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Intercultural Product Communication. An Assessment of Consumer Electronic Products in India and China

Bachelor Thesis 2016 59 Pages

Business economics - Offline Marketing and Online Marketing

Excerpt

Index of Contents

List of Abbreviations

List of Figures

1. Introduction
1.1. Problem Discussion
1.2. Practical Relevance
1.3. Limitation of Research

2. Product Communication
2.1. As Part of the Marketing Mix
2.2. Pressure Triangle – Effectivity, Innovation, Costs

3. Influences of cultural differences on product communication
3.1. General difficulties global acting companies have to face
3.2. China
3.2.1. Culture
3.2.2. Market, Competitors, Demand
3.3. India
3.3.1. Culture
3.3.2. Market, Competitors, Demand

4. Case Example of Intercultural Product Communication
4.1. Sony
4.1.1. Core Strategy
4.1.2. Implementation on PlayStation 4
4.1.3. Cultural Characteristics of Product Communication on Chinese Market
4.2. Microsoft
4.2.1. Core Strategy
4.2.2. Implementation on Xbox One
4.2.3. Cultural Characteristics of Product Communication on Chinese Market
4.3. Samsung
4.3.1. Core Strategy
4.3.2. Implementation on Galaxy S6 Edge+
4.3.3. Cultural Characteristics of Product Communication on Indian Market
4.4. Apple
4.4.1. Core Strategy
4.4.2. Implementation on iPhone 6S Plus
4.4.3. Cultural Characteristics of Product Communication on Indian Market
4.5. Comparison of Facts and Figures

5. Results – Critical Discussion – Recommendation

6. Conclusion and Outlook

References

Declaration in lieu of oath

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Figure 1: 7P Marketing Mix (Own figure)

Figure 2: Pressure Triangle (Own Figure)

Figure 3: Cultural Dimensions of China according Hofstede (Own Figure)

Figure 4: 7 Dimensions of Culture according Trompenaars & Hampden-Turner (Own Figure)

Figure 5: Cultural Dimensions of India according Hofstede (Own Figure)

Figure 6: GDPs of India, China, Germany from 2000-2020 (Own figure, data by StatisticsTimes.com, 2016)

Figure 7: PlayStation US-Website (Sony Interactive Entertainment LLC, 2016)

Figure 8: PlayStation China Website (Sony Interactive Entertainment LLC, 2016)

Figure 9: Comparison of US and Chinese Xbox Websites (Microsoft Corp, 2016; Microsoft Corp, 2016)

Figure 10: Indian Samsung Website (Samsung Corp, 2016)

Figure 11: The Evolution of the iPhone (TheTipsGuru.com, 2016)

Figure 12: Comparison of Key facts (Own Figure according data of (Forbes Media LLC, 2016))

1. Introduction

Once one has been to the USA, Italy, Germany, other foreign countries or even China or India, one travels with subconscious stereotypes and prejudices. In consequence of educational background, advertisement, friends and other influences cultural imaginations originate without doing it willful. Now to fit the real cultural requirements one has to study the culture in detail.

To lead into this topic, this thesis examines the product communication in consideration of different cultural circumstances and the development of cultural adaption.

This first chapter outlines the general problem, which international and global action organizations have by facing foreign cultures. The problems guide inevitable to the relevance for economy and the mentioned organizations. Due to the work with and for human beings, also limitations are topic.

The second chapter is devoted to product communication, as part of the marketing mix and under reflection of the pressure triangle.

Chapter 3 is dedicated to the countries India and China. The focus will be set on their cultures, as well as the specific markets.

The fourth chapter illustrates the intercultural product communication based on the observations of the companies Sony, Microsoft, Samsung and Apple. Their products PS4, Xbox One, Galaxy S6 Edge+ and IPhone 6S Plus, will be referred to each core strategy and the cultural characteristics in China respectively India.

After the summary of the observations, which includes the results, as well as a discussion and economic and corporate recommendations in chapter 5, the sixth and last chapter gives an outlook and the conclusion.

