Marketing has taken a completely new approach from what it was some time ago. Immediately after the Second World War, The world was turned into a global village. Communication was made easy with the invention of telephone. Movement was also made easy with the invention of air transport. The world market became easily accessible to many multi-national corporations. This large market would easily purchase the products of Multi-national Corporation, and as such, the biggest issue was to make production in mass.
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Things started changing when countries like Japan started coming up as major world manufacturers. The American firms that for a long time had dominated the world market with manufactured goods started facing the challenge posed by the Japanese firms. Competition was setting in and the tact had to be changed. After a short while, China started coming up as another major manufacturer.
This was a further blow to the firms from developed countries that for a long time had been operational without any major challenge from other firms. What made the market environment even more competitive was the fact that most of the firms that were emerging in the emerging economies were producing goods that would serve similar purpose as those of American firms, but at a cheaper price. Tanke (2000, p. 78) says that many of the new firms were known to mimic the products of other major companies, a fact that made competition very rife.
The world market was characterized with varieties of products from which customers would choose. The attention of the multinational firms was shifting from production to marketing. There was a need to acquire and retain a given market share within a particular market in order to remain competitive in that particular region. Manufacturers realized that it was necessary to give preference to the customers’ expectations and needs in the market. The focus of marketing therefore changed from an inward-out approach to an outward-in approach. Companies started factoring in the needs of the customers in their production.
Social marketing became the only way that these firms could manage the stiff competition that was in the international market. It is upon this realization that firms came to appreciate the fact that culture was an important factor to consider when doing international marketing. Cross-cultural analysis became very relevant as firms strove to be relevant in various cultural settings in different regions of the world. The scholars gave emphasis to culture and many models for cross-cultural analysis were developed. One of the most prominent models that were developed during this time was Hofstede’s model of cross-cultural analysis.
In this study, the researcher intends to critically examine the effect of culture on and the importance of cross-cultural analysis on international marketing, with focus on Hofstede’s model of cross-cultural analysis.
Culture and Marketing
Hollensen (2011, p. 32) defines culture as a set of beliefs, ideas or a given pattern of behavior of a particular group of people. Culture varies in various fronts. As Anderson (2004, p. 56) states, culture is defined by various factors. Religion as one of the major factors that influence culture, is shaped by the very culture. A given market will behave in a given manner depending on the religious beliefs. An international marketer would need to understand the needs of a given religious grouping if success is to be achieved. Caves (2007, p. 35) states that religion is the major factor that influence culture and hence buyer behavior.
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A given customer would purchase a given product in mass but completely avoid the other because of cultural beliefs. A Muslim cannot take pork because of the religious beliefs. As such, their culture bars them from buying this product because in the first place they are not allowed to lay a hand on it. A marketer in this product would therefore be advised to look for markets outside an Islamic religion. If such a firm exists in a country that is majorly Islamic like Saudi Arabia, it would be advisable for such firms to select the market segment that are not Islamic in this country.
Marketing cannot assume culture as one of the most important factors to consider when conducting business in new regions. Culture has a heavy influence on the buyer behavior towards certain products. As Doole and Lowe (2008, p. 54) say, it would be dangerous for a firm to generalize markets on cultural terms. Inasmuch as there are various characteristics that cut across cultures (like abhorrence of adult content to children below the age of majority), some of the characteristics are so unique to given cultures. As such, a firm that operates in various countries around the globe would need to have a detailed cross-cultural analysis of these regions in order to remain relevant in all of them.
Meaning of Cross-Cultural Analysis
Hakim (2000, p. 12) defines cross-cultural as a combination of or involving many cultures. According to Hofstede (2005, p. 90) cross cultural analysis refers to the study of different cultures and how they relate to one another. It is the study of the way of life of different people in different regions of the world. In relation to commerce, cross-cultural analysis would be defined as the detailed study of how different cultures from different regions of the world affect the way people conduct trade. It is the study of the effect of culture on trade and how these cultures vary from one region to another.
Relevance of Cross-Cultural Analysis
Cross-cultural analysis has become very relevant in the current world market. For some time in the past, trade was limited to certain specific regions that were limited in distance. When such dynasties like the Roman Empire and other world powers like Britain conquered the world, trade was broadened. With the emerging technologies, communications and movement of people from one region to another has been made easier. This in effect, has turned the world into a global village. The world market is now easily accessible to many of the firms that have the capacity to produce goods internationally.
At first, only a few firms could manage to produce goods and sell them in the international market. Most of these firms were American or British companies. However, when countries like China, India and Brazil started coming up as major manufacturers and exporters of similar goods as those of the American and British firms, stiff competition started to arise (Hollensen 2011, p. 26). The world market, which was till then was vast and non-choosy, became very selective because of the variety that was now available.
