London American city college

A PROJECT ON

CROSS CULTURAL BETWEEN HOST COUNTRY AND HOME COUNTRY

SUBMITTED BY RAHUL REHAL

Date 25TH- 11-2012

INDEX

1. INTRODUCTION Culture Characteristics For Culture Cross Cultural Marketing

2. MAIN BODY Eurodisney A Cross Cultural Disaster Factors Considered For Cross Cultural Marketing Cross Cultural Marketing Process Cross Cultural Research Cross Cultural Aspects of Products Cross Cultural Influences On Advertising Cross Cultural Sales promotional Techniques Cross Cultural Issues in Sales Management Cross Cultural Channels of Distribution Cross Cultural Pricing Cross Cultural Aspects of Service quality Cross Cultural Marketing Hiccups!

3. CONCLUSION 4. BIBLIOGRAPHY

INTRODUCTION

CULTURE
Culture is a system of communications that makes a human society possible that incorporates the biological and technical behaviour of human beings with their verbal and nonverbal systems of expressive behaviour. Culture is the sum total of a way of life, including such things as expected behaviour, beliefs, values, language and living practices shared by the people within a region. Some catalyst must exist that is capable of transforming private meanings into public meanings so they become understood by other (future, unborn) members of the society; culture is that catalyst. It is the instrument by which each new generation acquires the capacity to bridge the distance that separates one life from another. Culture provides standards and rules regarding when to eat and what is appropriate to eat for breakfast, lunch dinner and snacks. In the process of social evolution, people find certain behaviours and values to be adaptive and helpful; others are found non-adaptive and even harmful. Helpful practices are shared and rewarded; harmful practices are discarded and discouraged. Over a period of time, useful behaviours, values become institutionalized and incorporated as a part of the cultural traditions. The individual internalizes these institutionalized practices and often forgets their origin. Shaking hands, a characteristic form of greeting in many western cultures, may have originated in the primitive practice of strangers clasping each others weapon arm, both as a sign of friendship and as protection from attack. Its original function had considerable usefulness and was therefore institutionalized as a social tradition; now, thousands of years later it is functionally obsolete but it still survives as a valued custom. Cultural beliefs, values and customs continue to be followed so long as they yield satisfaction. However, when a specific standard no longer fully satisfies the members of a society, it is modified or replaced, so that the resulting standard is more in line with the current needs and desires

of the society. Thus, culture gradually but continually evolves to meet the needs of society. These norms differ between cultures. One culture may focus on different aspects of an agreement (legal, financial) rather than another (personal,relationships). Americans may negotiate a contract while the Japanese may negotiate a personal relationship. The Chinese tend to accept their environment rather than seeking to change it. They seek to fit or harmonize with the environment while Westerners seek control of their environment. These behaviours, deeply rooted in their respective cultures, have immense implications for business behaviours and marketing practices. One example lies in the differences of the importance of the individual to the group. In Japan, the impulses and needs of the individual tend to be subordinated to the good of the group whereas in the United States, any intrusion by the group on the rights of the individual is regarded as unwarranted. One is the land of big WE the other is the land of big I. In Japan, predominant values are for minimizing differences, preserving harmony, and reinforcing group loyalty; these customs are derived from ancient Japan where a nation short on resources but long on people required the participation of all its members in an orderly manner if survival were to result. In the United States, the prevailing customs tend for maximizing difference, confrontation, and compromise. This individualistic approach may be derived from the frontier days when ones nearest neighbour was miles away and one had to be very driven, self oriented and individualistic to survive.

FISH IN WATER Humans are consciously aware of their own culture. This is similar to a fish in water. The fish is at home in, and comfortably unconscious of, its environment, the water. The last thing a fish would discover would be water. It becomes uncomfortable and aware of its environment only when it is out of the water and exposed to air. Similarly, mankind has been only vaguely conscious of the existence of culture and has owed this lack of consciousness to contrasts between his tribes own customs and those from another tribe with which he happens to be in contact. This results in culture shock when humans find themselves out of their natural cultural environment.

CHARACTERISTICS FOR CULTURE

1. Functional: In every society, the culture of that society has a functional purpose that provides guidelines for behaviour that are crucial for the survival of the group.

2. A social phenomenon: Culture arises out of human interaction, is a human creation, and is unique to human society.

3. Prescriptive: Culture defines and prescribes acceptable behaviours.

4. Learned: Culture is not inherited genetically but is rather the result of acquired behaviour learned from other members of the society.

5. Arbitrary: Cultural practices have certain arbitrariness since behaviours acceptable in one culture are not acceptable in other cultures.

6. Value laden: Culture provides values and tells people what is expected of them.

7. Facilities communications: Verbal and non-verbal.

8. Dynamic: Culture is constantly changing to adapt to new situations and new sources of knowledge; it changes as society changes and evolves.

9. Long term: Contemporary cultures have resulted from thousands of years of accumulated experience and knowledge.

10. Satisfies needs: Culture exists to satisfy the needs of the people within in a society. Culture takes on new traits and discards the old, useless ones according to the societys needs. However, the core values remain the same.

CROSS CULTURAL MARKETING

One of the most difficult, but also the most important aspects of doing business in a foreign country is to understand the differences in cultural perceptions and values, the differences in needs within a society. Within a cultural context, a firms products and services can be viewed as offering appropriate or acceptable solutions for individual or social needs. Since marketing is based upon satisfying the varied needs or wants of a firms customers, and the needs and wants are very much culturally based, a successful international marketer seeks to understand the cultural mores of the country to which he / she is attempting to market. If a product is no longer acceptable because a value or custom related to its use does not adequately satisfy human needs or fails to satisfy or address adequately the particular cultural values of the society, the firm producing it must then be ready to be adjust or revise its product offering. The need to address a potential market from a cultural point of view prior to marketing to the foreign country or transact a business deal with another society separates the successful firm from the unsuccessful one. Culture a cross- cultural differences can be seen in a variety of human interactions including but not limited to language, non-verbal communications, religion, time, space, colour, numbers, materialism, manners and customs, aesthetics, status consciousness and food preferences. Any of these interactions are potential pitfalls for the unweary or careless, as many companies both American and otherwise have discovered to their dismay.

FILTER-TIPPED CIGARETTES

Filer-tipped cigarettes often sell poorly in less developed countries. Consumers in wealthier countries are more aware of the health risks and willing to pay for the filter tip. In poor countries where the life expectancy rarely exceeds 40 years threats are much less real and can be more easily ignored. For these consumers, the extra cost involved in the filter becomes the critical issue.

MAIN BODY

EURODISNEY A CROSS-CULTURAL DISASTER

This is an example of WALT DINSENY COMPANY which failed to recognize the importance of cross-cultural marketing and understanding cultures of the host country EUROPE. Due to its arrogant behaviour WALT DISNEY stuck to its successful marketing plan, irrespective of cultural differences in Europe and enforced their product in the market, thus accounting to losses.

