Intercultural Marketing

Theory and Practice

Ivana Beveridge

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000218091
• Edition: 1
• Topic: Business
• Subtopic: Consumer Behaviour
• Index: Business

With companies actively marketing products and services beyond their borders, marketers must understand culturally ingrained consumer behavior throughout the world. Focusing on psychological and social dimensions of these behaviors, this textbook brings together academic research and contemporary case studies from marketing practice.Built on a strong, cross-disciplinary theoretical foundation and extensive practice experience, this concisely written text is a practical guide to understanding the intricacies of cultural influence on consumption, and for the design and implementation of effective intercultural marketing strategies, focused on branding and promotion. The book uses representative, well-known corporate cases while also including dynamic examples from the sharing economy, blockchain, and emerging economy companies. Incorporating strategy, sociology, linguistics, cross-cultural communications, psychology, philosophy, religious studies, and economics, the book is particularly distinguished from the mainstream by introducing non-Western frameworks.Upper-level undergraduate and postgraduate students of marketing and international business will benefit from the book's new concepts and novel methods, as well as clear objectives, examples, and discussion topics in each chapter. Instructors will appreciate the inclusion of a semester-long project for students, allowing them to wear the "practitioner's hat" and including practice in a netnographic research method.

1 The Globalization Imperative

Introduction

Chapter 1 focuses on the overarching drivers and expressions of globalization. It discusses the main variables affecting globalization of products and services. It also sheds light on ethnocentrism and xenocentrism as outcomes of globalization. It further discusses the allure of the global brands on one hand, and the responsibility and expectations placed on them in the somewhat uneven global branding playfield. The chapter also focuses on the importance of branding blunders for understanding cultural influence. It illustrates different levels of brand involvement in international markets, and points at the importance of new middle classes in the emerging markets and their unique characteristics.

The chapter critically assesses the traditional notion of “modernization” commonly accepted in the West as a concept of progress, implying that the non-Western countries should catch up with the West, which has set the standards for the “rest.” Case-in-point examples include China’s Belt and Road Initiative (BRI), international education segment, yoga and K-Pop, Paco Rabanne, Quorn in Asia, Coca Cola’s Super Bowl ad, Uber in Asia, Club Med in China, Pepsi in China, and luxury industry. The mini-case included in the Chapter 1 is Sofitel Hotels & Resorts.

Chapter Objectives

• Understand the concept of globalization and its drivers.
• Learn the main variables affecting internationalization of brands.
• Become familiar with the concepts of ethnocentrism and xenocentrism.
• Critically assess the role and the importance of global brands.
• Understand the role of branding blunders in cultural analysis.
• Distinguish between different degrees of brand involvement in international markets.
• Understand the importance of new middle classes in developing markets.

Warmup question: How can brands become globally recognizable and remain culturally relevant at the same time?

Why Globalize?

Globalization is defined as a “growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information” (Peterson Institute for International Economics, 2020). The process of globalization is characterized by the growing interdependence between the world’s economies, cultures, and consumers. The consequences of this process are in fact so profound and pervasive that some researchers even claim that globalization presents a new form of consciousness (Eriksen, 2007).

Globalization is reflected in an unparalleled interdependence of different spheres of economic, political, cultural, ideological, and ecological influence. Ecological globalization refers to global pollution, climate change, and resource degradation seen as a result of rapid globalization of trade (Steger, 2009).

The process of globalization is characterized by the unparalleled number of interactions happening in the increasingly fast and dense communication networks. Nonetheless, it is also characterized by the growing tensions between cultural groups due to their exposure to one another and cultural changes that happen in this process. The global flow of capital, technology, and information has led to the often profound changes in human behavior.

Because we share resources across the globe, our actions and consumption patterns in one location have a butterfly effect in another location. For example, the societal shift toward healthy eating in the West has contributed to the rapidly growing demand for quinoa, the traditional staple food in Peru. This trend has brought about many benefits for the local farmers who saw a strong growth in the demand for their product. However, Peru’s Ministry of Agriculture suggests that while quinoa production grew from 32,590 to 114,725 tons between 2005 and 2014, in the same period, the price of quinoa in Peru rose more than 500% (Livingstone, 2018). Consequently, it became less affordable for the local population than it used to be before the spike in global demand.

What are the main consequences of globalization?

Drivers of Globalization

Globalization of brands is no longer an alternative, but an imperative for most companies no matter where they are in the world. Globalization opportunities are brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Some of the main drivers of globalization include the saturation of domestic markets, a more affordable production in international markets, emerging market companies expanding into developed markets, the emergence of new consumer groups across the world, and globalization of labor, to name some.

Due to the saturation of domestic markets and the intensifying competition, companies are actively seeking opportunities beyond their home boundaries. Manufacturing of products is often more affordable in developing markets, and this affordability is achieved through coordination of production across different countries and regions. Consequently, companies are either outsourcing specific product components or setting up manufacturing plants and service operations abroad to save costs.

At the same time, companies from emerging economies are making inroads into the developed markets. Some examples include companies like Korean Samsung, Chinese Huawei, or Mexico’s Cemex. New consumer groups from emerging markets are also actively stepping onto the global scene, seeking products and services that were previously not affordable or not readily available in their home countries. Furthermore, emerging markets are increasingly investing in the developed, industrial markets through large infrastructure projects such as the Belt and Road Initiative (BRI).