1.1. Problem Discussion

Developing new products means not only having an idea of necessities human beings have, neither being a creative brain. The products if new or not will be promoted on every market one wants to be present. Moreover, every market has its idiosyncrasies. But not the specific industrial sector, but also every nation, every town, every community and every human (Schönenstein, 2015).

To maximize the turnover besides revenue, global organizations have to concentrate on their core strategies and how to implement these strategies by adapting cultural circumstances and characteristics. Nevertheless, every human being has a different cultural identity and is member of diverse social and cultural groups (Shater, 2012). To give an example of an average man: a thirty years old man, living in Cologne, has Italian and German roots, is roman-catholic, likes soccer – playing and watching, watches superhero movies, hears Hip Hop and Electro, works for a postal service provider, and so on. The mentioned profile could be divided into at least eleven social and/or cultural groups – to give an impression.

Now, where in market shall an organization place itself and which social or cultural group does the organization want to address with their product communication? Moreover, how does the communication fit into their core strategy?

1.2. Practical Relevance

The relevance – especially the practical – is to get knowledge about customer’s preferences. Industries and organization does not want to pay useless money for advertisements, posters or spots without targeting their focus groups. Targeting the focus groups means to segment people into specific groups. Religion, nationality, age, gender and every other thinkable social group can divide these groups.

Especially for global acting companies these segmenting is important, as they need to know how the groups response to the promotion and if an adaption of various cultural specifications is necessary. Not only in one country, but also worldwide. Due to this fact, it is even more difficult to particularize the focus groups, because they need not be built similar in several countries.

On top of relevance question is to minimize costs and maximize revenue by communicate the correct product for the exact segmented group at least effort. This point will be picked up in several chapters, but in more detail in chapter 2.2.

1.3. Limitation of Research

Due to the uniqueness of human beings, their thoughts and preferences, it is impossible to explore each peculiarity, which could be an interesting point while creating, producing or communicating a product. Furthermore, it does not make sense. An organization will not produce a product for only one person. The limitation frame is given by logical conditions – mentioned earlier – and the specific orientation of organizations.

Due to general censorship in China, their government, specifically for sections concerned with Chinese regard, gives the limitation.

Another limit setting point is the topicality of the subject matter. This fact complicates the diversity as well as the kind of references. The search for up-to-date sources is restricted into websites and books, where books advance a more old-fashioned opinion and the internet a more modern one. This assimilates the resources according occurrence.

2. Product Communication

In this section of the thesis, the author explains and defines the scope of product communication. Where product communication is to be arranged in business sciences and what affect it. Due to the importance of product communication, this section is an important part of this thesis to introduce the practical part of the thesis.

2.1. As Part of the Marketing Mix

Earlier Marketing was defined as sales promotion (Weiber, 1993, pp. 1-2). However, in 1960 McCarthy created the original Marketing Mix, which includes the so-called “4Ps”. This mix was giving the inaccurately described and defined marketing a shape (Fill, 2001, p. 25). The price is a very important part with the fastest impact on sales. In addition, visible on turnover figures. Of course, the product is key factor of marketing, because it affects not only the price, but also the place where to promote the product. You would not place – which means distribute – a freezer in Antarctica.

illustration not visible in this excerpt

Figure 1: 7P Marketing Mix (Own figure)

In 1981, Booms & Bitner created the claimed update of the marketing mix (Cambridge Professional Academy Ltd, 2016). Augmented to the “classic” marketing mix – marked red and blue in Figure 1 – whereas People, Processes and Physical Evidence – marked green in Figure 1.

Physical Evidence means that also every service, which usually is intangible, has a physical component. For example, a champagne as welcome-drink of a hotel’s concierge.

A process is made of pieces. Connected one get a process-chain and these processes are part of the product or service. The service is done, when the product is delivered, additionally the delivery is a process the customers is paying for.

