Intercultural Marketing. The Impact of Culture on the Marketing-Mix

Bachelor Thesis 2014 59 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media


List of Contents

List of Contents

List of Figures

List of Abbreviations

1 Introduction
1.1 Definition of the problem
1.2 Objectives of the Thesis
1.3 Methodology

2 International Marketing
2.1 Globalization of the economy
2.2 Definition of International Marketing
2.3 Orientation Systems

3 Intercultural Marketing
3.1 Terminology Delimitation
3.2 Orientation Systems
3.3 Standardization vs. Differentiation
3.4 Market Segmentation

4 Culture
4.1 Common Understanding of the term Culture
4.2 Theoretical Approaches dealing with Culture
4.2.1 Cultural Dimensions according to Hofstede
4.2.2 Cultural Dimensions according to Hall

5 Adjustment of the Marketing-Mix to the Culture
5.1 Product Policy
5.1.1 The nature of Intercultural Product Strategies
5.1.2 Standardized vs. differentiated Products
5.1.3 Culture-free and culture-bound Products
5.1.4 Product Attributes
5.1.5 Program Policy
5.1.6 Branding Policy
5.1.7 Packaging
5.2 Communication Policy
5.2.1The Nature of Intercultural promotional Decisions
5.2.2 Intercultural Advertising Decisions Advertising Objectives Advertising Message Advertising Media
5.3 Pricing policy
5.3.1 The Nature of Intercultural Pricing Decisions
5.3.2 Cultural Influences on Pricing The Role of Money Price as Quality Indicator Price Acceptance Level
5.4 Distribution Policy
5.4.1The Nature of Intercultural Distribution Decisions
5.4.2 Intercultural Logistical Decisions Internationalization and Standardization The Selection of the Distribution Channel

6 Conclusion

List of Literature

List of Figures

Figure 1: Nation and Culture as Reference Value for International Marketing .. 8

Figure 2: Strategy of Differentiated Standardization 14

Figure 3: Principle of Differentiated Standardization 15

Figure 4: Three Level of Uniqueness in Human Mental Programming 20

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

1.1 Definition of the problem

Internationalization of business activities of numerous major corporations has paved the way to constant merging and the integration of national economies. This phenomenon of economic interpenetration has been accelerated through the emergence of new technologies, better transport facilities and new forms of com- munication like the Internet and satellites. Companies that desire to secure their sustainable existence stop focusing on domestic markets and initiate activities abroad. Furthermore, the constant transformations of markets worldwide and shorter product life cycles promote the entry of several international active firms in worldwide markets which aspire for economies of scale and risk diversification. Trans-boundary trade, international capital flow, and rapid widespread diffusion of technology have led to a uniformity of the economy which affects globaliza- tion. Among other things, the alignment of consumer needs worldwide and the idea of a global consumer have been discussed in the globalization debate. The discussion suggests that consumer needs, wants, and tastes have been uniformed worldwide and therefore international active companies should standardize their marketing activities. However, this school of thought often underestimates the factor culture which has a significant influence on inner consumer behavior.1 In order words, consumer needs and purchasing decisions are affected by culture and cannot be handled with a sole standardized marketing strategy. For this reason, firms should take the factor of culture into consideration when designing interna- tional marketing strategies, thus causing companies’ international marketing ac- tivities to focus more on the interactive effects between culture and consumer be- havior. In this view, international marketer’s challenges reside in mastering cul- tural differences in marketing activities strategy and in adjusting marketing mix activities to the culture of each national market, deriving from being the concept of intercultural marketing.

1.2 Objectives of the Thesis

The objective of this presented bachelor thesis is to demonstrate how culture af- fects international marketing activities, thus portray the marketing intercultural branch. In other words, the reader will gain an idea of the importance of culture in the strategic marketing planning. From a marketing point of view, it is recogniza- ble that worldwide interdependence of economies has partly created homogeneity of business operations, but the world is still comprised of cultural differences and specificity and various consumer behaviors and needs. Bearing this fact in mind, enterprises integrate culture more and more into international marketing activities, especially when doing business in an environment full of cultural diversity. The question of a strategic choice is raised at this point. Active international corpora- tions have to decide whether to standardize or to adapt to marketing-mix activi- ties. This leads to the following questions: which factors determine businesses choice for a differentiated or a standardized strategy in marketing mix activities? To what extent can companies standardize goods and services? Is standardization relevant for all marketing mix activities and for all foreign target markets? Is it a necessary for the active international firm to adapt their activities to each national culture? How important is the impact of culture on marketing-mix? The presented paper will provide some preliminary answers to these questions with an emphasis on marketing-mix elements and will investigate whether and to what extent cul- ture should be considered as a strategic key success factor.