EXAMPLE

Walt Disney Company has successfully launched TOKYO Disneyland years before. However, it was only a licenser, garnering but a small fraction of the revenues as the price for its name and mystique while another company owned the park. Two mistakes in the companys sparkled past would not be repeated in Europe; it would own and control the park and it would own enough land for its own hotels. Disney was fanatically intent on bringing Americana to the Europeans. After prolonged negotiations with the variety of European countries, Disney passed on a site in sunny Spain for a location 20 miles east of Paris, which it believed projected a more central location. Of the final $4 billion price tag for the project, Disney invested only $160 million; the French Government assumed the bulk of the financial risk, including the construction of two adjoining freeway exits and a connecting suburban train line to Paris. Tokyo has more than 3 times as many inhabitants as Paris with the per capita income 50 % higher than the Parisian native. Tokyo Disneyland is only 6 miles from downtown Tokyo while EuroDisney is 20 miles outside Paris. Europeans can be in

Florida within a matter of hours, a geographic luxury the Japanese do not have. Disney World competed directly with EuroDisney for the Europeans entertainment dollar while Tokyo Disneyland had no such competition. Winter temperatures in Tokyo, while cold are still bearable, while French winters are cold and snowy and unbearable attendants at EuroDisney in winter could have been anticipated to be 4-6 times less than Tokyo Disneyland. Early on, omens were unambiguous. The cultural elite in Paris lambasted the project as an affront to French cultural traditions. (Responding to their concerns, Disney decided French would be the official language of EuroDisney.) Farmers protested the manner in which the French Government had condemned their land so that it could be sold to Disney. The rigid legal approach was offensive to the French, to consider depending on lawyers to be a last, not first, resort. The firm found itself depending on its conservative dress codes (Disney prohibited facial hair and limited the use of make-up and jewellery); regimented training practices and plans to ban alcohol from park facilities. Enhancements were added and the park originally budgeted at $2 billion, ended up costing nearly $4 billion, pushing Euro Disneys break-even parameters sharply higher and perhaps far beyond its ability to deliver. Disney had worked hard to adapt EuroDisney to European tastes. Fantasyland focused on the Grimm Brothers fairy tales and Alice in Wonderland. Discovery land exhibits drew attention to Jules Verne, H G Wells and Leonardo da Vinci. EuroDisneys castle is called Le Chateau de la Belle au Bois Dormant ( sleeping beautys home). A theatre featured a movie on European history. The Visionarium showed a 360 degree movie about French culture. Signs are in 3 languages: English, French and Dutch. A multilingual staff was available (the reservations center had separate phone lines for each of twelve different languages). EuroDisney had Mickey Mouse and Donald Duck with French accents. Basically, however the Disney strategy was to transplant the American park to Paris. The American management system was exported in total; Disney knew it would work because it was Disney and it had always worked in the past. This arrogance worsened relations with the local French. In April 1992, EuroDisney opened its doors. A pre-opening party provided spare ribs without providing the silverware; French visitors were perplexed. Start-up

problems abounded. Disney planners presumed hotel guests would stay an average of 3-4 days as they do at Disney World in Orlando; the actual average was closer to 2 days. Many guests arrive early in the morning, rush to the park, come back at late at night, and check out the next morning before heading to the park for the second day. Disney thought Monday would be a light day with Fridays heavy and allocated staff accordingly; the reality was the reverse. These shorter stays lowered occupancy rates and placed unanticipated burden on the hotels operations because of the unexpectedly high volume of check-in and check-out activity. Attendance was highly seasonal and peak during the summer months: Europeans typically take one long vacation in the summer instead of short visits typical of Americans. (there family vacation budgets are more modest than Americans and more carefully rationed to sustain the longer vacations.) Disney executives believed incorrectly that they could change French attitudes of not wanting to take their children from school during the school year and to take shorter breaks many times a year rather than one long vacation in the summer. The dismal Central European winter inhibits attendance for 1-3rd of the year. Visitors spent 12% less on food and souvenirs than expected. Instead of riding the expensive trams, Europeans preferred walking. The high American service available at Disney World and Disneyland was not easily exportable: Euro Disneys youthful French employees did not see the need to cut their hair, dress uniformly, smile incessantly, and provide world class service to the park attendees. For a European who had visited the Disney parks in the United States, the experience was second-rate and often not considered worth the high prices charged. Alcohol was not served since Disney felt a family theme park should not do so; Disney failed to consider the European penchant for drinking beer and wine with meals. The park did not offer sufficient restaurant seating for its European customers, who enjoy a leisurely meal and expected to sit down at the accustomed dinner hour. Break-fast was erroneously initially downplayed. The Disney team again and again disregarded the advice of locals. They did not adequately take into consideration the cultural factors that differed between Disneyland, Disney World, Disney World Japan and the European market place. Europeans wanted more local content in their parks. Whereas the Japanese are fond of

American pop culture, the Europeans wanted their own. To them, detailed and craftsmanship were more important than heart-stopping rides. The Magic Kingdom concept alone was not compelling enough to entice Europeans to extend their stay beyond one or two days. The solution was to have been the now delayed adjacent MGM movie theme park, which was then put on indefinite hold. Euro Disneys first year resulted in a loss; forecasted attendance was nearly 12 million visitors the first year; although actual attendance was substantial (9.5 million), it was far below the break-even level of 11 million. Fewer French came than were predicted. Eurodisneys admission price was 30% higher than Orlandos park, even though conditions in Europe lower disposable income, conservative vacation. In retrospect, Disney, although adapting the park itself, failed to take the time to understand its potential customers better and, in essence, assumed the unassumable, the Self- Reference Criterion: they had a formula that had succeeded in the United States and ( presumably) Japan, they saw no reason to tamper with it, and it should also work in France. Arrogance and poor planning led to a tarnishing of the Disney mystique which is still being fixed. On March 15, 1994, Disney and its partners announced a restructuring agreement. The Euro prefix was intended to provide the theme park with a pan European branding; that this did not work out was indicated when the name of the park was changed during 1995 to Disneyland Paris. As of 1996, the park was still losing money, albeit at a smaller rate.

We can see from the above example how cross-cultural marketing helps in making or breaking a companys strategies and affects its performance overseas.

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FACTORS CONSIDERED FOR CROSS-CULTURAL MARKETING

Language
Eskimos have many words to describe the concept of snow because the difference in the forms of snow plays a much more important role in their daily life than say, a native of Bermuda or Haiti. A countrys language is the key to its culture. Language expresses the thinking patterns of a culture; what is important and what is not important to a particular culture can be ascertained by what is present and what is not present in its language. The words of the language are merely concepts reflecting the culture from which it is derived. Its the spoken language that dominates as it changes more quickly and reflects the culture more directly. Cultures are proud of their native tongue. In todays modern world, concerns exist in many countries that ones language is becoming obsolete. France passed a law in February 1994 which became effective in 1996 that French radio stations have to devote at least 40% of their prime-time music programming to songs in French. This ignores the fact that English is the language of choice for the hip in France. The law also indicates every second French song has to come from so called new talent; the law does not require that the artists show talent, simply that they havent made any hits. Critics complain that the 40% quota is too high, citing the mediocrity and uniformity of French music production. France is seeking to protect its culture against what it considers the perfidious influence of the English language. Disney was taken to court because merely 7 out of 5000 items in its Paris retail store did not have French labels. (Parisian law requires all labels to be written in French.) French consumers prefer American television and tune out French programs. American films account for over 70% of all box office receipts in the

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European Union. (Jurassic Park had lines that stretched for blocks; meanwhile, the high budget French films, Queen Margot was moderately successful in France and flopped abroad. The French government considers this invasion American cultural imperialism. France spent $16 billion to produce cultural products in France in 1994, three-quarters of which came from the government. The European Union demands that 51% of all television programming be European. French moviegoers pay an 11% tax so the government can provide most of the funding for the French film industry. French language must be used on television and radio, in all the advertising, and in schools and workplaces. The use of an English term is forbidden if an adequate French term is available. The major blunders in language come from mistranslation, lack of understanding of slang or idioms in the native language, and use of wrong dialect. Exxons Japanese brand name, Esso, meant stalled car when pronounced phonetically in Japanese. Exxons replacement of Enco referred to a sewage disposal truck. Creap (Japanese coffee creamer) and Super piss (a finnish product for unfreezing car locks) were products introduced into the United States which, not surprisingly, did not prosper. The solution to avoiding such faux pas is back translating: having one translator translate a document or ad from the original language to the intended language and having a second translator independently translate the message back to original language. If the incoming and outgoing messages agree, the translation is likely to succeed. If there is disagreement, analysis of the message must be made, the message be changed, and back translated again until both match. For example, the term Entre means appetizer in Australia, but main course in Israel; if the product were labeled an entre, its price and market position would need to differ considerably in those two countries. Although back translation will solve the problems of literal translation issues, it does not eliminate the problems of whether or not the context of use is the same.

