Culture and International Business

Hofstede's five Cultural Dimensions





          - Power distance : This concerns the extent to which less powerful members of organizations within a country expect and accept that power is distributed unequally. In general, Hofstede found that Latin American and Latin European(France and Spain) countries had higher power distance scores.

          - Uncertainty avoidance : This concerns the extent to which the members of a society feel threatened by uncertain arid unknown situations. Jamaica and Singapore were relatively low uncertainty avoidance cultures  where precision and punctuality are less important, innovation is encouraged and people are motivated by being esteemed by, or belonging to, others above other things.

          - Individualism vs Collectivism : In an individualist business, employment contracts based on hiring and firing. Two examples of countries with high scores on individualism were Australia and Canada. In a collective society, people are more concerned for others and the culture is based around more cohesive groups such as the family which offer protection in exchange for loyalty. Ecuador, China and Indonesia are the examples of more collective societies.

          - Masculinity vs Femininity : This refers to the degree to which gender roles are distinct and adhered to within a society. In high femininity societies, social gender roles overlap, with both men valuing feminine qualities such as modesty, intuition and quality of life above the more traditionally masculine qualities of aggression and competition. Denmark and the Netherlands were more feminine cultures  while many other Western countries exhibited more masculine values. Japan, the UK and West Germany scored highly on masculine values.

          - Long Term vs Short Term Orientation : This refers to the degree to which the country orients and focuses for people's efforts more more to the future or present. Korea and Japan are the examples long term orientation countries, while Mexico and Jamaica are short term orientation countries.

          - Indulgence vs Restraint : Indulgence society is freely satisfied by basic needs and behavior, and enjoys moment rather than using time to compare with others. The USA and Canada can be an indulgence society. Restraint society will be suppressed and regulated, which ends with feeling threatened. China and some south eastern Asia can be the example of restraint society.

6. Market Research Company

Company : Samsung 




Samsung is one of the largest and efficient companies that is originated from South Korea, the best semiconductor making company in the world. Samsung provides diverse services such as electronic devices, insurance, construction, etc. They slowly expanded the area of service in order to approach to customers more often and repetitively. Samsung approaches to various of people, but especially to business workers because their products and services are mostly specialized to the age from 20~50 or even less than 20.
Samsung promotes their company by making a continuous advertisement and approaching to people by providing many after services and solid economic policies.

11. International Marketing

Why do companies expand internationally?      

          - Expanded markets and increased sales mean more profits. Profits mean success for a business. They also mean that a business can make contributions to causes that they believe in.

          - Saturated home markets forces the companies to shift to other countries and make more profits.

          - Spreading risks between different markets: selling cars in China was easier than in the UK because of the difference of GDP.

          - Comparing to the trading conditions in other countries, which is better than their home country, led the expansion of international business.

What considerations must a company have in these areas when undertaking international marketing?

 Political differences : Changes of governments can cause instability in some countries and this can increase the risk of doing business. Such as terrorism or threats of civil violence will disable the companies to work fluently.

Economic differences : The difference in GDP rates around the world will be the most difficult thing for the international companies to handle.

Social differences : The role of women and the importance of marriage in society vary substantially too and these an other social factors may have a considerable impact on the products to be sold and the marketing strategies used to sell them.

Legal differences : Some goods, such as guns, can be sold in the USA, but it will be impossible to be sold in other countries because it might be illegal in certain countries.

Cultural differences : Failure to recognize cultual and language differences can have a disastrous effect on a firm's marketing strategy. The use of male and female models in advertisements would not be acceptable in some countries with strong religious traditions.

Differences in business practices : Accounting standards and rules can vary in different parts of the world. The ease of setting up a limited company varies widely- it can take a few days in the UK, yet the formalities and form filling can exceed one year in Sierra Leone.

10. Distribution Arrangement

Types of distribution arrangement


Intensive - Intensive Distribution takes place when suppliers sell through as many retailers as possible. This arrangement usually maximizes suppliers' sales, and it enables retailers to offer many brands and product versions.

Exclusive - Exclusive distribution is a situation where suppliers and distributors enter into an exclusive agreement that only allows the named distributor to sell a specific product. For example, Apple had an exclusive distribution deal with AT&T to provide the iPhone to consumers.

Selective - Selective distribution is a type of product distribution that lies between intensive distribution and exclusive distribution, and in which only a few retail outlets cover a specific geographical are. Considered more suitable for high-end items such as 'designer' or prestige goods.