1.3 Methodology

The presented bachelor thesis consists of four main parts. The first part describes the reasons and the development of the internationalization of the economy and is followed by the definition of international marketing and the resulting internation- al marketing orientations for abroad-reaching companies. The second part concen- trates on intercultural marketing which is an aspect of international marketing. This begins with a terminology delimitation of intercultural marketing, and then marketing orientation in the light of culture is discussed. Regarding the fact that international active firms have to handle several markets, arguments and specifici- ty of standardization or a differentiation strategy will be point out the resulting market segmentation strategies.

Connecting these is the third part, giving an overall idea of the term culture, which plays a central role in this discussion. The aim of this section is to make the term culture more tangible and to develop fundamental knowledge for the future dis- cussion in the fourth part. In addition, some theoretical approaches dealing with culture are going be illustrated. The fourth part which constitutes the principal part of the thesis deals with marketing mix in relation to a cultural viewpoint. The intention is to illustrate the impact of culture on marketing-mix elements. In other words, how international marketers should understand and perceive cultural differences in foreign markets and adapt marketing activities accordingly. Finally, the bachelor thesis ends with a conclusion, which summarizes results, ideas, and concepts of all previous parts as well as a critical evaluation.

2 International Marketing

2.1 Globalization of the economy

Globalization can be defined as the steady interdependence of countries world- wide through the increasing volume and cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.2 This phenomenon has been increasingly developed since the end of World War II due to close interactions at the economic level between all countries. Nowadays it is also manifested through the liberaliza- tion of the market, technological advancement, and efficient communication, which favor firms having worldwide manufacturing communication and world- wide real-time financial transactions.3 From an economical standpoint, globaliza- tion has facilitated the mobility of products, services, capital and technology all over the world and has increased the intensity and the broadness of the market competition worldwide.4 According to the WTO trade report, the real global ex- port of commodities increases up to 3.5 per cent on average (based on constant price data) and the manufacturing of products grows up to 5.9 percent per year. This fact reflects the rising economic importance of trade in goods and the cross- border progressing of activities of companies, as well as a strong competition. Hence, what leads companies to internationalize their businesses?

There are many motives for companies to go abroad or to internationalize their activities. On one hand, there is steady saturation of their local markets through foreign competition, the worldwide interconnection of the economy facilitated through regional trade agreement between nations, and the search of new markets to develop their activities and achieve economies of scale.5 On the other hand, there is shortened product life cycle, as well as the aim to save costs through the learning curve effect pressuring companies to go abroad.6 Small and mediumsized companies and also large corporation in search of sustainability and competitive advantage are now obligated to internationalize their activities - if they want to overcome the competition. Therefore, it is a necessity for firms to perceive new trends, create new assets, and adapt to political changes.

2.2 Definition of international marketing

At the early stage of internationalization, companies need to examine and differ- entiate domestic marketing strategies to international marketing strategies. Local companies have two attitudes to the choices made in order to face the impact of globalization on their local business environments. They can either be an active or a passive recipient.7 An active company is a company that decides to go abroad in order to seek new customers instead of being suffocated in its own national mar- ket by the consequences of globalization. At this level, companies often consider international marketing as the first step in the initial stages of processing market- ing activities in foreign markets. The difference between marketing and interna- tional marketing resides in the fact that international marketing involves designing marketing activities across national boundaries or in at least two different coun- tries while marketing mainly focus on the coordination of domestic markets activ- ities.