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Non-verbal communications
Non-verbal behaviour may be defined as any behaviour intentional or unintentional, beyond the words themselves that can be interpreted by a receiver as having meaning. Non-verbal behaviours could include facial expressions, eye contact, gestures, body movements, postures, physical appearance, space, touch and time usages which are different from culture to culture. Non-verbal behaviours either accompany verbal messages or are used independently of verbal messages. They may affirm and emphasize or contradict spoken messages. Non-verbal behaviours are more likely to be used unconsciously because they are habitual and routine behaviours. Over 70% of the content of any message is not contained in the verbal but in the non-verbal portion of the message. People will tend to emphasize the non-verbal element and override the verbal if there is disagreement between the verbal expression and the body language. An American attributes an unwillingness to engage in a frank conversation with an Indian who does not look the American directly in the eye; the Indian attributes to the American an attempt to control and dictate by means of direct physical confrontation. To look away is a sign of respect to Indians, while in the United States, respect is shown by looking directly at the speaker. In India, older people are automatically given respect due to their age. Touching an older persons feet is not an uncommon practice in India, a practice that shows respect for ones seniors. In contrast, the French have direct and intense eye contact that the Americans will attribute to aggressiveness and stubbornness. The French person meanwhile is likely to attribute weakness, casualness and insincerity to the American when the intense gaze is not returned or it is avoided. Americans also unknowingly create noise : slouching, chewing gum, using first names, forgetting titles, joking, wearing too casual clothing , being overtly friendly towards the opposite sex, speaking too loudly, being too egalitarian with the wrong people (usually lower class), working with ones hands, carrying bundles, tipping too much. Such noise in ones conduct, although

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perfectly natural in communication with another of ones own culture, may have the unintended effect of derailing the message when in a cross-cultural setting.

Religion
Religion has profound influences on the beliefs and practices around the world. CocaCola printed country flags on its cans in Spain; McDonalds did the same for its carry-out bags for its childrens meals in Britain both in an effort to capitalize on the World Cup soccer games in 1994. Muslims quickly became outraged. The green and white flag of Saudi Arabia featured an Arabic passage (there is no God but Allah and Mohammed is his prophet.) that they felt should be treated with reverence, not commercialism, let alone to be thrown out in the trash. McDonalds printed 2 million of the bags for the promotion while Coca-Cola had produced 270 million cans bearing the flags of the 24 world cup nations participating in the games. Both companies immediately ceased production of the offending products. However a smart marketer can also take advantage of religion. Historically, camera sales in Saudi Arabia were quite limited because of Islamic traditions. However, Polaroid instant photography enabled Arab men to photograph their wives and daughters without the need for strangers to handle the film in a processing lab. Consequently, sales boomed there. Beef is taboo for Hindus: Mcdonalds in India sells vegetarian burgers (made of soya beans). Animism, in which spirits and ancestors are thought to have an ongoing interest in the behaviour of the living, is not an unusual right. Thus, the smart businessman might want to consult an oracle about the priority of making a deal.

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Time
Time, how definite it is in our lives, how it affects our work, and the role it plays in our worldview, is a universal aspect of all cultures. A cultures attitude towards time determines the importance placed on the development of personal relationships in business. In a culture where everyone is busy, when there never seems to be enough time to get everything done, little chance or importance is given to building long term, solid personal relationships. In those cultures in which time is less of a constraint; a certain valuing of personal relationships exists. While Americans might expect a meeting to begin and end at a certain time with a series of important points discussed in between (linear logic), Latins typically arrive later than the time stated, expect to discuss a great many items not on the Americans agenda and keep the meeting going long beyond its stated time (circular logic). The Chinese generally believe that a considerable amount of time should be invested in establishing a general climate of understanding, trust, and willingness to help in matters quite apart from the issues brought to the table. They do not view time as a constraint or as a set of limits in which a particular task must be completed. International deals take longer to conclude than purely domestic transactions. McDonalds negotiated for nearly 10 years to open its first hamburger restaurant in Moscow. IBM needed almost 2 yrs to secure an agreement to build a computer plant in Mexico. Negotiating a joint venture in China takes an average of 2 yrs. The organization of most European and Japanese businesses, and their modes of operations, usually requires more time to negotiate than is the case of American firms. In the case on European firms, it usually take at least twice as much time and up to 6 times as long is often required for Japanese firms. The extent to which American expectations of the duration of any negotiation can differ from those of a foreign foe was demonstrated at the Paris peace talks to end the Vietnam War: the American negotiators checked into the Ritz Hotel while the north Vietnamese leased a Villa for 2 years. For the French, traditionally, concern is not on time but on precision and quality. While Americans typically opt for a deadline, the French will opt for taking what they call a reasonable amount of extra time to get the product or project to the level of the

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quality they believe is necessary. Americans see the deadline as more important while the French view the quality as their primary concern.

Space
While Americans feel comfortable with a space distance of three feet, Mexicans, Italians, and Arab men typically get extremely close to their counterparts. Right and left can take on different connotations: the Arabic and Hebrew languages are read from right to left while most western languages are read left to right. This affects the flow of logic.

WASHER THAT SPILLS DIRT

A three-panel advertisement for a laundry detergent showed dirty clothes and soap in one panel followed by a busy washer in the second and the third, on the far right, showing clean clothes.

Western reading

Dirty clothes & soap

Busy washer

Clean clothes

Arabic reading

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The ad was printed unchanged for an Arabic insert: to one familiar with the Arabic language, it appeared that clean clothes went in the washer with the detergent and after washing the detergent made them dirty!

In France, supervisors are placed at the center to watch and control the subordinates all around them. In Japan, where no separate offices exist and the work area is one large, open space, supervisors sit at one end of a room from where they can see and hear everything that is going on in the room. While window offices are of high status in the United States, the Japanese expression sitting near the window refers to employees who have been retired on the job.

Colour
In most parts of Asia, white represents death and must be avoided. Green denotes adventurousness in the United States and Japan but trustworthiness in China and Korea. In Taiwan, a man wears green to signify that his wife has been unfaithful. In China, the most popular colour is red; it denotes happiness. Black also elicits a positive response because it denotes power and trustworthiness. For decades, darkie toothpaste was among the bet-selling brands in Asia, with a package featuring a minstrel in blackface. Due to protests from African Americans, both the brand name and the package have been changed. Although blue is thought to be the most masculine colour to most Americans, in France and Britain it is red. Americans think pink is feminine, while most of the world considers yellow as feminine.

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Food preferences
Next to language, food and drink are the most culturally sensitive and grounded topic. Examine the differences inherent in eating breakfast. Traditionally, Germans eat bread with cheese or meat in the mornings, while Japanese eat rice-based breakfast. Unlike Japan, India is an ideal market for Kelloggs to introduce its cereal, since breakfast is a well-established daily meal in India. Since, milk is already a staple in most Indians diets, fewer cultural changes will be necessary. Even though most Indians eat a hot breakfast with traditional foods such as chapattis or dosas (fried pancake), Kelloggs is targeting Indias vast 200 million middleclass consumers. Nonetheless, it faces an uphill battle, as Indians are unaccustomed to waking up to western style breakfast cereals. Just 3 % of Indians eat breakfast cereal; most prefer cooked breakfast. The lifestyle of Indians allows them plenty of time to cook and consume a leisurely hot breakfast. Kelloggs assumes that people will pay a premium for convenience and speed. (Rs. 120 for a box of Kelloggs cornflakes compared to Rs.30-40 for an Indian brand.) Kelloggs is still optimistic.

