INTERNATIONAL MARKETING MANAGEMENT
“Explain the concept of ‘self reference criterion' and demonstrate its importance to a marketing firm planning to enter international markets for the first time”
International marketing is one of the most increasingly important factors in the 21 century for all the types and size of company. It has a great impact on both the national economy and the world economy as well. (Albaum & Duerr & Strandskov, 2005). Lots of big and medium size company in the world are now involved in doing international business. There are big name like Coca-Cola, Unilever, P&G and others who are doing business successfully all over the world. There are some factors that need to be considering for doing business globally. Culture is one of the most important elements of doing international marketing. Now what is culture? We can simply say that culture is the way the peoples think and do their works, the way they behave, their value and attitude. The Dutch anthropologist Hofstede defines culture as “the collective programming of the mind that distinguishes the members of one category of people from those of another” (Lee & Carter, 2005). Before entering a market the marketers should have a clear idea about the market, the culture and the consumer behaviour. Different parts of the world have different culture. It varies from country to country. Even inside one country there are cultural differences among people. Culture has a great influence on peoples thinking process. And most people use there own culture while they do and think something. It is people's unconscious tendency to use their own national culture to their thinking and work and to handle a problem or situation. People automatically do this. James Lee referred the situation of people's unconscious attempts to compare others culture through their own national cultural eye's as the Self reference criterion. This Self reference criterion often create problem while a marketers try to enter into a new market (Lee & Carter, 2005). Especially when a marketer is trying to enter into the international market for the first time. To do business on international market understanding the culture of other market is very important for running the business for a long time.
The definition of culture can be express in many ways. Culture can be define as “Patterned ways of thinking, feeling and reflecting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artefacts; the essential case of culture consists of traditional ideas and especially their attached values”(Lee & Certer, 2005). Anthropologists suggest there are three characteristics of culture. Firstly it does not come naturally, it is learned. Secondly the various facets are interrelated in culture. This means if any facets change in any place that will affect the whole thing. And lastly the members of a group share it and the boundaries between different groups are also define by culture (Keegan, 1989). Different country has practised different traditional values and attitudes. Language, religion, values and attitude, education, these are the elements which create the cultural difference and make people different from one another. There are other elements also. Different country use different language, even people in one country use different language; for example India. Religion is another important factor of cultural difference. Peoples in the Arab country are different from people in the Europe. Religion has a great impact on peoples thought process and life style. For example in Muslim community there is a concept of halal food and haram food. Whereas in other religion it does not exists. People's education system is also different from culture to culture. So culture is a very important factor in international marketing. Because it has a big influence on consumers behaviour. And so the marketing environment is also influenced by many aspect of culture. For example taste. It varies from culture to culture which had a great impact on market environment. In Moslem countries green is a highly regarded colour but in South West Asia it is a negative connotation (Keegan, 1989). These factors need to be considered while entering into a market. Marketers have also their own culture and tradition. As we see it is human's unconscious tendency to use their own culture while they think or do something. When one marketer does business in their own country he or she might not find any difficulty of the similarity of the culture. The problem starts when he or she wants to expend the business and take the business internationally. This means when he or she tries to enter into an international market. The main problem here the markets own culture. When the marketers use and apply his own cultural experience while entering into other new international market then he or she might face difficulty. Here is a very less possibility to be successful. This unconscious reference to use the marketers own culture is Self reference criterion or SRC in short.
We can define Self reference criterion as a person's unconscious tendency to use the individuals own culture as a standards to evaluate others. We can explain SRC by an example: Americans see those countries as backward and unmotivated country which is very traditional. They thought that this country always tries to keep their own traditional value always and they fail to adopt new technology and social customs. SRC is a barrier to do business on international market. Sometimes it happens like people think their own culture as superior then others culture. This creates more complexity. This is known as ethnocentrism (USC Marshall). Own cultural experience can block the perceptions of marketing needs. It has a negative impact on taking the business decision.
Culture is a set of value. It is a pattern of learned behaviour. This comes from living within a particular society (Gilligan & Hird, 1986). It is the basic cause of people's wants and behaviour. Culture has a great influence on the buying behaviour on the consumer. From one country to another, this often very a lot. To set a good marketing strategy international marketers should understand the culture in every possible international market that they want to enter (Kotler & Armstrong, 2004). If the marketers fail to do that they face difficulty in running the business. The marketing strategy will not be a successful one if there is no cultural influence. When there is cultural influence on making the marketing strategy to enter into a international market, even then the strategy could be failed. This will happen when the marketers use their own cultural influence while making the strategy. They need to think and make strategy accordingly to the culture of that particular county. They need to understand that particular market and their consumer behaviour, test, value, religion. For example: McDonald wants to start their business in Arab country. If the markets think according to their own culture and start their business same like back to their own country, they will fail to run their business. This means if they sell same food item like their own country, the people in Arab will not eat those food. Arab peoples are Muslim in religion. And they don't eat pork or any haram food. So in that case McDonald cannot continue their business in Arab. Same happened if a fashion house from Europe wants to sell their product to a country where the temperature is very hot and humid like Africa. Because Europe is very cold place and the people use warm and heavy cloths. Where in Africa the scenario is almost opposite. To avoid this kind of problem of SRC, Lee mentions a systematic four step process. This four step framework can remove this type of myopia. The steps are:
1. Define the problem or goal in terms of country cultural traits, habits, and norms.
2. Define the problems or goal in terms of the foreign culture, traits, habits and norms.
3. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem.