Integrated marketing - Integrated marketing is a strategy aimed at unifying different marketing methods such as mass marketing, one-to-one marketing, and direct marketing. Its objective is to complement and reinforce the market impact of each method, and to employ the market data generated by these efforts in product development, pricing, distribution, customer service, etc.




Why is the choice of distribution channel so important?
- Consumers may need easy access to a firm's products to allow them to see and try them before they but, to make purchasing easy and to allow for the return of goods.
- Manufacturers need outlets for their products that give as wide a market coverage as possible, but with the desired image of the product appropriately promoted.
- Retailers will sell producers' goods but will demand a mark-up to cover their costs and make a profit, so, if price is very important, using few or no intermediaries would be an advantage.




What issues must be considered when choosing a distribution channel?

- Nature of market : Choice of suitable channel of distribution also depends on the nature of market. Location a buying habits of buyers are also analyzed.
- Nature of product : Nature of product has influence on the selection of a channel or distribution. In the case of industrial goods like machinery and equipment. The manufacturer sells directly to industrial user, but in the case of tools, sales take place through middlemen.
- Distribution expenses : If the producer makes direct selling, he will have to spend on distribution. So, if the product gets good response from the dealers, a producer prefers to sell through them to reduce his distribution expenses.
- Mutual cooperation : Choice of channel of distribution depends on the mutual cooperation between the manufacturer and the dealers.




What are some of the things you must consider about selecting a channel partner?

- The type of channel you choose will depend on what it is you are selling. If you are selling a software product, system, or chip that can be held in inventory, then you will want a partner who can stock your product for ready distribution. If your end customers are businesses, then you will want a distributor who focuses on B to B sales. If your end customers are consumers, then your channel will be stores such as web-based retailers.

9. Promotional Mix vs Product Life Cycle

What is Promotional Mix?
          - Promotional Mix is the combination of promotional techniques that a firm uses to communicate the benefits of its product to customers.

8 Stages in deciding on a promotional mix:

1. Decide on the image of the product.
2. Develop a profile of the target market.
3. Decide on the messages to communicate.
4. Set an appropriate budget.
5. Decide on how the message should be communicated.
6. Establish how the success of the promotional mix is to be assessed.
7. Undertake the promotional plan and the mix elements.
8. Measure its success.

Product life cycle: 

Introduction
Growth
Maturity
Decline
(extension strategies to prolong maturity or limit decline)


How would the promotional mix change at different stages of the product life cycle?

Introduction
          - Informative advertisement to make consumers aware of the product.
               - Sales promotion offering free samples or trial periods to attract the buyers.
Growth
               - Focus shifts to 'brand' building and persuasive advertising. 
               - Sales promotion to have a repetitive purchase.
               - Try to develop brand loyalty.
Maturity
               - Advertise in order to show the difference between the product from their company and other competing companies 
               - Sales promotion incentives to encourage brand development and loyalty
Decline - assuming no extension strategy  
               - Minimal advertising
               - Sales promotion : little additional support for the product if the intention is to withdraw it

8. Promotion Case Studies

Choose four of the case studies to analyze.  Briefly explain why the promotion was successful - what was it about this promotion that made it appealing to potential customers


1. The Arizona Department of Health Services wanted to generate community awareness of the risks of second-hand smoke, particularly as it affects children. The campaign, first introduced with TV spots and brochures in the surrounding Phoenix area, got a PR boost when it generated newspaper articles. Additional exposure was achieved through the distribution of two ingenious promotional items.
First, restaurants who supported a non-smoking policy received baby bibs to present to diners who came in with infant children. The bibs bore a custom imprint phrase, "I am in a designated non-smoking area." In addition, bottles of soap bubbles were distributed at community events, such as fairs, workshops and women's expose. A message on the bottle label made humorous reference to the Surgeon General's tobacco warning. "My Cause: Joy, Laughter, Smiles and Excitement; Not: Asthma, Pneumonia or Cancer." The program received tremendous support and sent a valuable message about the dangers of second-hand smoke. In a follow-up evaluation of the program, it was determined that the important message reached more than 100,000 local residents.

The Arizona Department of Health Services did give an awareness of the risks of second-hand smoke by giving logical reasons and examples to persuade the people.

