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MARK 4700: International Test 2
Vitamin C in Ribena Drink 1
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The drink was made from black currants. Ribena was falsely advertised saying that it contained 4 x the amount of Vitamin C of oranges. A school project revealed this fact to be false. Ribena NEVER FULLY apologized.
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Vitamin C in Ribena Drink 2
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Pled guilty to 15 charges. The Fair Trading Act says it is illegal to mislead customers.The event led to a 10-12% drop in sales.
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AFLAC 1
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90% of Japanese households have life insurance. AFLAC sells cancer insurance, attractive to Japanese market because of a longer life span. Japan relies on alternative marketing, using networks--retired employees sell to old colleagues.
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ALFAC 2
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Deregulation of Japanese Insurance industry caused AFLAC to join forces with Japan's largest insurance firm. Shifted sales so non-cancer policies are responsible for 60% of new sales
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Nutriset 1
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developed a product called "Plumpy'nut" a peanut butter type product used to combat malnutrition in Africa. Logistics for the product have proven difficult, because of national emergencies
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Nutriset 2
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"Plumpy'Nut" will be manufactured locally to keep costs low and ensure quality. They are distributed in individual packets
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Whirlpool 1
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International marketing issue: Europe's recovering economy, market penetration, difference in distribution channels, varying competition within each country
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Whirlpool 2
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Whirlpool is experiencing some challenges entering the European market. Consumer preferences between Europeans and Americans are different. European market offers opportunity for more growth.
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Uni-Cola 1
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Developed enriched snacks and beverages but does not want to market them to foreign markets as "healthy foods". Plans to enter Philippines, Indonesia, Pakistan, India, and South Korea
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Uni-Cola 2
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Each country has a different source of advertising and competition.
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Airbus-Boeing 1
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Boeing and Airbus have a duopoly on civilian jet manufacturing. International Issue: 4 major US airlines have declared bankruptcy. Boeing's goal is to protect its monopoly position in the 747 segment. Airbus' goal is to match Boeing's product range
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Airbus-Boeing 2
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Airbus' strength is their advanced technology, efficient engines, and airframe design. Airbus receives foreign government subsidies. Boeing is counting on smaller capacity aircrafts traveling long distances to smaller regional cities and capitals. By 2015 1/2 of wide body jets will be flying Pacific routes
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Nestle-Baby Market 1
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Food and beverage company headquartered in Switzerland. In 1988 Nestle had no US market share for infant formula. Nestle's US subsidiary Carnation introduced Good Start HA. Claimed it was hypoallergenic,3 months later sever allergic reactions were reported. FDA investigated, and they had to remove "hypoallergenic" from the can.
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Nestle-Baby Market 2
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Boycotts against Nestle occurred in Europe. Beba HA was introduced in Germany as Nestles hypoallergenic formula. In US Carnation publicized the feature without waiting for pediatricians to recommend it. Nestle worked with the WHO to work out the issue
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Power of Low Prices (Hello Pizza)
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French accountant started pizza business in Kunming and Chongqing but both failed b/c of high prices. Finally opened business in Shanghai. Hello Pizza had much lower prices than their competition. Le Corre's business model: low prices+ low cost+ quality. Poor marketing research in failed cities.
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Culture 1
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- Culture is generally accepted and learned behavior
- Ethnocentrism is the belief that one’s (your own) culture is superior to other cultures
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Culture 2
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Sum total of artifacts, beliefs, institutions, rules, and techniques that characterize a human population
“Culture is learned behavior; a way of life for any group of people living together in a single, related, and interdependent community”
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Dimensions of Culture (Information Oriented)
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Individualism
Lower per distance
Bribery less common
Low distance from English
Monochromatic time
Internet
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Dimensions of Culture (Relationship Oriented)
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Collectivism
High power distance
Bribery is more common
High distance from English
Polychromatic time
Face-to-face
Reduce transaction costs
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Culture Summary
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Integrated pattern of behavior
Attitudes and values greatly affect consumer behavior
Each society has its own ideas about beauty and what is in good taste
Communication is a major part of the marketing task
Religion, Education, and social organizations all play a part in culture
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Characteristics of Culture
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It is a pattern of behavior
It is learned, shareIt is dynamic
It is a better human delimiter than most national boundaries
·National boundaries do not separate people like it used to, today it is people’s culture
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Overview of Culturegram
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*Does nationalism really exist?