Globalization also creates new power structures. In addition to the hard power such as military and political power affiliated with governments, or the economic power exercised through global corporations, we can talk about culture as a soft power. Soft power implies that the standards are introduced from one culture to another. Examples of soft power include lifestyle, body image, music, fashion, or parenting styles introduced, and at times imposed, from one culture to another. The influence of soft power moves in both directions – both Eastward and Westward, as seen in the example of K-pop discussed later in this chapter.

Are there examples of your home country’s culture as soft power in another market?

Mega Infrastructure Projects

Recently, we saw the birth of mega infrastructure and transportation projects initiated in the Eastern hemisphere. These projects, aimed at connecting the Eastern and Western hemispheres, present new economic growth drivers. They have led to the unparalleled connectivity between nations and regions and opened many new business opportunities. These include, for example, China’s Belt and Road Initiative (BRI), the China-Pakistan Economic Corridor (CPEC), the International North-South Transport Corridor (INSTC), or Dubai’s Silk Road Strategy project, to name the main ones.

A Case in Point: Belt and Road Initiative (BRI)

Big global infrastructure projects initiated in non-Western countries have triggered a collision of cultural values between “East” and “West.” In some cases, it is the value differences, rather than project-related reasons that have hindered progress of these projects. One such example is China’s Belt and Road Initiative (BRI).

Launched in 2013, BRI is one of the most ambitious infrastructure investment projects in human history. Envisioned as a revival of the ancient Silk Road, it aims to enrich trades from the Atlantic to the Pacific. To date, countries representing nearly two-thirds of the world’s population have either signed on or indicated interest in joining the project. In particular, many developing and emerging economies in need of an infrastructure boost have welcomed the project.

Nonetheless, the project has encountered a significant pushback, especially in the European Union (E.U.). Although building better connections between Europe and Asia is undoubtedly on everyone’s agenda, ideas on how this should be executed diverge greatly between different parties.

The main areas of concern over the BRI project raised by the E.U. include issues such as a lack of transparency in the bidding processes, especially on projects required to use Chinese firms. There are also concerns over low interest loans as opposed to aid grants, and the alleged opaque and unaccountable approach to financing exposing already vulnerable economies to fiscal instability, to name some. The question inevitably arises: are most of these concerns really project-related, or is there a more underling crash of values in the face-off between the West and China?

Without a doubt, in order to utilize the emerging business opportunities that come with the similar large-scale projects, we must be willing to accept the differences in cultural values and norms. This also includes the differences between the systemic structures in different countries and regions. Understanding these differences will help to convert the apparent challenges into opportunities and marketing advantages (Stelling, 2020).

What are some possible expressions of value differences between China and the West on the example Belt and Road Initiative project?

Glocalization

The underlying decision that marketers need to make when internationalizing brands is how much to standardize and/or adapt their home country brands in the international markets. The debate over how much to standardize or adapt revolves around the idea of standardization for efficiency, or the economics of simplicity based on the assumption of the “least common denominator” across cultures, versus localization for effectiveness.

At the outset of globalization, many brands opted for the economics of simplicity and sold their standardized products with little or no adaptation in international markets. Such are the examples of Coca-Cola and Nestlé who applied uniform global marketing principles in the 1980s with success. If nothing else, standardization can certainly lower operating and marketing costs and help the companies achieve economies of scale and scope.

The ideal outcome of branding efforts is, however, neither a strict standardization nor full localization, but rather “glocalization.” Glocalization is seen as a co-presence of both universal as well as particular tendencies in an effort to adapt global brands to local needs while also remaining true to the original brand identity. This effort is expressed in the “think global, but act local” slogan, the origin of which has been attributed to many.

However, achieving the ideal balance between global and local is in itself a goal ridden with paradoxical tensions between the two, and it requires continuous strategic adaptation. There are numerous examples of multinational companies that had to adjust their signature products and practices in international markets to fit the customs, laws, and preferences of a local market. Retaining universal brand values and remaining authentic to the home brand identity, all while also making the brands particular and tailoring campaigns toward the local tastes is particularly challenging for the marketers.

While many succeed, many also fail to adjust their efforts with a sufficient degree of success in order to remain relevant in the local markets. For example, Walmart’s signature customer service aimed at enhancing customer experience in the U.S. was not well received in Europe. Walmart’s greeters at the store door were met with dismay in countries like Germany where people are not used to someone addressing them as they walk into a store (Landler & Barbaro, 2006). Other brands, however, achieved great success with their adaptation attempts, such as Whirlpool, which customized their washing machines for washing the long Indian sarees without getting tangled in the washer (Marquardt, 2011).

What are the main challenges for brands in intercultural markets?

Variables Affecting Brand Globalization

One of the main decisions that brands need to make in international markets is how much to standardize vs. how much to adjust to local needs, and this depends on a number of factors. Standardization/adaptation variables include, for example, company’s structure, company’s country of origin, product category, product lifecycle, or the broader business environment of the host country, to name some.

To a great extent, global marketing strategy is influenced by company’s structure and the culture of a company’s country of origin. A country of origin and its business practices play an important role and they influence the vision of company’s management, which in turn influence marketing decisions.

Standardization decisions are influenced by a degree of standardization of company’s business functions across the world, which also drives the degree of independence of local or regional marketing managers. Tighter managerial control across different departments or global offices is most often found in the large bureaucratic structures. Consequently, in those companies, a higher degree of standardization is expected from the marketing managers, too.

For example, ExxonMobil, a U.S. energy company and the...