There are numerous definitions of international marketing in literature, but most of these definitions depict international marketing as an excess of national cross- border marketing activities. On one hand it is summarized as the planning and the designing of measures to ease the exchange and the coordination process of a firm in foreign markets.8 On the other hand, the emphasis is on the fact that interna- tional marketing is a way of finding and satisfying global customer needs better than the competition while coordinating both domestic and international market- ing activities within the constraints of the global environment.9 These previous conceptions of international marketing enhance the fact that it reflects the man- agement of marketing mix activities in at least two different national markets. However, it is difficult to give a clear definition of international marketing be- cause there are numerous strategic orientations of how companies should pene- trate foreign markets.10 International marketing paths are commonly based on the idea that everything is global.11 In other words, globalization has created a world- wide uniformity in customer needs, wants, and tastes, so that companies are likely to conduct a standardized strategy for their product and thus there is no need to adapt product for every single market. But depending on the degree of complexi- ty, international marketing also require companies to create new facilities and manufactured industries abroad in order to coordinate their activities in the host market.12

Characteristics of international marketing include complexity and differentiation of the company's environment, the increase of the importance of cultural envi- ronment of the enterprise, the complexity of the marketing activities due to a large number of foreign markets, high degree of risk in decision-making, and the enor- mous need for constant data.13 Therefore, international marketers have a threefold responsibility: international marketing (marketing across national boundaries), foreign marketing (marketing within foreign countries), and multinational market- ing management (coordinating marketing in multiple markets).14

2.3 Orientation systems

In order to manage their international marketing activities, internationally active companies need a norm-based framework to guide their business operations. As guidance orientation to enter new market worldwide, companies refer to the Heenan and Perlmutter EPRG model to design their operations. The EPRG (eth- nocentric- polycentric- regiocentric- geocentric) framework originally presented by Perlmutter suggests four dimensions of the company's internationalization paths.15

Ethnocentric orientation occurs when a company assumes that consumer behav- ior in foreign markets are same as in domestic market and views international business operations as derivative to their main activities in home country mar- ket.16 Characteristic of such companies is the use of an export strategy at the early stages of their internationalization.17 A strong cultural dominance and superiority of the parent company exist within ethnocentric oriented enterprises. Most of time, decisions are centralized and every important decision is made by the head office. The parent firm gives instructions to the subsidiary firm and procedures are transferred from the headquarters and impose to subsidiaries.18 Ethnocentric ori- ented firms make a clear distinction between national and foreign target markets. Marketers set domestic markets prior to foreign targets markets. Ethnocentric viewpoint derives from the idea that successful products in the domestic market have chances to be successful everywhere. That is the reason why companies con- duct no systematic research outside of the domestic market, and transfer products into foreign markets without or less modifications. Companies with an ethnocen- tric approach tend to have a high degree of standardization, because they mini- mize the impact of cultural differences and they believe in home-country superior- ity.19 An example of ethnocentric attitude is the American Barbie doll with blond hair and long legs that has been exported and commercialized throughout the world without any modification of the product to specific countries. The Barbie doll has been sold first in Japan after an adaptation of the doll to Japanese typical body dimensions.20

Basically the opposite of an ethnocentric approach is a polycentric approach. The underlying idea behind the polycentric orientation is that the world is made of cultural and economic differences, which hinder marketing activities across na- tional boundaries and make the uniqueness of each country.21 Therefore interna- tional business operations should be aligned towards every single host market needs and particularities. Regarding the heterogeneity of the market is an adapta- tion of marketing activities (product, pricing, distribution, and communication) necessary to meet local customer needs and wants. Hence, polycentric firms ar- range their marketing strategies for each host market in order to gain an optimal product-market fit.22 The aim of this approach is to develop a global market and thus activities are performed also with a high degree of standardization and the focus on the specific situation of each country enables a wide exploitation of mar- ket potential in terms of market shares, or the achievement of a substantial premium pricing.23 Polycentric enterprises mostly use subsidiaries that have a decisionmaking autonomy at one disposal to deal with foreign market, but are still centrally controlled.24 A typical representative in consumer goods sector is Unilever whose foreign subsidiaries partly operate under the original company name and under the use of its own brand.25

A regiocentric approach appears when similarly foreign markets have been grouped into superior region.26 Firms that have a regiocentric viewpoint group each single market into regions in regard of the homogeneity of the market. As a result of this grouping, they develop regional marketing strategies and standardize products according to each regions particularity (eg: Euro-marketing). The group- ing of market is based on cultural and economic similarities between countries. Regiocentric orientated enterprise acknowledge that the world is made of differ- ences between countries and regions, thus businesses should take in consideration political, legal or socio- cultural business environment . This viewpoint is often strengthening by the existence of regional trade like EU and NAFTA which favor- ite regional trade via the dismantling of tariff and non-tariff barriers. Marketing activities are usually coordinated in regard of regional market circumstances.27 In this case, companies delegate their core business operations in the host market to a regional independently acting company that undertake all activities in the region.