The people describe the employees. No matter if clerk, cleaning power or manager, everybody belongs to the company, is an important part and can influence the output (Cambridge Professional Academy Ltd, 2016).

The main topics for this thesis are the combination of the “2Ps” promotion – as the symbolic roof of communication – besides the product itself. These are marked red in above-mentioned Figure 1. As already said the product is the essential part of the marketing mix – no product, no marketing. However, the “P” which means products is not only the physical object or intangible service. Rather it includes the industry the product serves the segmented target group and is a significant part of determinants for price and corporate strategy.

2.2. Pressure Triangle – Effectivity, Innovation, Costs

Innovation comes from the Latin word “innovatio”, which means alteration, change or renewal. At the present time it is tantamount to R&D, creativity, ideas and new USPs and products. Indeed, innovation is not invention and can be more than that. In fact, there is no generally accepted definition; the only common attributes are the translated (Hoffmann, Lennerts, Schmitz, Stölzle, & Uebernickel, 2015, p. 397). In the thesis the focus is set on culture, product and communication, therefore the focus is set on technical innovations.

Firms’ only incentive taken into account to innovate is profit (Rosenkranz, 1996). By investing – which creates cost, we will come to this part in the following passage – in ideas and new products the ulterior motive is to develop a new USP. An undiscovered USP leads customers to buy; this brings higher revenue, due to the fact that it is a Unique Selling Proposition. This forces competitors to innovate themselves.

Costs are measureable. If it is labor, metal, oil, the rent for an office building or anything else. Everything is measureable autonomous of the currency. Nonetheless, due to the rapid trend in media since the 1990s (Hollensen, 2014, p. 484), especially in communication and IT – hardware and software – the demand for new products increase instantaneously. It is a strong driver and constraint, which the growing competition and velocity have on every organization. At the end, the investment will be represented in ratio to revenue, turnover, new customers or other KPIs. This brings us to the last passage in this section.

illustration not visible in this excerpt

Figure 2: Pressure Triangle (Own Figure)

Effectivity – especially effective communication – is critical to any organization, but can help the organization (Hearst Newspaper, LLC, 2016). It can be misinterpreted; therefore, it has to be defined. The definition gives a concrete frame, in order to devise and measure what is a positive result and what is not. In addition, the definition prevents managers or executives of talking the results up, as the defined frame is set out in writing.

As observable in Figure 2, the mentioned parts build a pyramid that collapses like a house of cards if one part will not fit as necessary. The balance between costs, effectivity and innovation has to be weighed up carefully. So that the communication method follows valuable price-performance ratio.

3. Influences of cultural differences on product communication

To explain differences, the cultural characteristics have to be focused first. In the following passages, the author gives an impression of general difficulties global players face. Additionally, the countries China and India will be spotlighted in general facts, their culture and their economy.

3.1. General difficulties global acting companies have to face

Nowadays companies want to go global. Executives see that the domestic markets, where the product may be established, is or will be saturated on long-term view. To maximize their turnover, achieve higher reputation and at least grow, new markets should be discovered.

Henceforth the proven (core) strategy, which has been adapted to domestic needs, culture and target groups are known. As mentioned in chapter 1, other countries – respective their citizens and social groups – have other cultures and needs, the age patterns and ethnics may differentiate, as well as each other subgroup (Jandt, 1995).

But before the corporate growth can start executives have to decide whether to pursue a global or a multi-local – international – strategy with a variety of business areas (Gatignon & Kimberly, 2016). This decision influences following processes and decision. If the one focus an international strategy, the concentration is on some foreign markets. An example is Ikea, after the foundation in 1943 (IKEA Deutschland GmbH & Co. KG, 2016) Ikea opened the first subsidiary in another country in 1958 in Sweden. Moreover, went on in the Scandinavian area with subsidiaries in Norway (1963) and Denmark (1969). The first subsidiary outside of Scandinavia opened in 1973 in Switzerland, thirty years after the foundation (Schmid, 2006, p. 342).