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CROSS-CULTURAL MARKETING - PROCESS

Cross-cultural Marketing Research

Cross-cultural aspects of Products

Cross-cultural Sales Promotional Techniques

Cross-cultural Channels of Distribution

Cross-cultural aspects of Pricing

Cross-cultural aspects of service Quality

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CROSS-CULTURAL MARKETING RESEARCH

The use of marketing research as business intelligence has the same utility to marketers as military intelligence has for the general staff of the armed forces. Majority of mistakes could have been avoided if proper market research would have been conducted. The usage of marketing research in a cross cultural context is a necessary facet to assist a marketer in minimizing potentially fatal errors, especially those problems that might arise in cross cultural research when testing the role that certain sociological constructs play in buying behavior. Unilever introduced a super concentrated detergent version of surf to the Japanese market, only to find out that the pre measured package didnt dissolve in the wash; the product was not deigned to work in a new, popular low agitation washing machine, and the fresh smell was not relevant in Japan since most consumers hung their wash outside to dry in the fresh air.

Avoidable errors in Cross Cultural Marketing Research

Definition Error The way the problem is defined by each culture. A Readers Digest study reported that French German consumers ate significantly more spaghetti than the Italians; the study had taken into consideration only packaged spaghetti and not total spaghetti consumption (many Italians prefer to buy in bulk).

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Construct equivalence Construct equivalence consists of conceptual equivalence, functional equivalence and instrument equivalence.

Construct Equivalence

Conceptual Equivalence

Functional Equivalence

Instrument Equivalence

Conceptual equivalence: it deals with what the concept expresses attitude or behavior across cultures. The word family has different connotations in different parts of the world. In the United States, it generally means the nuclear family of parent and children. In many Latin countries, it means the extended family including grandparents, aunts, uncles and cousins.

Functional equivalence: does the concept serve the same function in different cultures. While refrigerators are used to store frozen foods in some countries and to chill water and soft drinks in others, in certain markets, they serve as status symbols and are prominently placed in the house, often in the living room and not in the kitchen.

Instrument equivalence: This measures the validity and importance of research questions. An instrument that measures a phenomenon uniformly in different countries is essential for comparative evaluation for markets.

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Social desirability An item or a question in a given cultural or social context should reflect in a proper way in the respondents culture. Sex is a taboo subject in India. Researchers need to determine if topics are socially acceptable or not.

Positives of Cross - Cultural Marketing Research

Success stories underscoring the value of research exist. P&Gs market research indicated that Japanese mothers are very concerned with keeping their babies clean and as a result, change their childrens diapers far more often than Americans do. In response, P&G devised Ultra Pampers; a more absorbent diaper that keeps the child drier and makes frequent changing a less messy task. In its research effort, P&G also discovered the value of storage space in the average Japanese home; the company made the diapers thinner to fit in a smaller space and take up less of the valuable home space. Ultra Pampers is now the market leader in Japan. Kentucky Fried Chicken customized its American product and strategy to suit the tastes of the Japanese consumers. By using indirect Japanese market research techniques, it promoted the restaurants as trendy and high class, not as fast food restaurants. After consulting directly with customers, French fries were substituted for mashed potatoes, the sugar content in the coleslaw was reduced, and fried fish, cold corn salad, and smoked chicken were added to the menu.

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Dominos initial market research in Japan indicated that home delivery of pizza was not feasible. The Japanese emphasized such foods as raw fish, rice and seaweed in their diets and dislike such pizza staples as tomato and cheese. Pizza is considered as a snack food rather than a meal, which makes it difficult to justify the high prices necessary to make the home delivery business profitable. The consumers who like the pizza most are the teenage girls, the segment of the Japanese population with the least disposable income. As a result, dominos reduced the size of its pizzas and used motor scooters instead of cars to counter the Tokyo traffic. To succeed in cross - cultural marketing research one should use short, simple sentences while also using a limited vocabulary and familiar words. Any research instrument must use categories, which are tested for relevance, and this often implies searching out other peoples categories in their own language. International researchers, when involved in cross cultural research, must understand and expect that such research will be more costly, take longer than expected, and that researchers must be more careful than in similar domestic research, especially in viewing and analyzing the results.

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CROSS CULTURAL ASPECTS OF PRODUCTS

Features

Product Brand

Packaging

Country origin effect

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A product is a bundle of utilities, a cluster of value satisfactions. Products can be classified as goods or services. A customer attaches value to a product in proportion to its perceived ability to help solve problems. Gillette often has to sell the idea of shaving before it can sell its blades. In some countries, facial hair is removed with a sharp edge of glass. To persuade these men that shaving can be easier and more comfortable, Gillette sends a van from village to village carrying its salesmen who are equipped with all the essentials. In those cases where shaving is common, other factors take precedence. To counter the discovery that few Mexican men who used shaving cream, Gillette introduced plastic tubes of shaving cream that sold for half the price of its aerosol cans. The effect of culture upon a product can be directly tied to the total product concept. As cultures vary, these differences are noted in tastes. The core product is often the same. Any product has a bundle of psychological features just as important as its physical features. These psychological features are instrumental in providing customer satisfaction. Different cultures provide different values to different psychological features. Adoption and potential adaptation of products can be effected as much by how the product concept conflicts with the norms and mores of the culture as much as it is by its physical features. Automobile styling shows distinct cultural patterns. German taste is rooted in nature and its slow changes and enduring quality. Thus, Mercedes designs change slowly and must be carefully balanced to last as long as they do. Nothing stands out on a Mercedes. All elements are carefully balanced. Conversely, the Japanese tend to put their cars in front of a wall whereas Westerns are apt to use nature as a backdrop. In Japan, tight streets cars are most often viewed close up; thus, the Japanese like those visual elements attractive to the eye when viewing the car in segments. Americans design cars to look their best from 20 30 feet away; it is this whole picture rather than details which is desired. While Westerns are attuned to remodeling, reworking, and changing a bit at a time, the Japanese are used to starting with a clean slate.

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Features
Features include a host of attributes. Some of the most obvious, and most important, are dimensions, size, capacity, and volume. A major cultural problem is the American system of weights and measures versus the rest of the worlds metric system. But other problems also bound for the unweary. Different physical characteristics of consumers often influence product designs. GE medical system designed a product specifically for Japan; the unit is smaller because Japanese hospitals are smaller and the typical Japanese patient is smaller. Swiss watchmakers make smaller watches for Japanese consumers respecting the fact the wrists of Japanese are smaller than most of the westerners. Local cultural tastes often have forced many international companies to modify components, and possibly the entire product to be successful.

Brands
Brands have staying power due to the promotional efforts expended by companies to create awareness and image for their brands. Standardization of both the product and brand are not necessarily consistent; a regional brand may have local features or a highly standardized brand may have local brand names. Global brands carry instant recognition and especially for international travelers represent a risk avoidance strategy versus using local brands. European consumers buy American goods for its quality, prestige and age. Goodyear sells its tires in Germany with advertisements of Indy cars. Coca cola uses Coke Lite as a brand name instead of Diet Coke in France since the term diet is restricted due to medical connotations and suggests poor health. Coca cola changed Diet Coke to Coke Light in Japan; Japanese women do not like to admit dieting and in Japan, the idea of diet implies sickness or medicine. Other name changes are not necessarily voluntary: in India, because of a ban on the use of foreign brand names, hybrid brand names are the norm; for example, Maruti Suzuki, Dom Toyota, Kinetic Honda, and Lehar Pepsi. Brand loyalty also can vary across cultures. Chinese

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consumers tend to be more brand loyal and tend to purchase the same brand or product other members of the group recommend; they tend to be members of a small number of reference groups.