- customs and courtesies (greetings, eating, gestures)
- the people (population, general attitudes, religion, language)
- the lifestyle (the family, business, recreation)
- the nation (history, govt, economy, education)
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Social Institutions (Family)
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· Nepotism: taking care of family members
· Role of extended family
- Ex) EJ Gallo, very loyal, The Godfather
· Favoritism of boys in some culture
- Has stilted the growth of Chinese population
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Social Institutions (Religion)
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· First institution infants are exposed to outside the home
· Impact of values systems
· Misunderstanding of beliefs
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Social Institutions (School)
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· Affects all aspects of the culture, from economic development to consumer behavior
· No country has been successful economically with less than 50% literacy
- Athens-Clarke Country graduation rate last time checked was 49%
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Social Institutions (The Media)
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· Media time has replaced family time
- TV
- Internet
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Social Institutions (Government)
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· Influences the thinking and behaviors of adult citizens
- Propaganda
- Passage, promulgation, promotion, and enforce laws
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Social Institutions (Corporations)
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· Most innovations are introduced to societies by companies
· Spread through media
· Change agents
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Cultural Imperatives
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· Business customs and expectations that must be met and conformed to or avoid if relationships are to be successful
- The significance friendship cannot be overemphasized
· In some cultures a person’s demeanor is more critical than in others
· Imperatives vary from culture to culture
Example: Making friendships in brazil before asking to engage in a deal.
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Cultural Electives
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· Relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but may not be required
· A cultural elective in one country may be an imperative in another
· Cultural elective are most visibly different customs
· Customs or behavior patterns reserved exclusively for the locals
Example: Making friendships in brazil before asking to engage in a deal.
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Cultural Exclusives
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· Customs or behavior patterns reserved exclusively for the locals
Example: You are not required to go to church in catholic country if you're not part of the country.
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Factual Knowledge
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· Has meaning as a straightforward fact about a culture
· Assumes additional significance when interpreted within the context of culture
- Selective perception
- Needs to be learned
- Understanding that Mexico is 98% Catholic is a fact
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Interpretive Knowledge
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· Requires a degree of insight that may be described as a feeling
- Most dependent of past experience for interpretation
- Most frequently prone to misrepresentation
- Requires consultation and cooperation with bilingual natives with marketing backgrounds
· Nothing takes the place of research
- understanding what it means to be catholic in Mexico is different than Catholic in Spain
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Elements of Culture--Ritual
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· Marriage
- Polish wedding— lasts up to 10 days
- Funeral
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Elements of Culture--Symbols
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· Language
-Linguistic distance
· Aesthetics as symbol
- Insensitivity to aesthetic values can often, create a negative impression and in general render marketing efforts ineffective or even damaging
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Elements of Culture--Beliefs
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·To make light of superstition in other cultures can be an expensive mistake
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Elements of Culture--Thought Process
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·Difference in perception
- Focus vs. big picture
- Different outlook on life between Italians and French
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Attitudes and Values 1
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- Attitude and values help people determine what they think is right or appropriate, what is important and what is desirable
- People have attitudes and values about work, time, money, achievement and technology
· Older generations defined by what they did for a living
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Attitudes and Values 2
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- It is important to understand a culture’s values and attitudes about four important aspects
· Wealth, material gain, and acquisition
· Change
· Risk taking
· Consumer behavior
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Attitudes and Values 3
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- Wealth material gain and acquisition
· The US has been called the “affluent
“achieving” and “acquisitive society”—wealth and acquisition are considered signs of success
· By contrast Buddhist or Hindu cultures promote nirvana or “wantlessness”
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Attitudes and Values 4
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-Change
· By entering a foreign market a firm brings change by introducing new product and new ways of doing things
· Some cultures embrace change, others resist it
· The international marketer is an agent of change
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Attitudes and Values 5
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Risk Taking
· The consumer takes risks by trying new product
· The international marketing manager needs to seek to reduce perceived risk by customers and distributors by education, guarantees, etc.
