978-0134129945 Chapter 4 Lecture Note Part 2

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THE SELF-REFERENCE CRITERION

√ (Learning Objective #4)

A person’s perception of market needs is framed by his or her own cultural experience. A

framework for reducing perceptual blockage and distortion was developed by James Lee.

The unconscious reference to one’s own cultural values is the self-reference criterion (SRC). To

eliminate or reduce cultural myopia, Lee proposed a four-step framework.

Define the problem or goal in terms of home country cultural traits, habits, and norms.

Define the problem or goal in terms of host-country cultural traits, habits, and norms.

Make no value judgments.

Isolate the SRC influence and examine it carefully to see if it complicates the problem.

Redefine the problem without the SRC influence and solve for the host-country market

situation.

SRC teaches that a vital, critical skill of the global marketer is unbiased perception, the ability to

see a culture.

SRC can be a negative force in global business leading to misunderstanding and failure. A person

must suspend assumptions based on prior experience and success and add new knowledge about

human behavior and motivation.

Diusion Theory

√ (Learning Objective # 5)

Sociologist Everett Rogers distilled his research into three concepts that are extremely useful to

global marketers: the adoption process, characteristics of innovations, and adopter categories.

An innovation is something new. However, a product already introduced in one market may be

an innovation elsewhere because it is new and different for the targeted market.

Managers find themselves marketing products that may be, simultaneously, innovations in some

markets and mature or declining products in other markets.

The Adoption Process

The adoption process – the mental stages from the first knowledge of an innovation to product

adoption or purchase:

Awareness. The customer becomes aware for the first time of the product or

innovation. Global marketers create awareness through general exposure to advertising

messages.

Interest. The customer is interested enough to learn more. The customer will engage in

research and seek information.

Evaluation. The individual mentally assesses the product’s benefits and decides whether

or not to try it.

Trial. Most customers will not purchase expensive products without a “trial.” For

inexpensive products, an initial single purchase is defined as trial.

 Adoption. The individual either makes an initial purchase or continues to purchase a

product. Sales reps and word of mouth are forces in the decision to buy.

Characteristics of Innovations

Five factors affect the rate of adoption:

Relative advantage: How a new product compares with existing products or methods.

Compatibility: How consistent a product is with existing values and past experiences.

Complexity: How difficult the new product is to understand and use.

Divisibility: How easy it is to try a product on a limited basis without great expense.

Communicability. How well the benefits or value of a product are communicated.

Adopter Categories

Adopter categories are classifications of individuals in a market on the basis of innovativeness.

(See Figure 4-3)

Five categories have been assigned to the segments of a normal distribution:

The first 2.5 percent to purchase a product are innovators.

The next 13.5 percent are early adopters

The next 34 percent are the early majority

The next 34 percent are the late majority

The final 16 percent are laggards.

Innovators are more venturesome, more cosmopolitan, and wealthier than those who adopt later.

Earlier adopters are the most influential people in their communities and have great influence on

the early and late majority, the bulk of the adopters of any product.

Early adopters tend to be younger, with higher social status, and a more favorable financial

position than later adopters.

Persuading innovators and early adopters to purchase a product is critical; these groups must

make the first move in order for eventual penetration of a product into the broader market.

Diffusion of Innovations in Pacific Rim Countries

Since Japan, South Korea, and Taiwan are high-context, homogeneous cultures while the U.S. is

a low-context, heterogeneous culture, research showed that Asia had faster diffusion rates.

Adoption would proceed more quickly in markets where innovations were introduced late,

allowing time to assess the relative advantages, compatibility, and other product attributes.

The Asian adopter behavior differs from Western behavior. There are fewer Asian innovators

since risk avoidance is high.

When Asian consumers become aware that others tried the product, they quickly follow suit.

MARKETING IMPLICATIONS OF SOCIAL AND CULTURAL ENVIRONMENTS

(Learning Objective #5)

The various cultural factors described earlier can exert important influences on consumer and

industrial products marketed around the globe.

Environmental sensitivity reflects the extent to which products must be adapted to the culture-

specific needs of different national markets.

At one end of the continuum are environmentally insensitive products that do not require

significant adaptation; at the other are products that are sensitive to environmental factors.