Packaging
Packaging considerations depend upon the market for the product. In the case of a product targeted at a business, packaging is usually plain and functional in nature. For consumer products, the packaging becomes part of the promotional effort. Consumer products can be marketed by self - service or over the counter. In cultures where over the counter predominates, promotional considerations for packaging take on less importance. Government requirements can also greatly influence a products final design. U.S law levies taxes on certain chemicals destined for toxic waste dumps. In France, Amora ketchup (a local brand) overtook Heinz by introducing plastic bottles resembling rocket ships, a move Heinz matched. In Panama, Aunt Jenima pancake mix and ritz crackers are sold in cans rather than in boxes because of high humidity. The typical Japanese consumer will not purchase a product that is not well wrapped; a poorly packaged product conveys an impression of poor quality. To the Japanese, form is as important as function. Packaging must be beautiful and of high quality; it is expected to be aesthetically pleasing as well as functional. Packaging paper used for wrapping and bags are of excellent quality, and wrapping an item in three layers is standard practice. Laver Brothers sells Lux soap in stylish boxes because more than half of all soap bar purchases in Japan are made during the two gift giving seasons (winter and summer).

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Country of origin effect

The country of origin effect is an influence that the country of manufacture has on a consumers positive or negative perception of a product. The country, the type of product and the image of the company and its brand, influence the magnitude of the effect upon the global consumer. Industrialized countries generally have the highest quality image. This effect can also potentially cause the near extinction of local brands if they are deemed inferior. American and European consumer products have become so popular in China that they have eclipsed their Chinese counterparts. China has launched a buy Chinese campaign. Consumers have vague but definite stereotypes associated with various countries and products. Scotland is associated with Scotch whisky; France with perfume, wine and cheese; Italy with pasta; and America with cigarette, while channel No. 5 gains by being a French perfume, and Johnnie Walker a Scotch whisky. An Italian whiskey or German wine or Scotch perfume would be negatively influenced by the effect. Products made in Germany are more highly regarded by American than French consumers. In countries where another countrys image is high, a premium price may be charged for those types of products.

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CULTURAL INFLUENCES ON ADVERTISING

The way cultures react to communications and messages differ. Advertisers that understand these differences succeed. Those that ignore them fail. Korea is a word-ofmouth advertising country: a customers testimony is more effective than television or newspaper advertising; Koreans value the testimony of a friend, family member, or opinion leader. Likewise, Chinese consumers tend to rely more on word-of-mouth communications. The concept of family is important to the Chinese and is thus played up in advertisements. Non-verbal or visual advertising is most likely to satisfy a companys global market objectives. However, it should be noted that body motions are interpreted differently among cultures. In Japan, pointing to ones own chest with a forefinger indicates that the person want a bath. Symbols are not universal; snakes symbolize danger in Sweden while they represent wisdom in Korea. In Saudi Arabia, (and many Arab nations) it is against the law to publicly advertise symbols that contain Christian or Jewish connotations.

Cross cultural advertising

Cultural differences can create problems when potential customers translate the message into their own cognition. The rugged cowboy image of the Marlboro Man was unsuccessful in Hong Kong where the urban population did not identify with horseback riding in the countryside. Philip Morris changed its ad to reflect a younger, better dressed; truck owner and success ensued. P&G found that its ads for Camay soap did not work in Japan because the ad featured men complimenting women on their appearance; the directness was not well received. In another Camay commercial, a Japanese husband was shown in the room while his wife was bathing, an invasion of privacy the Japanese 29

consumers found distasteful. When the commercial was revised so that the man was removed from the scene, but with a male voice narrating, the commercial was very successful. As always, when dealing with different cultures, translation problems can be, if not fatal, at least embarrassing. Cultures in general do show distinct differences regarding tastes for their advertisements. French advertisements use more emotional appeals than American advertisements, but American advertisements contain more information cues. Sexual appeals are more frequently used in French advertisements than in American ones. A Nivea print advertisement was banned in the United States for indecent exposure, but the same message and image had been used in Germany without any controversy. The French use humour more frequently in advertising than Americans. American commercials are more information laden than British commercials, which tend to be more entertaining. A typical British ad will always contain some element of fun, whereas the Germans tend to applaud technical perfection.

Japanese Advertising
Japanese advertising is designed to appeal to emotions, produce good feelings, and create a happy atmosphere. Japanese ads are visually attractive and eye catching, featuring bright colours. The Japanese often use symbols and strong gestures in their television commercials. Japanese ads may be humorous and appeal to the consumers intelligence; however they do not convey much product information. Japanese advertising is emotional, suggestive and indirect, while Western advertising has more a verbal, direct message and is logical. Toyota created two versions of a Japanese ad for one of its automobiles. Engine was a straightforward, to the point presentation of mechanical excellence of the new car. Bird had the same message, but superimposed on it a scene of an open road and the symbol of a bird. Bird was by far the more successful ad. Mechanical qualities are often taken for granted by the Japanese, so the emotional aspects

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are more important. The mobility of having a car affords the average Japanese consumer psychological escape and freedom, well symbolized by the open road and the bird. Direct comparisons with the competition are almost never used in Japan. It is taboo for any company to acknowledge the existence of its rivals, let alone attack or put down a rival. The accepted Japanese industry norm is to avoid slandering and attacking competitors.

Requirements for cross cultural advertising

Understand local regulations and their effects on advertising. Do not assume that just because a commercial appeals at home it ill also appeal to foreigners with equal effectiveness. Create a global theme, but localize to particular markets as necessary. As advertising objectives vary from market to market, customize objectives for each target market designated and do so with the culture in mind. Clearly designate the target audience within the target market. Examine media alternatives available within the target market. Review local agency availability and capabilities.

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CROSS- CULTURAL SALES PROMOTIONAL TECHNIQUES

Coupons

Sales Promotion Techniques

Public Relations

Gift Giving

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Sales Promotion consists of those promotional activities other than advertising, personal selling and publicity. Common promotional tools include coupons, sweepstakes, games, contests and event sponsorships. Differences in preferences for sales promotional tools are a direct expression of cultural differences. Sales promotions are likely to be less effective where mass media coverage is poor. The use of promotion requires some sophistication on the part of the retailers in the targeted country. Corporate event sponsorships are big in Japan; it typically costs several million dollars for a tournament on the Japanese Professional Golfers Tour. Major tennis tournaments go for one tenth of that amount. In addition, the title sponsor must generally buy two thirds of the television advertising time. Coca Cola spends over $2 million a year in Japan on community sports programs with its independent bottlers spending half as much. The great disparity in income throughout the world is an important obstacle to worldwide product standardization. To achieve market penetration, firms must either modify their product or produce a different, less costly product.