- Warranty and guarantee—does the product need a guarantee if it’s a good product
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Attitudes and Values 6
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Consumer Behavior
· Consumer behavior varies with a domestic market and varies even more when looking at international markets
·The international marketing manager must rely on his/her own research but also other, especially local, to help understand consumer and personal behavior
- Don’t be afraid to spend money to do research
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Aesthetics
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-Aesthetics refers to the prevalent ideas in a culture concerning beauty and good taste, as expressed in the arts—music, art, drama, and dance—and the appreciation of color and form. International differences abound in aesthetics, but they tend to be regional rather than national
- It is important to understand a cultures aesthetics about three important aspects:
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Aesthetics (Color)
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· The significance of different colors varies by culture
· For example the color of mourning in Western cultures is black, where it is white in Eastern countries
· Colors often have very specific emotional, religious, patriotic, or aesthetic reasons
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Aesthetics (Color 2)
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· The significance of these colors influence the international marketers choices on product, packaging, and advertising
· One practical suggestion is that colors on the country’s flag are usually safe
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Aesthetics (Package Design)
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· The design of product and package should be sensitive to local aesthetic preferences
· The design of plants and other physical space also are influenced by local aesthetic preferences
- Youngest age is in India
- US average age 46
Door handles made easy to open
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Aesthetics (Brand Name)
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· Often the best brand name is one in the local language
· However, rather than having many brand names some forms look for “nonsense” words tat have no specific meaning anywhere (ex. Kodak)
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Language Low Context
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· Low context—cultures have a very direct communication style where the message is clear, logical, and very specific
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Language High Context
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· High context—cultures place less importance on what is said (the actual verbal communication) and more on the context, non verbal and the relationship
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Language
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- Perhaps the most obvious difference between cultures
- Inextricably lined with all other aspects of culture
- Reflects the nature and values of a culture
- Common language and common culture
· Language variations between countries that speak the same language (ex. UK and US English, and Spain and Mexico Spanish, and France and Canada French)
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Religion
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- Religion involves the way people make sense if the world around them and their relationship to the world
- Understanding a cultures religion often provides the best insights onto behavior
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Major World Religions
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Major world religion include:
· Christianity (2.1 billion adherents)
· Islam (1.5 billion)
· Hinduism (900 million)
· Buddhism (376 million)
· Judaism (14 million)
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Religion and the Economy 1
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Religious holidays
- St. Patrick’s day
Consumption patterns differ by religious requirements or taboos
· Religion influences the economic role of women
- Birth rates declining considerably because women are working have better education, etc.
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Religion and the Economy 2
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· Religious views of family size and responsibilities
- Chinese laws limiting family size
· Religious institutions may play an economic role
· Religious divisions within a country can impact marketing efforts
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Education
Japan women 97, men 99.5% have completed high school
US like half
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- Education often means formal training in school, but education is broader than that
· Education is the process of transmitting skills, ideas, attitudes, and training
- Education transfers culture and also plays a key role in cultural change
- Among other things the level of education of a culture impacts the marketing plan in terms of what you say, how you say it, and how you gather information (marketing research)
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Hofstede's Cultural Dimensions (1-Power Distance)
a useful means by which to understand and compare cultures
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Power distance
· Degree to which power in a group is shared and is the relative distance between the “most” and “least” powerful person
· Impacts decision making an views towards authority
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Hofstede's Cultural Dimensions (2-Individualism)
a useful means by which to understand and compare cultures
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· Degree of emphasis placed on the individual versus group
· Praise and blame placed on the individual, weak ties
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Hofstede's Cultural Dimensions (3-Masculinity)
a useful means by which to understand and compare cultures
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- distribution of roles between genders
· Reflects values on achievement and success
- Masculine countries value competition, ambition to power, wealth accumulation.
- Feminine countries care about the general well being of the country and quality of life.
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Hofstede's Cultural Dimensions (4-Uncertainty Avoidance)
a useful means by which to understand and compare cultures
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· Degree to which a society tolerates risk and ambiguity
· Impacts entrepreneurship, risk taking, and willingness o change
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Hofstede's Cultural Dimensions (5-Long-term Orientation)
a useful means by which to understand and compare cultures
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· Added later after studying Chinese managers
· Long-term values include “thrift and perseverance”
· Short-term values include “respect for tradition, fulfilling social obligation” and saving face
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Developing Ethical Standards
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Legal compliance is a the floor for ethical behavior not a substitute for it.