The greater the environmental sensitivity, the more managers must address country-specific

economic, regulatory, technological, social, and cultural environmental conditions.

Intel’s microprocessors can be sold anywhere because a chip is a chip, but food products have

high environmental sensitivity because of sensitivity to climate and culture.

The sensitivity of products can be represented on a two-dimensional scale (Figure 4-5). The

horizontal axis shows environmental sensitivity, the vertical axis the degree for product

adaptation needed.

At the upper right of Figure 4-5 are products with high environmental sensitivity. Food

sometimes falls into this category because it is sensitive to climate and culture.

Research studies show that, independent of social class and income, culture is a significant

influence on consumption behavior and durable goods ownership.

Consumer products are probably more sensitive to cultural difference than are industrial

products.

Hunger is a basic physiological need in Maslow’s hierarchy; everyone needs to eat, but what we

want to eat can be strongly influenced by culture.

Evidence from the front lines of the marketing wars suggests that food is probably the most

sensitive category of consumer products.

Hydration is a universal physiological need (see Exhibit 4-9). As is the case with food and

cooking, however, the particular liquids people want to drink can be strongly influenced by

culture. Coffee is a beverage category that illustrates the point.

On the European continent, coffee has been consumed for centuries. By contrast, Britain has

historically been a nation of tea drinkers, and the notion of afternoon tea is firmly entrenched in

British culture.

TEACHING TOOLS AND EXERCISES

Additional Cases:

“Tailoring Your Strategy to Fit the Culture” by Marieke de Mooij, Insight Magazine, June 2010;

IIR026-PDF-ENG.

“EMC2: Delivering Customer Centricity” by Thomas Steenburgh and Jill Avery, April 2011.

Harvard Business School 511124-PDF-ENG.

“Dacia Duster SUV” by Marina Apaydin, Hantulie Oana, and Nicoleta, January 2011, Richard

Ivey School, Product Number 910A31-PDF-ENG.

“Marketing: Who’s Really Minding the Store Globally”? Linda C. Ueltschy,; Irene Herremans;

John K. Ryans Jr. HBS BH190.

“Colgate Max Fresh: Global Brand Roll-Out”, John A. Quelch, Jacquie Labatt-Randle, HBS

508009.

Activity: Students should be preparing or presenting their Cultural-Economic Analysis and

Marketing Plan for their country and product as outlined in Chapter 1.

Out-Of-Class Reading: As an outside reading assignment, students will read how expanding

into adjacent markets is tougher than it looks; three-quarters of the time, the effort fails. Here is

how to change those odds dramatically.

Zook, Chris, and Allen, James. “Growth Outside the Core.” Harvard Business Review 81, no. 12

(December, 2003), pp. 67-73.

Cross-Cultural Differences: To assess cross-cultural differences, students will talk to people

from a different country. They can check with the office responsible for coordinating

international students to obtain names. Interview at least three people and get responses to the

following questions: (a) What country do you come from? (b) What is your first language? (c)

Describe you country’s culture in terms of the role of women in the workforce, the benefits

provided to employees, how managers treat their employees, and general management practices.

(d) What were the greatest difficulties you had in adapting to your new culture? (e) What advice

would you give me if I were in a marketing management position in your country?

Internet Exercise: Have students go to the homepage of The Internationalist

(www.internationalist.com). Here they can start to explore the world. Have them browse around

the sites and then click on International Business. They should select 2-3 countries in which they

have an interest. Students are to write a 1-page impression of findings regarding the culture of

these countries and should be prepared to discuss those findings with the class.

Videos:

U.K. Bellwether Report: Marketers Are Pessimistic About 2012 – European Companies are

scaling back marketing plans for 2012.

http://adage.com/article/global-news/u-k-bellwether-report-marketers-pessimistic-2012/232201/

Four Seasons Embraces Digital Marketing, Virtual Experiences – How they are coping with

advertising changes worldwide, and the new moves they are making.

http://adage.com/article/cmo-interviews/seasons-embraces-digital-marketing-virtual-

experiences/232055/

Film: Assign the film “Rising Sun.” The movie is a murder mystery based on the culture clash

between Los Angeles police and Japanese multinational business interests. It is entertaining and

educational at the same time.