Coupons
By offering a rebate through coupons, a manufacturer can attract some consumers who are otherwise more inclined to buy a competing brand. Sending out coupon allows the sellers to separate market segments with different degrees of consumer brand loyalty. This kind of price discrimination is profitable for the seller when the cost of couponing is sufficiently low. Couponing increases competition and reduces profits. The use of couponing is advised when considerable price sensitivity exists for the product category or when brand switching is common. Coupons provide a catalyst for consumers to choose one brand over another when homogeneity between brands is perceived. The use of coupons is often an effective way to give new users for a brand and to stimulate repeat

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purchases. P&G in December 1995 to notify several selected markets that it was eliminating coupons. The company was investigating several other substitute marketing programs including everyday low prices. P&G studies have indicated that for most consumers, coupons are not an efficient promotional tool and they offer only limited benefits to manufactures, distributors, and consumers. Couponing elsewhere around the globe has seen variable results, even dying out in some countries. In general, coupons require literacy and some sophistication on the part of retailers and consumers. Coupons also require a well-developed backward channel to handle their redemption. Coupons also require well-developed print media for new product introductions. In general, coupon distribution and redemption is related to the marketing sophistication of the culture; in those advanced cultures such as the United States and the UK, it appears that coupon usage is decreasing, while in cultures where marketing sophistication is relatively low but increasing, greater coupon usage can be found.

Public Relations
The Japanese have little concept of public relations in the American sense. Since the Japanese are very modest and self effacing, they cannot understand self promotion. They have little need for corporate public relations. The tendency of the Japanese to be closemouthed and even secretive about their business is a result of several cultural and economic factors. Traditionally, Japanese society has been closed made up of exclusive groups and groups within groups. Each group is very sensitive about its existence, responsibilities and privileges and is basically hostile to all other groups. China generally lacks skill in public relations. Chinas Communist led system is to blame with its principle that the center of power is identical with the center of truth. It is more important for leaders in Beijing to show that they are in control, even

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when they are not, than to worry about the public relations consequences for their country. Public relations can be a major influence at the corporate level as well. The bad press and boycotts that come with doing business with dictators can outweigh the benefits. That is why PepsiCo sold its minority share in its joint venture bottling

company in Burma to its Burmese partners.

Gift Giving
The original meaning of gift giving in Germany, schenken (giving), meant to pour, to give a drink and was the oldest form of honour. On the other hand, it was only synonymous with the term bond because gifts were often directly bound or pinned to the body of the recipient, showing the idea of a tie established by the gift. In archaic societies, this idea serves as basis for gift giving: everything is linked to its original owner. Giving away a personal object means giving away a part of ones spiritual essence and creates a bond between oneself and the recipient. In United States, it is acceptable for a boss to give his secretary roses to express appreciation for helping to close a big deal; in Germany and in many Latin countries, such action would be seen as a sign of romantic attachment and therefore inappropriate. One must attempt to match the recipients status. Over and under giving can cause embarrassment and be counterproductive. In gift giving, as in everything else in Japan, attention to rank is essential. Gifts must be graded according to rank. If the president receives a gift equal to that given to the vice president, the former will feel insulted and the latter embarrassed.

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CROSS CULTURAL ISSUES IN SALES MANAGEMENT

The sales management process varies greatly across cultural and political borders. Manufacturing Data Systems Inc. (MDSI), a producer of computer software, finds that a sale in the United States requires an average of two calls per sale. In Europe, frequent callbacks are necessary, each time with a higher level of management, expending more time and cost. In Japan, a sale requires even more time than in Europe. Electrolux finds its direct sales force requires an average of only five demonstrations to make a sale in Malaysia, but 20 in the Philippines. Since bargaining still dominates the exchange process in Saudi Arabia, merchants are heavily dependent upon personal selling to conduct their transactions. Only in the United States and a few other countries it is normal to do business from a distance, between strangers, by mail or phone. Americans tend to be extraordinarily preoccupied with the tangible aspects of a product during the sales presentation instead of the people side. The British believe that Americans talk too much about nothing or talk about things Americans know about. Asians believe Americans are not sufficiently humble and become skeptical when they feel Americans are over confident. The Swiss say Americans are too absolute in their claims. In many cultures sales people are not held in high esteem; in Europe, for example, selling is not considered to be a socially acceptable occupation; in France, sales person are routinely referred to as consultants or commercial attaches. In Thailand, Malaysia and India this negative perception limits the sale process to persons of similar social strata. An American company invested a large amount of money in recruiting and training forty young Brazilians in sales techniques for an entire week. On the following Monday, the Brazilians were told they were going door to door selling the product. The Brazilians were appalled; it is beneath the dignity of Brazilian men to ring door bells and talk to women about a product.

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Cultural influences on sales process

Religious or cultural beliefs often influence the selling process. Salespeople from one tribal or religious group often cannot sell to another such group in their own country. Car salespeople in Japan deliver a car to a consumer on a lucky day; contractors check for an auspicious day before breaking ground; insurance salespeople are careful to pick a good day before asking a customers signature on a life insurance policy. One American firm arrived in Japan to negotiate a joint venture agreement with a contract already in hand. In the first meeting with their prospective partners, the Americans placed copies of the proposed contract in front of the astonished Japanese. The Japanese perceived the behavior of the Americans in presenting a legal contract at the beginning of the first meeting extremely rude and inept and decided it would not be wise to conduct further business with such a firm. Customs and manners are also important. In Brazil, it is important to dress as your customer dresses, formal or casual. In Switzerland and Germany, it is considered rude to shake hands across desks; instead, executives walk around their desks. The English do not, as a rule, make deals over the phone. A proper Frenchman neither likes instant familiarity nor refers to strangers by their first names. Germans dislike overstatement. Visiting salespeople should expect to be invited to long banquets when selling to and negotiating with the Chinese; the expected result of these banquets is a drunken guest; otherwise, the guest is believed not to have had a good time. Language, as in any cross cultural situation, could provide its share of obstacles. In Mainland China, the people say no problem frequently; this actually means there is a bit of a problem, but that it is not serious. When they say, there is a little bit of a problem, this implies that a task will not be completed at all unless special action is taken. The Japanese salespersons role does not stop with the purchase order. A computer salesperson should be present for meetings before installation, at the installation, and even when an engineer adds a piece of hardware or software. When a change in a delivery schedule is inevitable, neither a letter nor a phone call is sufficient a personal visit is mandated. When a Japanese company asks suppliers to do something, even if it is impossible, they will never say no. They will go through the motions and show they are making a sincere effort to meet the request, no matter how illogical or

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impractical. Japanese salespeople usually have poor selling skills. In Japan, the selling profession lacks respect. In the Japanese business culture, the route to the top goes through manufacturing, not marketing and sales as in many an American company. In any company, the sales division is shunned by most self respecting salary men. New employees are almost forced to spend time in sales division before moving on. Unlike the Chinese, who will spend hours bargaining, and enhancing the value of their wares and managing to raise their prices slowly over time, the Japanese want to get the whole thing over with as soon as possible.

Suggestions for cross cultural sales management

1. Become culturally sensitive and seek out cultural differences and the implications they may have for the sales process. A contract between Boeing and a Japanese supplier called for the delivery of fuselage panels to have a mirror finish. Labour costs were higher than expected because the supplier polished and polished the panels to achieve what is believed to be the desired finish, a literal interpretation. All Boeing wanted was a shiny surface. 2. Research the business protocol for countries in which one plans to do business. Be respectful of local business protocol. Know when to talk business and when not to. 3. Expect a slower selling cycle. 4. One should walk a fine line between being ethnocentric and being totally polycentric.