Philip Kotler said, that ‘all good marketing is local. Global companies know this and are going “glocal”.’ This means, those strategic conclusions, made by managements, by their competitiveness regarding the structure within an industry. In case of an industry of high-grade globalism, there are high interdependencies between extrinsic stakeholders: customers, suppliers and markets (Hollensen, 2014, pp. 22-24). A few large, powerful players (global) dominate the industry. Two good examples are producers of CPU, the most known and used in private PCs are Intel and AMD. The second is aircrafts; there the dominant players are Airbus and Boeing. Local business is more independent of other markets, due to the production of local products. A good example is “Kölsch” (Beer brewed in and 50 km surround Cologne), where either the ingredients can be generated by local firms or self-produced, if necessary.

Nevertheless, which industries can be globalized by which degree cannot be influenced by the firm, as it is mainly determined by the international marketing environment (Hollensen, 2014, pp. 24-25).

Significant and even more difficult in comparison to international strategies is the synchronized commercialization and sales all over the globe. A global player has no restriction in countries, continents or customers. Only the segmented target groups limit itself. To fit its target group(s), one has to divide carefully and even studies it (them). Social, cultural, historical, religious and every other thinkable arrangement in groups, as well as the markets the segmentation base on. Likewise, the high-paced development in media since the 1990s assign the companies new tasks, because that implicates compositions of new segments, target groups and even markets – a threat as well as an opportunity (Rohn, 2010, pp. 51-52).

By exploring a new market not only, the product is a key factor. For the reason that the foreign culture is comparatively unknown one has to analyze, plan and control all market applied company activities onto the declared market (Framson, 2007, pp. 24-25). This includes the entire Marketing Mix, due to possibly altered price conditions, ways of distribution; appreciation of communication (Apfelthaler, 1999).This is described roughly and shortened at the outset.

3.2. China

The name China translated means middle kingdom. This is what Chinese think about their nation and how they see China in international comparison (Zinzius, 1996, p. 23). The People`s Republic of China has nearly 1.37 billion inhabitants, which makes it the most populous country in the world and the fourth biggest country in area with approximately 9.5 million square-kilometers (Statistisches Bundesamt, 2016). Two-thirds of the China’s vast territory mountainous or desert and only one tenth is cultivated (Chow, Holbert, Kelley, & Yu, 1997). These are some key facts that demonstrate the dimensions the country has in matters of population, size and the possibilities are attended by these specifications.

To give an impression of the historical and political way until today, one starts in the 1970s – after the revolution in 1949. China concentrate on its own strengths and economists as well as policymakers recognized the necessity of overhauling the economic system (Bell, et al., 1993). China had to be rejuvenating the economic system and began to reform policies from 1978 to 1984, which let the trade fairs gain. Afterwards the establishment of the pricing system and the taxation has been reformed. Then, in the early 1990s, the socialist market system grew under the leading of Deng Xiaoping (Bell, et al., 1993).

Nowadays China is confronted with stereotypes like communism, bad labor conditions on the one hand and high-tech society and fast growing economy one the other hand.

3.2.1. Culture

Chinese culture has various facets, which are affected by diverse factors. Similar to other Asian countries Chinese focus on family, which sometimes includes the company as well as the country. Personal connections are overwhelmingly important (Chow, Holbert, Kelley, & Yu, 1997).

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Figure 3: Cultural Dimensions of China according Hofstede (Own Figure)

This is also one aspect, which is considered in Geert Hofstede’s cultural model. According the point Individualism in Figure 3, the index of 22 expresses a high value of group behavior, attesting the importance of personal connections. The six dimensions are generated to set a nation`s values in relation to others nation`s values. These ideals are influenced by their culture; hence, these dimensions declare the culture. However, they are researched within a group of one nation, thus they express a collective not an individual (Hofstede, Van Hofstede, & Minkov, 2010, pp. 28-30).