4. Redefine the problem without the SRC influence and solve for the foreign market situation. (Keegan, 1989)
The marketers must be careful about not to fall into the trap of SRC. Impact of SRC can create serious misunderstanding between peoples of different culture. For example: a U.S marketing manager analyzes the Egyptian market. He found that the sales contract plays a minor role there. But he applied his own experience from his home country. He thought that it would be a risky approach of doing business without any sales contract. Because the courts for the case of litigation and the system of legal contracts are not reliable there. On the other hand giving words to one as a commitment is treated as agreement in Egypt. This came form the religious value from Islam as Egypt is a Muslim country. So a Egyptian who will do business with U.S for the first time he don't know anything about written contract. If this Egyptian asks for a written contract then it will be treated as insult by him as it is considered as insult to Muslim honour. In this case both U.S and Egyptian use their own cultural experience to treat this situation. This creates a serious misunderstanding (Muhlbacher & Leihs & Dahringer, 2006). So SRC can create misunderstanding and personal space between people of different culture. Misunderstanding can also be happened on high vs low context of culture. In low context culture word carries most of the information and there the massage are explicate. And on other side verbal part of the massage contain very less information. It carries more on the context of communication. The basic value of communicator and the background association include here. For example United States is a Low context culture and Japan is high context culture followers.
The marketers can do cross cultural analysis before entering into the new market. According to Lee & Carter(2005) cross cultural analysis is the systematic comparison of similarities and differences in the behavioural aspects and material of culture. The marketers who want to enter into foreign country for the first time he or she should do cross cultural analysis. When they identified the similarities and differences of their own culture and the foreign culture then it will be easier for them to do effective marketing and avoid the cultural conflict. They need to understand the behavioural aspect of the foreign consumer. Geert Hofstede describes culture as a source of conflict then of synergy. Synergy means combined or cooperative action. According to Hofstede the cultural difference are nuisances at best or it is often a disaster. Hofstede approach to cross cultural analysis is most widely used. He mentions that the cultural difference between different nations can be compared by four dimensions. Those are Power distance, uncertainty avoidance, individualism and masculinity. The way societies deal with human inequality is power distance. The uncertainty of the future and the way the society deal with, that describe uncertainty avoidance. Individualism refers the relationship of an individual and his or her fellow in society. The degree to which society display the stereotype male and female difference, this is describe by the masculinity (Lee & Carter,2005 ).
Those firms who want to enter in to an international market for the first time, it is very important for them to do a brief analysis of culture. The effect and influence of your own culture is very harmful for international business. It creates a lot of complication. They need to understand the cultural difference of other country. Culture is a very complex thing. So marketers need to know other culture as well. There are also needs of doing cross cultural analysis. Ethnocentric view need to avoid while you are on international market. In the domestic market it is ok to use own culture while making strategy. But the marketer will fail to do business in other country if he or she don't take others culture seriously. So a sound analysis of others culture is must.
“Why should the international marketer have knowledge of sub cultural groups when attempting to segment markets in a particular country or region. Use example in your answer.”
The world is very big and complex. And lots of people live here. This people live in different part of the world. And these peoples are not same in character and behaviour. They are different from each other. This characteristic and behavioural pattern comes from the place tor region they live in. This is a natural process. Peoples are habitual in this. So this is very from region to region. People of one region or area are same in character but different from other region. These humans behavioural pattern, characteristic, the norms and value they belief, which creates difference peoples from one region to other region is known as culture (Lee & Carter, 2005). When the question of international marketing comes, then it is necessary to keep culture in mind. People from one culture are mainly homogeneous. But it is not remain homogeneous all the time. After a certain time it started to loose it. Especially when the population started to increase. That time people started to divide into small group according to satisfy their needs. Then the concept of subculture comes. The small group between big cultures is called subculture (Kotler, 1967). So not only the culture, the subculture is also important in international business in making marketing strategy. Because same product or service may not be accepted in every part of one country. In some part it may not be accepted well. Some country is so big and each part is different from each other. Marketers need to analyze the subculture very closely before making a strategy.
According to some writer, the rising income levels and modern communication has promoted a common culture worldwide. If this point of view is right then the task of international marketing will be easy for the marketers. But this does not happen all the time. There is difference between cultures to culture. The buyer's behaviour is different. Peoples understanding of meaning is different. However there is some novel product can be sold worldwide by the marketers using a universal massage depending on the fact of ubiquitous availability (Bradley, 2005).