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CROSS CULTURAL CHANNELS OF DISTRIBUTION

A channel of distribution is the path the goods take from the manufacturer to the ultimate user. A channel provides the services needed to make a product available when it is demanded and in the quantities demanded by the customer. For business to business goods, the path is short, usually directly between manufacturer and the customer via the direct sales force of the manufacturer, or often with an industrial distributor or manufacturers representative acting as intermediary between two endpoints. For consumer goods, channels are usually longer and typically have one or two levels of wholesalers before reaching the retailer and the final consumers. International channel alternatives are many. Distributors, agents, commission houses, import merchants, brokers, jobbers, trading companies, cooperative exporters, state trading companies and franchises are among the potential intermediaries. Distribution in underdeveloped countries is characterized by small intermediaries. Distribution is slow and inefficient in underdeveloped countries because the population is widely scattered, inventories are low, costs of capital are high, middlemen are few, and margins are high. Developing countries are typically sellers markets where the balance of power within the channel tilts towards the supplier. Coupled with the fact that the typical dealer in developing countries such as India is small and is attributed a relatively lower social status, this leads to asymmetrical power relationships and communication flows that are mostly unidirectional from suppliers to dealers. In such economies, the suppliers are typically provided with a superior position as the providers in an undersupplied economy. The attitude toward the middlemen in underdeveloped countries is generally negative. This feeling exists because the people tend to emphasize production and consider the intermediary unproductive. The result is often that this function is done on the side or secretly, which makes distribution overly difficult. In addition, since intermediaries in such undeveloped markets are typically not considered productive by the locals, few locals act as intermediaries; the vacuum is usually filled by foreigners. The importance of distribution even in a closed society can be seen in the example of Korea. Kodak Film has become Koreas most popular brand of colour film

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through its link with the Doosan Group, while Coca cola, not being allowed to participate in the distribution business, assisted its bottlers in marketing, promoting and selling its products by training its sales agents, and even providing marketing kits for the retail outlets.

Cultural influences on distribution channels

Channels must differ by country and culture since where consumers buy certain goods also differs country by country. In Germany, contact lens solution is only found in stores that sell eye glasses, while in France, it is found in most drugstores as well; magazines can be found in retail stores in the United States while new agents are the exclusive channel for magazines in the UK. Baby foods are predominantly distributed through pharmacies in Italy, while Germans can buy them in grocery stores. Sometimes what works in the United States does not work elsewhere in the world; the converse is also true. Although the number of Benetton stores worldwide reached 7000 in the early 1990s, the number of U.S stores dropped below 400, half of the total number of U.S stores five years previously. The Reason: controversial ads (AIDS, rainbow condoms) may have been acceptable in liberal Europe, but backfired in more conservative American locals. Italian distribution is characterized by a very fragmented retail and wholesale structure. In the Netherlands, buyer cooperatives deal directly with manufacturers. In Germany, mail order sales are important; it is not so in Portugal. In Norway, regional distributors predominate. Consumer cooperatives have traditionally been popular in Europe; they control almost one quarter of food sales in Switzerland and claim one third of Swiss households as members. Over 80% of Kenyas retail and wholesale businesses are controlled by Asians.

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Procter & Gamble worked with this traditional system. In Japan, P&Gs marketing task was to convince Japanese mothers that they are not lazy or uncaring if they use disposable diapers. P&G entered the Japanese market for disposable diapers by giving away millions of samples to customers. This not only provided consumers with a free taste of the product but also established obligatory relationships through out the distribution channel. Wholesalers and retailers had to return the favour, which they did by setting up special displays showcasing the P&G product in Supermarkets, departmental stores and family shops.

Franchising
Franchising is growing in popularity in every corner of the globe; much of its success is attributed to the 94% success rate it has achieved in the United States. McDonalds put its first European fast food outlet in a suburb of Amsterdam, thinking it would be just like a suburb in Chicago; in both cases, the companies found that most Europeans and Japanese live in central cities and are less mobile than the average American. Central city locations were more efficient, productive and profitable. When McDonalds chose a French partner it did so after extensive review and reference checking. However, initial inspection of the French restaurant alarmed the American staff. Hygiene habits were observed that were considered unacceptable in its U.S. outlets; the French are less concerned about cleanliness than are American attitudes at home. These habits were not viewed negatively by he French partner or by most of the French consumers. The major problem was that many of the outlets customers were American tourists expecting American standards. Other franchises have adapted well to foreign cultures. Big Boy serves no pork in Saudi Arabia, male waiters are substituted for waitresses, and separate seating areas are provided for men, for families and for women and children.

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Regulatory restrictions on cross cultural distribution

Although regulations and non tariff barriers are not culture bound. Culture and the norms within a culture certainly affect the regulations and legal standards within a country. If the regulations were not acceptable to the countrys dominant culture, they would not stay on the books for long. Therefore, by gazing at the regulatory restrictions that affect international channels of distribution, we are also examining culture. Europe and Japan, even though industrialized and developed, offer a variety of interesting and restrictive practices within the distribution network. Sweden has its town planners decide on the locations of retail outlets, so that thinly populated areas, as well as elderly and handicap customers will be served. Many European countries protected owners of small shops by regulating the placement and types of new stores that could enter the market. Developing countries often discriminate against franchising because it is viewed as a marketing system rather than as an economic contribution to the country. Many Asian countries view franchise agreements as instruments of exploitation. It is argued that trademarks cause prices to rise without a corresponding increase in the quality of product and / or service. Thee countries fear that persuasive advertising will lead to resource misallocation and ultimately to an adverse balance of payments. An often overlooked but critical factor is termination rights of the intermediary in another country. In the U.S, termination for non - performance is a relatively simple and accepted practice. In other cultures termination can be a costly and lengthy process.

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CROSS CULTURAL PRICING

Pricing effect is affected by factors such as cost differentials, demand conditions, and national laws. Pricing can be set by any number of techniques including cost, market, demand based, profit. Each technique has its advantages and disadvantages. Each culture has its own preference on pricing strategies and of which techniques to use. The final determinant of price may be irrelevant to costs; image and quality may be the primary determinants. For instance, BMW may have a comparable cost as an Oldsmobile, but to price it likewise would cause BMW to lose much of its image quality. Two major pricing tasks face the international marketer: pricing for export and pricing for the foreign market. Export pricing involves a marketer in a firms home market, cross border pricing. Foreign market pricing involves setting the price that will be paid by local buyers within the foreign market. Incomes, cultural habits, and consumer preferences differ from country to country. All three influence desire for a product and hence elasticity necessarily differs between any two countries or cultures. Thus, for the same product in two different countries or cultures, two different prices may be demanded and received. The cultural background of parent company executives often influences a pricing strategy. Canadian and Scandinavian prefer market systems; U.S., English, French and Japanese firms use predominantly cost oriented ones; and Italian, German and Dutch firms tend to use combination systems. Cost plus pricing is not the recognized price setting formula as found in the West. Management must first set the price and then see how costs can be brought into line. This is similar to Texas Instruments famous learning curves approach. The selling price is dictated by competition with other companies in the same industry. Companies must then reconcile costs with selling price. The main weapon of a sales department is low price. This strategy involves aggressively setting low prices to win market domination and then rapidly improving production to bring costs in the prices. Japanese marketers spend as much time discussing the right price for an article as they do discussing the right price for an article as they do discussing the product or its promotion. The price has to be what the consumer expects to pay. Once a price is established for a

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product in Japan, considerable difficulty exists in raising it. This makes initial price setting more important than in the West because prices must not change; one has to pick a price that one expects to be bound to for many years. P&G introduced Cheer into Japan by discounting its price, a common practice in the U.S. This only lowered the soaps reputation in Japan. P&G also discovered that once it discounted its product in Japan, it is extremely hard to raise the price again. Wholesalers were alienated because they made less money due to lower margins. Small retailers have limited shelf space and do not like to carry discounted products because of the lower per unit profit earned.

Japanese Pricing Strategy

An aggressive penetration pricing strategy in Japan is directed toward gaining and holding market share, particularly abroad. When operating overseas, the Japanese concentrate on pursuing market share rather than profits. But as long as the Japanese companies have adequate financial backing they have a high probability of success. Japanese exporters absorb significant cost, which impact profits in their home currency, to maintain and perhaps expand market share in their export markets. Market penetration traditionally has been a much more important pricing objective than quick profit taking with a skimming approach. The Japanese system of sales price determination is known as tatenesei. A manufacturer fixes the retail price of each product, tells wholesaler the price at which each product is to be distributed to retailers, and demands that retail stores throughout Japan strictly observe the retail price is set by the manufacturer.