Geocentric oriented firms operate using a global marketing strategy where mar- kets around the world are viewed as their primary target markets and they seek to create a global strategy to meet and respond effectively to local needs and wants of customer. The standardization of the market penetration activities is a distin- guished mark of the geocentric orientation.28 The Aim of geocentric companies is to improve their competitiveness through the integration of all company activities in a connected overall system.29 Geocentric approach recommends that responsi- bilities and power should be share mutually between parents firms and subsidiar- ies.30

3 Intercultural Marketing

3.1 Terminology delimitation

In order to respond in an effective way to cultural differences in the context of strategic international marketing-management, enterprises need accurate knowledge regarding the interactive effects between culture and customers behav- iors.31 Culture has a direct impact upon international marketing programs and in- ternational marketers need to take this factor into account while planning market- ing program worldwide. Firms doing business across national boundaries have to deal with cultural differences in host market, so is it important for international marketers to elaborate a cultural analysis before entering markets. In other words, cultural differences should be reflected in marketing strategies whereby the con- cept of intercultural marketing.32 The difference between intercultural marketing and international marketing resides in the fact that international marketing sets the main focus on target countries and explores possibilities to apply standardized operative marketing strategies at the national and international level, whereby the handling of cultural related factors are ignored. On the other hand, intercultural marketing takes into account the factor culture while planning marketing activities and try to conciliate differences and exploit similarities at international level (cf. figure 1).33

Figure 1: Nation and Culture as reference value for international Marketing

Abbildung in dieser Leseprobe nicht enthalten

Especially for businesses that operate worldwide, intercultural marketing is rele- vant because they meet people and institutions with rooted values, attitudes, and behavior patterns in a particular cultural area. These cultural traits are to take into consideration depending on the potential of standardization or differentiation when designing product, pricing, distribution and communication policies.

Intercultural marketing is to differentiate from ethno-marketing and global mar- keting. The focus of ethno-marketing is primarily on cultural differences that ap- pear within a country, where intercultural marketing includes the analysis, plan- ning, coordination and control of all companies’ activities in touch with culture in international markets.34 On the other hand, global marketing deals with the coor- dination, the development and the integration of marketing activities for the global market. Marketing programs are designed to meet global market demands and wants and activities are made simultaneously in several international markets.35 Furthermore, intercultural marketing follows the guiding principle that where cul- tural differences obviate to apply an integrated approach in foreign target markets, marketing strategies have to be adapted and where there are cultural similarities for transnational strategies, marketing activities have to be standardized.36

3.2 Orientation Systems

Considering culture as the reference plan in international marketing raises the question about the organization of a substantial intercultural marketing strategy. Bearing culture in mind, it important to adjust international marketing orientation system to cultural specificity in the designing and planning process of marketing activities. The main problem with the classical EPRG framework is that it was originally elaborate to unify and harmonize the organizational structure, the per- sonnel management, the decision making processes, and the international place- ment of employees within an organization. Cultural driven purposes were not in- tended.37 In this view, the KMRG framework developed by Mennicken and based on the EPRG model includes culture as starting point. Besides cultural- centered aspects, it also depicts multicultural, regiocultural and geocultural per- spectives.38 The reference value of the KMRG framework has been moved into the cultural sphere. In contrast, the EPRG framework sets the coordination of market- ing activities in foreign market as reference. This aim to give international mar- keters guidelines to develop and integrate activities in different cultural business environments.39 While conducting business across national boundaries, firms should take into account in their decisions making activities the culture of the host country and have a primacy of host -country approach while entering a new mar- ket.

