How to Deal with Cultural Diversity in the Marketplace? – Explained!

It is the culture, a fundamental determinant of wants and needs on the one hand, and the key to effective selling and positioning on the other. Wal-Mart, a US company could not do well in Germany because it did not go for cultural due diligence and customisation. It did not build its strategy on the basis of cultural competence.

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How to deal with cultural diversity in the marketplace? There are two schools of thought to deal with. One school says go for global standardisation as has been the case with Coca- Cola, Sony and McDonald’s. This approach will help in saving the cost, more sales and promoting one brand/corporate image worldwide.

Another school prescribes that companies must focus on geopolitical and cultural factors that shape customers in particular countries and customize their goods and services for the nations. Many countries believe in regional approach rather than country-specific approach. The truth is that today there is hardly any company following exclusively global approach.

That is why Coca- Colas sweetness and carbonation is not the same everywhere and McDonald’s uses lamb instead of beef in India and chili sauce instead of ketchup in Latin America. Papa John (a pizza chain) develops a pizza menu that suits a nation’s specific taste profile.

In Latin America it has pizzas with spicy flavours and tastes, in Korea it has added ‘Bulgogi pizza’, in Russia the pizza features ham, bacon, mushrooms, fresh tomato and a creamy spinach, in Portugal the pizza contains delicious shrimp, and in India the pizzas include Papa’s Tikka, Mutton Mazza, Keema Keema, Hot Pepper Passion and Papa’s Paneer and in sauces Mint Chutney and Tamarind Sauce.

i. Consumer Behaviour:

‘Markets are people, not products. There may be global products but there are no global people. There may be global brands but there are no global motivations for buying those brands.’ For the Sony’s Walkman the motivation in the Western world is enjoyment of music without being disturbed but the cofounder of Sony wanted to listen music without disturbing others.

It means how people behave as consumers, behave and what motivates is largely a matter of culture. How they relate to each other in the buying process, whether their decisions are individual decisions or group decisions, all decisions are culture bound. Sheth, Newman and Gross have classified five consumption values – functional values (need satisfaction from utilitarian physical attributes); social values (utility as an association with one or more social groups, e.g., social class, reference group, opinion leadership, diffusion of innovations and symbolic value); emotional value (ability to arouse specific emotions); epistemic value (novelty seeking, curiosity arousal, knowledge seeking, and willingness to innovate); and conditional value (functional or social value in a particular context like wedding cards).

Groups influence consumer behavior in every society. But the role of group, its reference function, and the individual’s place and the role in the group vary by culture. In an individualistic society – people can change social class, children are stimulated within the family to develop their distinct identity, and individual is given precedence over the group. Whereas in collective societies, people cannot easily shift to other social class and children are born as part of a group which provides them an identity.

The purpose of joining clubs is different in the two cultures. In masculine and large power distance cultures people derive their status through joining groups. But in feminine culture status is considered negative and people join a club to fulfill affiliation needs.

In high power distant cultures elders and superiors play an important role in decision making. In collective cultures the decisions are made in consensus with the group thus not making an individual decision. In feminine culture the spouse plays a strong role in decision making.

In Belgium, the husband can buy a car without consulting his wife, but not in the Netherlands. Members of the inner and outer circles play different roles in collective and individualistic cultures. In Japan, housewives refer to an average group of eight other housewives who influence their decisions but in an individualistic culture decision making is an individual activity.

The need for information and the type of information, the credibility of the source, and the degree of source are culture bound. In collective cultures building relationships with business partners is focused (trust in the company) but in individualistic cultures the focus will be on performance (trust in the brand).

Table 4.10: Cultural values and their Relevance to Consumer Behaviour:

With regard to time orientation, buyers in individualistic cultures are motivated by rime saving appeals but not in coffectivistic cultures. Does decision lead to action? Answer is uncertain. If 55% of the people who try a new product in Italy, they will say the product will definitely fail. But in Japan if 5% say they will certainly buy, the product will succeed. Adoption of new products in collectivistic culture takes longer (what is new is dangerous) than the individualistic culture (what is new is exciting).