The new firms that sprung up came with new and better strategies of doing business because they were well aware that they would meet competition from the already established firms. Although they did not have enough money to make them more competitive, their strategies towards the new markets was better than those of the established firms in the world market.
On the other hand, firms that were established in this world market had gathered huge financial base that could make them compete properly, but were a little slower to change as compared to other firms that were relatively new in the market. Competition became very strong, and the firms came to realize that in order to stay within a given market, a firm had to remain competitive in its market strategies. A firm had to look for a way to appeal to the market and convince it that it was determined to provide it with products that best satisfies its needs.
Culture came out as one of the strongest factors that affect buyer behavior. It became evident, through market research, that the market, as a unit, and a customer as an individual, is highly affected by the culture. Culture would determine what a person would buy. Again it was realized that culture is not universal (Kotler, Keller, Brady, Goodman, & Hansen 2009, p. 57). The cultural practices of the Americans sharply differ from that of Saudi Arabia.
An American firm, trading in both the American and Saudi markets, would have to understand both the American Culture and the Saudi Culture. As such, cross-cultural analysis became very relevant. Currently, cross-cultural analysis has become very important as firms strive to remain competitive in different markets in the world exhibiting different characteristics. Cross-cultural analysis has come out as the tool that can help in remaining competitive in these markets because it would help the firms understand each market culture.
Importance of Cross-Cultural Analysis
Cross-cultural analysis is very important in the current market. As stated above, the world is characterized by numerous cultures. Although most of these cultures have highly been infiltrated by the western culture, most of them still hold some uniqueness that make them vary from one another in different fronts (Luthans, & Doh 2009, p. 43). International firms have had to understand different cultures in different regions. Cross-cultural analysis has been a very important tool in understanding different cultures.
Hofstede’s Model of Cross Cultural Analysis
Hofstede’s model of cross-cultural analysis is one of the models that have been very popular in analyzing different cultures and how they affect multinational organization. Developed when Hofstede was working for IBM Corporation, This analysis gives five dimensions of culture. The five approaches given by this model vary from one religion to another. According to Hofstede, cultural practices have some similarities depending on their closeness. The five dimensions are as discussed below.
Some cultures lay more emphasis on individualism, while others lay emphasis on group ties. In every society, there exists some form of groupings. This can be in form of families, church or any other such social groupings. There are those societies that behavior of the market would highly be affected by the social groupings. For instance, some groupings may be influenced by religious beliefs.
Because an individual belongs to a certain religious grouping, he or she is expected and/or will behaving in a manner that this religion states. To an international marketer, it would be important to understand the doctrines of that group in order to be competitive in that market. On the other hand, some societies have given their people more independence from one another. In such societies, although one may belong to a given social grouping like a family or a religious group, actions of a person is not rigidly defined by the social grouping (Luthans & Doh 2009, p. 61). In such cases, it would be very difficult to generalize the behavior pattern of a given society. United States is one such country that has embraced individualism, while Saudi Arabia strongly holds to collectivism.
Power and Distance
In every society, there is some form of leadership. According to Hofstede (2005, p. 67), there is always a distance between the governed and the governors. In some societies, this gap is bigger than what it is in other societies. To a marketer, of interest would be how the authority influences the behavior of the rest of the population. For instance, in the western democracies, the governments do not have powers to dictate the lifestyle of an individual, as long as this behavior do not, in any way affect another individual or the state.
As such, people here are free to behave in a way that pleases them, only ensuring that they do not affect others in the process of enjoying their freedom. In other societies however, the state rigidly defines the way one should live (Marczyk, DeMatteo & Festinger 2010, p. 73). Any deviation from the expectation of the leadership of the state would result in severe punishments, some of which may result to execution. A marketer would therefore need to confront each market with the desirable approach that would make it relevant.
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Some societies do not tolerate situations where people work with guesses. The western societies highly value specifity. They prefer situations where any action taken would lead to a specific result. Such societies would prefer situations where a certain behavior would lead to a specific result so that such result would be manipulated to fit into their requirements. Such societies would avoid uncertainties at all costs. On the other hand, some societies do not value certainties. The Chinese do not give much importance to certainties. A marketer would need to be elaborate and specific to such societies that value certainties like the western countries.
Some societies tend to be more masculine than others. In a society that is masculine, people would tend to be very assertive. Even the women in that society would have the assertive character in most of their undertakings. Such societies value a competitive environment and this competition would always be on the basis of win-lose. Every individual would want to be in the first position and they give lesser attention to how others would feel by them gaining what they feel should be gained by them.
On the other hand, some societies behave in a feminist manner. The members of the society are not pushy. All the members of the society are concerned by what others would feel. As such, they would avoid behaving in a manner that would upset others. They are very considerate and value consultative actions. To a marketer, it is important to understand the environment. The societies sharply contrast each other, and as such, they should be given different approaches.