In culture-centered approach (ethnocentric), the culture of the homeland has a great influence on international activities of companies and foreign markets pro- cessing methods. This refers most of the time to an ethnocentric orientation.40 The culture of the homeland overwhelms the culture of the foreign target country, and marketing activities that have been developed in the domestic market are transferred in the foreign culture without or with less modification. Companies develop activities for global markets and aim to satisfy global consumer needs.41 Furthermore, some companies decide not to adapt their marketing activities to market cultural specificity relying on the country-of-origin-effect. This refers to the idea that foreign customer prefers a product on the basis of his manufacturing origin or nationality, because they associate the country where the product has been produced with high quality or reliability.42 Cultural centered orientation corresponds most of the time to standardized market cultivation where cultural differences are ignored. This strategic choice is likely to be unsuccessful because cultural particularities between markets are underestimated.43

Firms conducting a multicultural orientation (Polycentric) consider the culture of the foreign market on equal terms with the culture of their homeland. This means, there is no preponderance of the culture of the country of origin.44 Multi- cultural oriented firms are likely to develop a differentiated marketing strategic because they acknowledge culture differences between markets. This orientation is quite similar with a polycentric approach.45


1 Cf. Mennicken, C. (2000), p. 1.

2 Cf. Johnson, D./Turner, C. (2010), p. 21.

3 Cf. Bradley, F. (2005), p. 20.

4 Cf. Glowik, M./Smyczek, S. (2011), p. 8ff.

5 Cf. Norvell, D./Raveed, S. (1980), p. 1.

6 Cf. Mennicken, C. (2000), p. 1.

7 Cf. Johnson, D./Turner, C. (2010), p. 2.

8 Cf. Berndt, R. et al. (2005), p. 6.

9 Terpstra, V./Sarathy, R. (1994), p. 4.

10 Cf. Cuber, C. (2008), p. 6.

11 Cf. Levitt, T. (1983).

12 Cf. Gilligan, C./Hird, M. (1986), p. 12.

13 Cf. Mennicken, C. (2000), p. 17.

14 Terpstra, V. (1978), p. 5.

15 Cf. Heenan, D.-A./Perlmutter, H.-V. (1979), p. 15ff.

16 Cf. Richter, T. (2012), p. 57.

17 Cf. Berndt, R. et al. (2005), p. 11.

18 Cf. Glowik, M./Smyczek, S. (2011), p. 17.

19 Cf. Keegan, W.-J./Schlegelmilch, B.-B. (2001), p. 17.

20 Cf. Ohmae, K. (1985).

21 Cf. Keegan, W.-J./Schlegelmilch, B.-B. (2001), p. 17ff.

22 Cf. Perlmutter, H.-V. (1969), p. 9ff.

23 Cf. Zentes, J. et al. (2013), p. 57.

24 Cf. Backhaus, K./Voeth, M. (2010), p. 68.

25 Cf. Berndt, R. et al. (1997), p. 17.

26 Cf. Berndt, R. et al. (2005), p. 11.

27 Cf. Glowik, M./Smyczek, S. (2011), p. 17.

28 Cf. Zentes, J. et al. (2013), p. 51.

29 Cf. Meffert, H./Bolz, J. (1998), p. 26.

30 Cf. Glowik, M./Smyczek, S. (2011), p. 17.

31 Cf. Samli, A.-C. (1995), p. 163.

32 Cf. Gilligan, C./Hird, M. (1986), p. 46f.

33 Cf. Mennicken, C. (2000), p.86

34 Cf. Mennicken, C. (2000), p. 90.

35 Cf. Keegan, W.-J./Schlegelmilch, B.-B. (2001), p. 29.

36 Cf. Usunier, J.-C./Walliser, B. (1993), p. 128.

37 Cf. Emrich, C. (2014), p. 174.

38 Cf. Mennicken, C. (2000), p. 221.

39 Cf. Gilligan, C./Hird, M. (1986), p. 48.

40 Cf. Bruhn, M. (1992), p. 705.

41 Cf. Yip, G.-S. et al. (1996), p. 1ff.

42 Cf. Zentes, J. et al. (2013), p. 63.

43 Cf. Mennicken, C. (2000), p. 223.

44 Cf. Bruhn, M. (1992), p. 705.

45 Cf. Welge, M.-K. (1992), p. 705.


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intercultural marketing impact culture marketing-mix




Title: Intercultural Marketing. The Impact of Culture on the Marketing-Mix