2. An unusual product requires an unusual promotion. Culturelle, a company that makes dietary supplements that aid  digestive health and immune-system functioning, was looking to promote its brand in a quirky way. The company's products are 'pro biotics' - healthy bacteria that aid digestion - which might confuse the average consumer who associates bacteria with disease or things unhealthy.

With this in mind, Culturelle devised the "I Love Bacteria" campaign. The company gave away T-shirts imprinted with the classic "I ♥" icon to curious customers who saw an ad for it. After an extremely successful test-run of the campaign, Culturelle widened the promotion, tying it into its print and television advertising campaigns, both of which featured someone wearing the "I ♥Bacteria" T-shirt.

The promotion was successful because the company grew their consumer database substantially, increased their out-of-home branding since their logo was on the back of the shirts, and even used the shirts as a giveaway that bloggers used to kick-start a program which educated consumers about Culturelle and probiotics.

3. Producers of The Mechanic, an action thriller starring Jason Statham as a hit man, needed a unique promotion to stand out amid the din of the movie madness bombarding the media and consumers today. They were thinking T-shirts, but some creative thinking brought a variation of that theme to mind. 

Pre-release marketing to the press is critical to success in the movie business. Rather than giving traditional T-shirts to members of the press covering the movie, as well as to other potential moviegoers, the movie's marketers had the shirts shrink-wrapped and compressed into the shape of guns, playing into the movie's theme to make a bigger impact on T-shirt recipients.

The promotion has certainly helped to garner a wealth of media attention for the film's release.

4. At Massey Energy's 15 different coal mining sites, safety is a moment-by-moment concern. A recent campaign had the objectives of increasing awareness of safety habits in the workplace, improving workforce safety performance and reducing absenteeism.

This year-long campaign served as a constant reminder to work safely and develop safety-conscious work habits. The campaign kicked off with the posting of a banner at each mine, the distribution of compressed t-shirts and the presentation of "Masseyopoly," a Massey-customized version of the board game, Monopoly. This last item made a huge splash with the workforce. The campaign also introduced the character of "Raymond," a safety mascot who appreas on all of the program's communication pieces and promotional items. Every month, the mine sites received a new and different item, among them, beverage insulators, hats, emergency flipper kit, pocket watches and hard hat decals. A new banner arrived every quarter to keep the program fresh and safety awareness foremost in the minds of employees.

During the program, the company saw its Loss Time Accident Ratio decrease by 47%, recording the two safest years in the company's 90 year history.

7. Marketing - Advertising Techniques

1. Slogan

Definition - Identifies product or service with an idea

Example: I'm Lovin It from Mc Donald


2. Logo


Definition - Identifies product or service with a symbol

Example: Huge M shape in Mc Donald


3. Snob Appeal

Definition - Associates product or service with a personality or lifestyle

Example: A company giving the impression that using their product will give more benefits while others don't get any benefits.(Dougherty, Brian) 

4. Glittering Generality

Definition - The viewer is given a general feeling about the product, but not much else.

Example: The man uses the laptop in cafe, but only that.

5. Sex Appeal

Definition - The product will enhance your sexual attractiveness.

Example: A sexy female model with sexy dress drinks a water made by a company


6. Plain Folks

Definition : The advertiser tries to identify its product with an easy words and explanation so that many people will be able to understand and be friendly.

Example : Some random kid is walking down the street and everyone is laughing at him because he has really bad acne. All the sudden, an acne bottle pops into his hand. he goes to the nearest bathroom and tries it. Out of nowhere, his acne is gone. He goes outside and starts to get some girls, smiles at the camera and says - 'acne-b-gone; it really works!' 

7. Wit and Humor

Definition : Customers are attracted to products that divert the audience by giving viewers a reason to laugh or to be entertained by clever use of visuals or language.

Example : The man uses a glue instead of a chopstick.

8. Testimonial

Definition : Someone endorses the product.

Example : A dentist insists that the tooth paste works really well, which gives a confirmation of a good product.

9. Bandwagon

Definition : Uses peer pressure to influence the consumer. If everyone else is doing it, so should you.

Example : Everyone has an iPod, except for you! Go and buy one!

10. Emotional Appeal

Definition : Uses emotion to sell a product or service (pity, fear, patriotism, happiness, etc.)

Example : A mom holding a baby and cleans the baby with the soap that is made by a company that arranged the commercial.