Consumer decisions in different cultures are driven by different needs. A bicycle fulfills a functional need for a Chinese but a social need to many Americans (to keep fit or socialize). In India urban women spend a lot on personal grooming and dress when they go in public but not when they go out in public in the US. A mobile phone is a fashion statement in masculine culture hence people go for expensive and latest cell phones, but in feminine culture a phone is merely of a functional value. Credit cards have not been as popular in high long-term orientation culture as they are in low long-term orientation cultures.

Why brand loyalty, brand preference, brand image etc. differ in different markets can be understood through variations in consumer motivations which are always culture bound.

ii. Advertising (Marketing Communication):

The way advertising works is culture-bound. The difference is between communication styles – “the high-context and the low-context communication and the way people process communication and their expectations of the role, purpose, and effect of communication.” American TV is more action oriented than the Finnish TV. Japanese novels do not have happy ending. Fun is not a Russian concept.

This difference in style is because of two reasons. One, across the cultures one must find the context. In high- context cultures ads make use of less copy and of more symbols. Whereas in low-contest cultures communication uses more copy, facts and figures, and arguments.

The purpose of communication also differs across the cultures. In Japan, the purpose is to create a good relationship between people and products. But Americans look at advertising as a means to persuade others, to change attitudes, and to influence behavior.

Information processing varies according to associative thought versus abstract thought and inductive (begin with facts, data and drawing conclusions from those) and deductive (begin with a philosophy, a theory, and collect data and facts to prove it) thinking.

Differences in thinking affects balance between copy and visuals. In France magazine advertising contains 90% of visuals and in Germany 80% of advertisements comprise of copy. Not only basic appeals and motives but the basic forms or styles of execution vary by culture.

Franzen has identified 8 basic forms: announcement (presentation of facts without any people); display (primarily on a product’s presence); association transfer (product combined with another object, person, or environment); lesson (direct communications meant to lecture the audience); drama (indirect communication entailing interplay between two or more people); entertainment (indirect communications in the form of musicals, shows, comedies, slapstic humour, horror or satire); imagination (non-realistic presentations of a make believe world); and special effects (all sort of artistic elements, animation, cartoons, camera effects, recording and video techniques, music and tunes).

The dominant form differs among countries – in UK it is lesson, in France it is drama, and in Germany it is association and imagination. Display of female body, linguistic confusion in translation, ethnic origin of actors in TV commercials, skepticism or acceptance of the advertiser’s message, etc are culture bound.

iii. Channels of Distribution:

Purchasing habits of potential customers is an important factor affecting distribution decision. Shopping habits are largely formed during their teenage years. The way in which Japanese channels of distribution are structured and managed explains one of the major reasons for the apparent failure of foreign firms to establish major market penetration in Japan. Changing existing distribution systems may be quite difficult.

It is the society which decides preference of venues (e.g., bazaars or shopping malls), facilities for women shoppers (e.g., changing rooms) or acceptance of certain consumers (like children in bars). The channel strategy is to be formulated by in-country management. However, it must be in conformity with the total marketing communication. From a cross-cultural view, distribution strategy is influenced by environment, time, form (size, colour, shape, etc), and relationships (with channel partners).

iv. Price:

Different are the cultures and different are the prevalence of bargaining, attitude towards imported products, and expectation of extra benefits like discounts, guarantees, service, delivery etc. In China, while pricing one has to be very particular with two digits, eight and four.

While eight is associated with prosperity and good luck, four is associated with death. In rural Africa, chewing gum is sold as individual sticks and not as a pack of five in order to make it affordable to local population. Depending upon the environmental context of the market(s) the three alternatives may be pursued:

a. Ethnocentric: one price: one price all over the world

b. Polycentric: price in accordance with sensitivity to local or regional market conditions

c. Geocentric: price in sensitivity to global and local conditions.