Effect of Culture on International Marketing
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Culture plays a large role in effective marketing; it is a key factor in how consumers perceive advertising. Further, it forms the foundation to how consumers generally behave. Culture is described as “The customary beliefs, social forms, and material traits of a racial, religious, or social group, the characteristic features of everyday existence (such as diversions or a way of life) shared by people in a place or time” (Culture, n.d.). Culture can be relating to the country that the consumer lives in, which may include nuances such as food preferences or the way in which they dress. It may also be regional culture specific to the region the consumer lives in and has an effect on the way they buy products, such as in Western Australia where there is a strong culture of Western Australian made and owned (which is not as common in the rest of the nation). Therefore, it is extremely important that organisations are aware of certain cultures as it will highly impact the effectiveness of their marketing, whether that be an organisation attempting to penetrate an international market or for an international firm targeting the Australian market. Culture enables marketers to create greater engagement, relevance and grow their business. A Organisations failure to recognise the importance of culture to building a business weather internally or externally both nationally and international places them at a competitive disadvantage. Brands never speak directly to consumers or customers; it’s always through the medium of culture (Brands, 2014).
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Culture is the path through which communication travels, and creates challenges for marketers. Culture can change alter the direction, impact and meaning of communication in the slights or even at its extreme cause offence . The message may differ significantly depending on the sender and receiver .That’s why slang in the wrong hands can be embarrassing; although all of the words may be correct, other factors such as the context or tone fail to respect the culture. Culture contains many things - empathy, purpose and others that are difficult to measure, and therefore do not fit into marketing plans, (Brands, 2014). However, culture is where context is found. Failing to take account for cultural differences between countries has been the downfall of many businesses (Ricks, 1993).
Many marketing theories have been developed, particularly targeted at only Western countries, principally the United States. However, not all western countries share the same cultural believes as the US (this will be explained further on). The advancement of marketing requires that the validity of marketing models be scrutinised in other cultural markets to identify their universal useability to uncover their limitations and where they need to be modified. The most universally known framework that has been developed in the last three decades is Hofstede’s six dimensions of culture. This framework can be used by organisations to better tailor their marketing (Steenkamp, 2001).
Hofstede’s framework developed by far the most influential national cultural framework. Using a combination of empirical and eclectic analyses, Hofstede derived and defined six dimensions of cultural variation:
1. Power Distance, regarding the different keys to the basic problem of human inequality;
2. Uncertainty Avoidance, connected to the level of stress in a society in the face of an unknown future;
3. Individualism versus Collectivism, related to the incorporation of individuals into primary groups;
4. Masculinity versus Femininity, related to the separation of emotional roles between women and men;
5. Long Term versus Short Term Orientation, related to the decision of focus for people's efforts: the future or the present and past.
6. Indulgence versus Restraint, related to the pleasure versus control of basic human desires related to enjoying life.
The Hofstede framework, however, is not perfect . The correspondence between the items used to measure the cultural dimensions and the conceptual definition of these dimensions is weak. It is also not clear whether the items have the same meaning in different countries. Country scores are based on matched samples of IBM employees as part of Hofstede’s testing, which are not necessarily representative for their countries. This may apply especially to less‐developed countries. Data collection took place in 1967‐1973, and is outdated to today’s standards. Hofstede’s items refer to work‐related values, which might not completely overlap with priorities of consumers (Steenkamp, 2001).
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As stated previously, there are a number of organisations that have failed due to a lack of accounting to culture. An example of this is Walmart and their attempt to penetrate the German market. As previously stated, not all western nations share the same culture, as Germany has one of the highest Uncertainty Avoidance scores, at 65, whereas the USA comes in at 46. This shows the cultural divide between the two western countries. Wal-Mart failed to market to German consumers as the American giant failed to research German culture, as seen by the cashiers who were mandated to smile at customers which made it very uncomfortable for staff and customers ,Wal-Mart Germany had not accomplished the second part of its value proposition – “excellent customer service” . German consumers have been accustomed for decades to shopping at self-service formats without any staff assistance (Andreas and Andreas, 2003) .Alongside this, Wal-Mart enforced a 3 metre rule which stated that when within 3 meters of customers, they must smile, make eye contact, greet the customer, and offer assistance. Smiling to strangers was an uncommon practice in German culture (Shurrab, 2014), (Landler and Barbaro, 2006) (Nussbaum, 2006). staff were also told to ask if the costumer required any assistance which again goes against German culture as they are a very individualistic society and believe that if we need help we will directly ask for using explicit communication (Hall and Hall, 1990). To add to that, Wal-Mart initially went with American tradition by having employees bag the groceries at the end of each checkout lane. This practice again was foreign to German customers, who did not want a stranger touching their groceries. The German consumers realised that they would be paying more due to the extra unnecessary staff as the Germans are a value-oriented culture. As a result, this practice became one more reason for Germans to choose to shop elsewhere (Landler and Barbaro, 2006) (Tuleja, 2016)