1. Utilitarianism - Judges behavior in terms of costs and benefits to society.
2. Rights and Justice - Justice and fairness determine ethical behavior
3. Caring for others - How does the ethical decision change if the impacted parties are friends, families, co workers, or those of the same city, state, or nation
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Integrating Social Contacts
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● Cultural differences may reflect underlying value systems that can be a source for ethical conflict.
● Integrative Social Contracts theory focuses on the idea of a hypernorms to help reconcile such conflicts.
● Hypernorms are universal norms fundamental to human existence and reflected by a convergence of religious, political, and cultural beliefs.
● Example murder and deceit.
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Flow Chart Developing Ethical Standards
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1. Moral Principles: Maximize social utility, respect individual rights, distribute benefits and burdens justly. Exercise caring. 2. The firms current policies and actions. 3. Discussion across the firm: assessing specific policies and actions in light of moral principles. 4. Developing the individual employee’s ethical standard.
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Bribery 1
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- Ethical problems arise when bribery is used to win business and market share and to influence public officials and co-opt consumer agencies.
- Bribes have indirect costs such as unfair competition, misallocation of resources, inefficiency, long term slowing of growth, and reduced entrepreneurship.
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Bribery 2
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- The U.S. Foreign Corrupt Practices Act (FCPA) bans payments to government officials but allows grease payments.
- Grease payments are not payments to influence an outcome but payments to influence its speed in processing.
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New Product Development
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- Firms must decide which markets and how to adapt the products for those markets.
- Product development for low-income populations can be controversial, especially for products related to food and health care.
- A Global Public Good (GPG) is important for development and poverty reduction and often can be produced in sufficient quantity through the coordination and cooperation of entities in both developed and developing countries
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Approaches to Ethics
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Golden Rule - Treat others are you like to be treated
Conventionalist- Acts are ok as long as its legal or if everyone is doing it
Protestant Ethic - Do what you can defend to a committee of peers
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Approaches to Ethics
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Market Imperative Approach- The market will determine what is right
Libertine Ethic - Do what you want, as long as no one gets hurt
Utilitarian Ethic - Do what has the best outcome for all involved
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3 Frameworks for viewing ethical questions (Consequentialist)
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1. Consequentialist - Results are what matter … Ends over means
-Who might be hurt? and What is the right goal? and Who might/should benefit? and what if I get caught?
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3 Frameworks for viewing ethical questions (Duty-Based)
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2. Duty-Based - Contract orientation … what ones owes
-What and whom do I owe, Where are/should be my loyalties? and is this fair? and What do others legitimately expect from me? and what promise spoken or unspoken have been made?
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3 Frameworks for viewing ethical questions (Absolutist)
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3. Absolutist - Principles based, regardless of consequences -What is the right thing here? What is the law? Is this honest> Am i being true to my standards?
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Ethical Tests
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1. Is it right?
2. Is it fair?
3. Who will it hurt?
4. Would you want your decision publicized?
5. What would you tell your child to do?
6. Does it smell?
*But be aware of rationalizations “Everybody does it, Nobody cares”
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Global Branding
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· Promises the consumer quality and value and rewards the firm with premium prices and brand loyalty ( and thus barriers to entry) · However, global branding may cause a backlash -Local competitors hurt -Concerns over promoting a different lifestyle -Power of he multinational in regards to workers and other stakeholders
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Marketing Decision- Go international or remain a domestic marketer?
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Assessment of global market versus domestic market (demand and competition) and internal assessment of company readiness to go international)
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Marketing Decision- Which markets to enter?
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Assessment of individual market potential (ex. Demand, local competition, political environment)
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Marketing Decision- How to enter markets?
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Assessment of individual market potential (ex. Demand, local competition, political environment)
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Marketing Decision-How to market in target markets?
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Buyer behavior, competitive practices, distribution channels, promotional media, market experience, and company expertise
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