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CROSS CULTURAL ASPECTS OF SERVICE QUALITY

Services continue to increase in importance within national economies. Services make up 20 to 30 percent of world trade and have a growth rate estimated to be up to 20% annually. Thus, opportunities for growth at world market level are considerable. Yet, barriers to services exist and can be immense; most of the non - tariff barriers are aimed at services. Services have particular product dimensions that make global service that make global service marketing management different from that of physical goods. The growth in services internationally can be attributed to two principal factors: changing lifestyles affected by affluence, leisure time, and women in paid employment; and the changing world affected by the increased complexity of life, ecological concerns, and the variety and complexity of products available on the market.

Potential Hurdles in cross - cultural services

Several potential problems of the service industry are found when the subject of internationalization is discussed. Services tend to be labour intensive and internationally, barriers to labour mobility across countries exist; as such, services tend to export capital, technology and information that can be combined with local labour to recreate the imported service locally. A second potential barrier is the mobility of the service product offered. Mobility is prized in international trade; this is especially true for financial instruments and skills. Some services are more mobile than others. Retail establishments, due to their need for physical plants, are not as mobile as are insurance industries.

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The third potential hurdle is infrastructure. All service operations have some physical aspects. A bank needs a building and a vault. In order for a service entity to be successful, the required physical infrastructure must be present. The fourth potential problem is of cultural transferability. Some markets may be more culturally indifferent to particular services or prefer particular services than others. Consumer services in particular travel poorly.

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CROSS CULTURAL MARKETING HICCUPS !

Language
A Spanish translation for Budweiser: King of Beer used the wrong gender; Beer (cerveza) is a noun of the feminine gender in Spanish, and therefore cannot be the king, but must be Queen of Beers. Cue toothpaste was introduced in France by Colgate Palmolive who did not realize that Cue in French is a pornographic word.

Research
CPC International wanted to introduce Knorr dehydrated soups to America. They initiated market research by taste test comparisons. Americans indicated their preference for the taste of knorr. Knorr even reformulated its European product to make sure the soups appealed to American tastes. Upon positive receipt of the extensive tests showing strong preference for the Knorr product, CPC decided to go ahead, straight into a disaster. All the taste tests were performed with already made soups. When American consumers discovered that the soups had to be prepared and were not ready to eat, failure resulted. The taste panel tests did not simulate the actual market environment for the soup. The questions asked did not reflect the true scenario.

Packaging
Packaging can become an integral part of a products success or failure. Legos Bunny Set promotion, where the block toys reside in a bunny shaped storage case failed to impress the Japanese. The Japanese considered the bunny pack as superfluous and

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objected to the notion of being forced to waste money on unwanted products. On the other hand, Lego was slow to match Tycos storage case buckets in the United States, and only did so after Tyco had severely eroded its market share.

Advertising
Misunderstanding or a lack of understanding of differences between cultures also have led to a number of advertising mistakes: Ralston Purina used a toy bunny in Hungary in ads for its Eveready Energizer batteries; Hungarian consumers thought the ad was touting a bunny toy, not a battery. When a baby care company advertised soap to Hungarian consumers showing a young woman holding her baby, Hungarians saw an unwed mother. The model was wearing a ring on her left hand; Hungarians wear wedding bands on the right.

Sales Management
An American salesperson visits a Saudi official for an introductory meeting for a new product. The Saudi offers the American coffee, which is politely refused. The Americans sits down and crosses his legs, exposing the sole of his shoe. He passes documents to Saudi with his left hand, inquires after the Saudis wife, and assertively pursues the deal. Within the first ten minutes of the business conference, the American had unwillingly offended the Saudi five times.

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CONCLUSION
As mentioned in the hypothesis in order to cater to different demands of different cultures, companies indulge in product variances and inculcate Cross cultural marketing, this stands true as seen through the project, all companies who decide to go global have to adhere to the cross cultural marketing process. Gone are the days when companies could Push the products in the market. Now, companies have to cater to the demands of different consumers and provide the desired products. Companies failing to do so would fail in the corporate world. In todays cut - throat competition the consumer is the King, this enforces companies to be market sensitive. Taking into account the success and failures of companies who have gone abroad I would suggest a few guidelines for the international marketers. Be sensitive to the taboos and develop cultural empathy. Recognize, understand, accept and respect anothers culture and differences. Never assume transferability of a concept from one culture to another. E.g.: Just because local business people in developing countries tell you they dont like Americans, it does not mean they dont want to buy American goods. It simply means they are expected to say certain things in public, but that they may operate differently in private. International marketers should avoid the Self Reference Criterion (SRC). SRC is the concept that if I like and use a product, everyone should; if it sells well in Peoria, it should likewise in Beijing. As an example, examine marketing Texan Iced Tea to the United Kingdom: Examine those cultural and environmental attributes of the product they wish to market that make it a success in their home market. Compare these attributes to those found in the target market. Note the particular attributes where substantial differences exist.

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 Changes in the product or promotion must be made to account for the differences noted. In some cases, differences are too great, and the best option is not to enter.

Suggestions for Cross Cultural Marketing Process

Cross cultural research One should use short, simple sentences while also using a limited vocabulary and familiar words. Employ active rather than passive words. Repeat nouns rather than using pronouns. Avoid metaphors and possessive forms. Any research instrument must use categories which are tested for relevance and this often implies searching out other peoples categories in their own language. In addition one must be aware of response bias. The interpretation of results should be done with local advice so that explanation of reason is not biased by ones home culture.

Cross Cultural aspects of Products To increase the likelihood of success when a company is proposing to market products into a new culture back translating should be used to minimize the chance of a product or brand name being offensive to the host society. Marketers should understand and follow any special governmental regulations concerning packaging, labeling and quality standards of products. An understanding of how a product is currently being utilized

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within the cultural norms will help marketers to recognize which aspects of a product must be adapted in order for any success to be realized.

Cross Cultural Advertising One must understand the local regulations and their effects upon advertising. One should not assume that just because a commercial has appeal at home it will also appeal to foreigners with equal effectiveness. It is always good to create a global theme but one should localize to particular markets as necessary. As advertising objectives vary from market to market, customize objectives for each target market designated and do so with the culture in mind.

Cross Cultural Channels of distribution Channels chosen must take into account the country and culture so as to maintain acceptability and credibility within the target market. Global companies must extract the following advantages from the intermediaries: Cost savings from global intermediaries can be substantial. Assist the import/export documentation, custom clearances, and international banking requirements.

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Cross Cultural Pricing Effective pricing is a major element in the successful international business operation. Companies must counter the following: Variable distribution and marketing costs Fluctuating exchange rates Differing perceptions of the product Local competition A global company needs to pay attention to the possibility of parallel imports because they can cause irreparable damage to a companys image and profits. When a company goes global, it has to price its products in different countries and develop a standardized pricing policy. However, it is realistically not practical to set the same price in every country because of the differences in purchasing power parity.

Competition wont decrease but increase the need for survival. The companies can make those minute changes or even major changes to make their products successful in the foreign country. As the technology has crossed all borders so has trade, transforming the world into one market.

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BIBLIOGRAPHY

Books Referred : Marketing Management Philip Kotler Cross Cultural Marketing Paul . A. Herbig Essentials of Business Environment K. Aswathappa Global Marketing Management Allyn and Bacon

Internet Sites Referred : Google. Com Askjeeves.com Internationalmarketing.co.in Coke.com

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