Long term/short term Orientation or Confucian Dynamism
Some societies highly value planning. They look at what the actions of today will result into tomorrow. In such societies, planning and industriousness are highly valued. The long term orientation is always associated with Confucian value. These are values that insist on perfectionism in every action taken by its members. On the other hand, some societies are more concerned with what is to be achieved within a short term. These societies value short term achievements and give less concern to long term achievements. To a marketer, Quality of the products such as durability would be provided in a society that exhibits Confucian dynamism, while physical attractiveness of products would be prioritized in societies that value short term benefits.
Advantages of Hofstede’s model
Hofstede’s model of cross cultural analysis is one of the most popular models for the analysis of different cultures. This model, unlike some of the previous models, is multi-dimensional. Analysis using this model can take many fronts and as such, it would give many facets of the culture. As Hollensen (2011, p. 90) says, Hofstede’s model gives a complete analysis of culture from all the important fronts. Moreover, this model may help one predict characteristics of a new market by using the generalization approach.
Disadvantages of Hofstede’s Model
It is important to note that inasmuch as this model is very useful in the analysis of culture, it has some shortcomings that its users must take note of. When using this model to analyze the culture of a country, it may be difficult to understand the culture of specific sub-cultures within the society. It would be dangerous to generalize the culture of a country because in most of the cases, this generalization would be based on the dominant group of that country. A company trying to use such a generalized assumption may incur losses if it happens that it operates in regions where the generalization does not apply.
Another challenge of this model is that it does not reflect on the cultural changes that are bound to take place at regular intervals. The data used for the generalization may not be up to date and s such, the application of such model may be very misleading, especially in a dynamic society. This model is also not self-supportive. For a firm to be in a position to master the culture of different societies, it would need to use other models, besides this model
Application of Hofstede’s Model: Samba Financial Group Case Study
Samba Financial Group, originally known as the Saudi American Bank, is one of the leading financial institutions in Saudi Arabia and the entire Middle East region. The bank operates in many cities within Saudi Arabia and the neighboring countries. In its quest to increase its market share, the bank opened branches in the United Kingdom. Saudi Arabia is cradle land for the Muslim communities around the world.
It is one of the few countries that still hold on to the teachings of the Shariah law very strictly. On the contrary, the United Kingdom is one of the leading democracies in the world, with the leading religion being Christianity. These two regions sharply contrast each other in various cultural aspects. Hofstede’s model of cultural analysis can be the best tool that this firm can use to operate in the two regions successfully.
Taking the first dimension of individualism versus collectivism, Samba Financial Group appreciates that in Saudi Arabia, the society highly values collectivism. The society is highly influenced the Islamic teachings that demands that all the members of the society act as a unit.
As such, this firm knows that to succeed in this market, it must act as per the expectation of the entire society. This was seen when it introduced the Shariah Committee in its top management to help guide the bank in upholding the Islamic principles. Conversely, United Kingdom, just like many other western countries, gives lesser attachment to communism. Consequently, the bank has formulated marketing policies that would attract specific market segments.
In power and power and distance, the two societies also vary. While in Saudi Arabia, the firm has to operate having in mind that the government has absolute powers. The government has total control of many of the activities of the country and deviations from the expected norm would result in instant punishment (Swanson & Holton 1997, p. 43). This institution must understand the principles of the state to avoid any confrontation with the government. To satisfy this requirement, the government has established a Shariah Committee in its Riyadh branch, a committee that does not exist in its overseas branches like in United Kingdom.
The bank also takes the principles of Masculinity in most Islamic countries, especially in Saudi Arabia. According to the principles of Shariah law, a woman is considered as subordinate to a man. The society has accepted and highly values this principle. Men are given more priority in almost all the facilities and in social gatherings. Understanding the importance of sticking to this culture, the bank opened a female branch, different from the male branch in Riyadh.
The facilities at the male branch are conspicuously better than those at the female branch, a fact that many scholars have attributed to the pressure by the societal culture of the country. In United Kingdom, this bank has both male and female sharing the banking halls because of the clarion call for equality between the two genders.
Culture is one of the important factors that have to be considered in international marketing. Emerging technologies are transforming the world. The world has been turned into a global village. An American firm can manufacture its products in India where there is cheap labor, and sell these products in Saudi Arabia where there is a ready market. These three regions are very different culturally.
Whereas America, which is the leading democracy in the world, has the majority of its populace practicing Christianity, India is predominantly Hindu while Saudi Arabia is majorly Islamic. Culture and religion are closely knit together. Buyer behavior is closely related to cultural values and beliefs. For this reason therefore, international marketing must give emphasis to culture. Cross cultural analysis has gained a lot of relevance in international marketing for this matter. Hofstede’s model is the best model that explains cross-cultural analysis. Using five dimensions of culture, it gives an in-depth analysis of culture and how it relates to the individual’s behavior, which would help explain buyer behavior.
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