These practices were uncommon to the German culture, which made consumes very uncomfortable in Wal-Mart Germany. This meant it was not an ideal place to work either and led Wal-Mart to face a high turn-over (Jui, 2011). The Wal-Mart approach of being a retail outlet wasn’t been appreciated by the German customers as they found it was dramatically different to German retailers. This included the merchandising of the stores, which was flawed as it placed all the premium products at eye level while all the discounted products were being placed either at the bottom or the top of the shelves (Landler and Barbaro, 2006). While this may be common practice around the world, even in Australia, German customers did not react well to this (Landler and Barbaro, 2006). This reinforced that the habits of the average German customers were not studied, as German consumers are efficient and do not care for spending copious amounts time shopping. Wal-Mart was designed as many western supermarkets are; in a manner in which the customer is coaxed into spending more time and money in the outlets, which is a sound strategy of raising revenue but this again displeased the German consumer (Tuleja, 2016). Walmart’s failure was further fuelled by its unfriendly approach towards the environment, as the Germans are focused on the sustainability and the plastic packaging and the plastic bags of Walmart simply did not please the German consumer (Macaray, 2011). Walmart can be seen as selfish as they refused to Taylor to the German consumer and there culture in there ten years of exitance in Germany ,
Wal-Mart has been known to create a full-scale price war in every market it has entered so far in ordinance with their “every day low price” (allbusiness.com/barrons_dictionary, n.d.)-pledge to local consumers. This strategy has been successful in a majority of other markets the same cannot be said for Germany, largely due to the ignorance, lack of experience, and vanity of Wal-Mart Germany’s original top management team, all German competitors matched all of Wal-Mart’s price cuts (Andreas and Andreas, 2003). Harmed even more by the results of a number of independent surveys, commissioned by newspapers or produced by Stiftung Warentest, a highly influential government-sponsored consumer protection agency, and the Gesellschaft für Konsumforschung (GfK),Germany’s biggest market-research institute, who discredited Wal-Mart’s fundamental value proposition “everyday low prices” as a (largely) empty promise, they presented that Wal-Mart were simply not able to undercut Aldi and the low cost retailers let alone be substantially cheaper than the traditional retailers (Andreas and Andreas, 2003). While Walmart may have seen potential in the European market, these are some distinguished mishaps that were created due to a lack of cultural understanding and market understanding . It may be possible that the US giant assumed that there would not be any differences between their home brace and German consumers. Had they have done their homework and analysed the practiced culture and specifying customer’s demands, they may have had greater customer retention and financial performance in the German Market (Jui, 2011)
Culture is integral to functional marketing; it is a principal to how people recognise advertising and is the basis of how consumers behave. Culture allows marketers greater engagement with consumers to help grow their business. Failing to acknowledge the importance of culture places a brand at a competitive disadvantage. Marketing theories in majority are targeted at Western countries, particular in the United States, however not all western countries share the same cultural believes as the US, such is the example of Walmart’s attempt to penetrate the European market through Germany. Although the products may have been the same, the manner in which the products displayed was where Walmart began to lose the German consumer, furthered by Walmart’s lack of any cultural and market research which resulted in their demise. The advancement of marketing requires that the validity of marketing models be scrutinised in other cultural markets to identify their universal useability to uncover their limitations and where they need to be modified which Walmart clearly failed to do. This has to serve as an example for future organisations in their pursuit for international market penetration.
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- Andreas and Andreas. (2003). Why did Wal-Mart fail in Germany? Institute for World Economics and International Management.
- Brands, C. N.-V. (2014, Apr 7). Culture As Competitive Advantage For Marketers . Retrieved from forbes.com: https://www.forbes.com/sites/onmarketing/2014/04/07/culture-as-competitive-advantage-for-marketers/#7fd923657a13
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- Hofstede, G. (2011, Jan 12). Dimensionalizing Cultures: The Hofstede Model in Context. The Online Readings in Psychology and Culture (ORPC), 2(1).
- Jui, P. (2011). Walmart’s Downfall in Germany: A Case Study. Journal of International Management.
- Landler and Barbaro. (2006, Aug 2). Wal- Mart Finds That Its Formula Doesn’t Fit Every Culture. Retrieved from www.nytimes.com/: http://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.html?pagewanted=all&_r=2&
- Macaray, D. (2011). Why Did Wal-Mart Leave Germany? Retrieved from http://www.huffingtonpost.com/: http://www.huffingtonpost.com/david-macaray/why-did-walmart-leave-ger_b_940542.htm
- Nussbaum, B. (2006). Did Wal-Mart smile too much in Germany? Retrieved from businessweek.com: www.businessweek.com/ innovate/NussbaumOnDesign/archives/2006/07/why_did_walmart.html
- Ricks, D. (1993). Blunders in International Business. Cambridge: Blackwell.
- Shurrab, H. (2014). Wal-Mart’s German Misadventure.
- Steenkamp, J. (2001). The role of national culture in international marketing research. International Marketing Review, Vol. 18 (1), 30-44.
- Tuleja, E. (2016). Case 1 Wal-Mart in Germany: Corporate Formula Does Not Fit the German Culture. In E. Tuleja, Intercultural communication for global leadership (pp. 45-52). Abingdon: Routledge.
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