To enter into international market the marketers need to acquire brief knowledge on culture. Culture is divided into sub culture. This means a culture of one country contains with some smaller sub cultural or group of people. This group of people shared a common value system which is based on their life experience and situation. Subculture includes elements like nationalities, racial groups, religion and geographical region. For example some important sub cultural groups in United States are African American, Hispanic, Asian American and mature consumer. Each of this subculture has their own preference and behaviour. This sub cultural group has made important market segment. Marketers have to design their marketing programs and product according to the needs of those customers. The Hispanic consumers in the U.S Hispanic market are the Americans of Cuban, Central American, Mexican, South American and the Puerto Rican Descent. There is about 35 millions consumer who brought more than $425 billion worth service and goods each year. This Hispanic group use Spanish as a language. So the marketers reached them easily by Spanish language broadcast and print media. They are very loyal to brand. They like those company who show special interest on them. 35 millions people of U.S populations are African American. Their annual buying of goods and service worth $527 billions. These groups motivate strongly by selection and quality of product. They are very brand loyal and brand name is very important to them. This is a huge market for business. So companies developed special service and product and also the packaging and appeals to meet their needs. The Asian American are more then 10 millions in number. They are very affluent and fastest growing U.S demographics segment. Annually they spend on buying service and product is about $229 billions. They are the combination of Chinese, Japanese, Indians and Korean mainly. Traditional culture and language is the biggest barrier for the marketers to sell their product to them. Mature consumer is U.S is the most attractive and biggest group. They are 75 million in number. These mature groups have money and more times. Restaurant, exotic travel, home entertainment products designer furniture and leisure goods and service are ideal market for them. These mature consumers have the desire to feel young always. Marketers use this concepts while makes their strategy. For example Nike commercial shows a senior weight lifter proudly claims that he is not stronger for his age. He is strong. So it is seen that marketers are use this factor to make their strategy (Kotler & Armstrong, 2004). In others country like India there also exist cultural difference inside. The culture of south is different form the culture of north. Similarly the culture of east is different from west. Same thing goes with China, Europe and Africa. Even a small country like Bangladesh exists different sub cultural group.
There are many other secondary beliefs and values found in a culture which is recognize as subculture in the society. Subculture emerges especially for the grouping of people with common interest, motivation and experiences. Subculture can be created on the base of Religious or ethnic associations, situational facets of life style, age groupings and regional affiliations (Proctor, 2000). For example students are a sub cultural group in a society. According to Bradley (2005) language is the cultural mirror. It reflects the content and nature of the culture. Language is the most common difference between cultures. To separate a cultural group it is primary way. Different country use different language. There are lots of language exists in the world. Language creates sub cultural group also. Inside a single geographical boundary people speaks different. In U.S people speak Spanish and English. In India though Hindi is their national language, different language are also available there. The people in south speak different language from people in north. Even in east and west the language is different. In Canada there are French speaker and English speaker. In Switzerland there are both French speaking people and Garman speaking people.
It is impossible for a company to satisfy all the customers. Every customer has their own specific needs and requirements. It is batter to deal with them by group. The group can be consists of some individuals of similar consumption habits, economic characteristic, social behaviour and some other distinguishable criterion (Marjaro, 1982). This strategy is called market segmentation. Marjaro (1982) define market segmentation as the strategy of the firms where they partition the market into submarkets. And their aim of doing this is to maximize the penetration of such segments rather then spread the effort thinly over the total market. The marketers can focus easily on the wisely selected subgroup or submarkets. And they can easily differentiate their marketing programme to satisfy largest number of heterogeneous members of the total market. Marajo (1982) mentions some base for market segmentation. Segmentation can be done by attitude, taste or predispositions or personality and traits., channels patronage or store location, sensitivity to pricing or advertisement policy. According to Ellson (2004) for doing effective segmentation there are four key requirements which are homogeneity within segments, heterogeneity between segments, targetabillity by means of marketing mix and viability in commercial terms. Subculture is an important factor of doing market segmentation. Especially inside a big culture, different and distinct subcultures are united by certain belief, experience or values and make effective market segmentation. As we see on the example of Sub cultural groups in the U.S. Hispanic, African American, Asian American and the mature consumers are important subculture there (Schiffman & Kanuk, 2004). This subcultures made a important and valuable segmentation.
The international marketers should understand the importance of subgroup or subculture. An effective basis for market segmentation is provided by the subculture. American firms tried to attract different sub cultural groups in different way. For example: J.C. Penney has outfitted 170 stores for the Hispanic and African-American to carry merchandise. Carnival Cruise has an entire cruise ship for only the Hispanic market (Onkvisit & Shaw, 2004).
The company who wants to do business on the international market, it is necessary to understand the culture and the subculture of that country. The company need to segment the market. The subculture should take under consideration while doing segmentation. It is not possible the company to satisfy a big cultural country like U.S, China. For this they need to segment this market according to subculture. Then it will be easy for them to reach more consumers. Marketing strategy will be efficient and effective. Each group different from each other depend on their various aspects. So if one strategy is applied for the whole cultural segment then it will not be successful. What is like by one group is dislike by some other group. So use of the subculture on market segmentation is very important. The markets can focus accurately on their target. And they can reach to their goal on the fastest time period.
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