Following economists based on the work of Hofstede, Trompenaars and Hampden-Turner the dimensions have been filled with information and developed. In addition, the updated dimensions are geared to the origin dimensions created by Hofstede. Even more, Trompenaars and Hampden-Turner acknowledge the characteristics. Although the dimensions seen in Figure 4 are independent from the origin dimensions – alike Figure 3 – there are analogies. Even more, Trompenaars and Hampden Turner, accord Hofstede’s research about cultural characteristics.

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Figure 4: 7 Dimensions of Culture according Trompenaars & Hampden-Turner (Own Figure)

Important for business to concentrate on are specificity vs. diffuseness, inner-direct and outer direct based decisions and – as already mentioned according Hofstede and confirmed by Trompenaars and Hampden-Turner – individualism vs. collectivism. Chinese are, due to high collectivism value, interested in personal relations and ask direct and specific (Zinzius, 1996, pp. 45-47). But then again, they talk diffuse in business in order to be polite – according Confucianism – although they come to a pragmatic decision based on facts (Lang, 1998, pp. 29-32). Obviously, preparation affording one’s requirements in order to avoid discrepancies is definitely recommended.

7 Dimensions of Culture

3.2.2. Market, Competitors, Demand

The Chinese market is segmented into four parts. Agricultural (Rural) Sector, Urban (Industrial) Sector and Service Sector are the classic sectors, but due to the strong influence and control of the government, an important “sector” consists of State-owned enterprises. This control built the strong industrial sector and modernized China, according the communists judgement.

After giving a short impression of Chinese markets, now the ICT industry and its characteristics including a specific view on the game consoles. That 10 companies out of 50 – this means 20% – most valuable Chinese brands are relocated in ICT sector expresses the competition within this industry. Moreover, 210,302 US$ millions of brand value of these Chinese ICT brands is an impressive number (Millward Brown, 2016). In comparison to these 10 brands Sony – with 34 US$ billions – and Microsoft – with 407 US$ billions – show the global role and importance of the two leaders of the industry (Forbes Media LLC, 2016).

An important point for companies producing and selling video game consoles has been the blanket restrictions – including manufacturing and selling consoles – which took effect in 2000. Due to governmental censors and possible adverse effects on Chinese youth, this ban enacted. After 15 years, the ban was lifted in 2014, as support for local industry and opening of the market (Tribune Publishing, 2016). This is comparable to a new market entry for Based on half a billion gamers, the expectations have been tremendous. On the other hand, the lack of televisions, the high hardware cost and the – still prevailing – censorship for consoles and games, the short time trend is moderate. How the progress will remain to be seen.

3.3. India

Bharat Ganrajya – the Hindi term for Republic of India – places second with its 1.25 billion citizens in comparison to the world, only the population of China is higher. However, the area is only approximately a third with 3.3 million square-kilometers, which is number seven in comparison to world (Office of Public Affairs, 2016). India’s dimensions are comparable to Chinas regarding size and inhabitants. Even in economy both are developing countries and have an average income below 10,000 US$ per year – China 7,572 US$ and India 1,608 US$ (Statistisches Bundesamt, 2016).

The Portuguese Vasco da Gama has been the first European who travelled around the African continent and discovered India in 1498, which made the Portuguese an important trading partner. Nevertheless, in 1600 Great Britain replaced Portugal as leading economic power and found the East India Company (iportale GmbH, 2016).

In 1947, India became independent of British-India and had a lot of changing political alliances after two periods of office by Indira Gandhi and her death in 1984. The present global economic crisis has strong influences on Indian economy, which let the Rupee decrease (Bundeszentrale für politische Bildung, 2016). Future will show how economy will develop and what milestones will be set.

3.3.1. Culture

Indian culture as well as Chinese – mentioned in chapter 3.2.1 – has many variations. Due to different ages and several registrations of tenures – Portuguese, British, Islamic, Persia – the culture developed richly colored like a flower. The more than 13 practiced religions – the main is Hindu with approximately 80% - point the variety up. Furthermore 100 languages of which 21 – besides English and Indian – are registered as official languages, which is another indicator for cultural diversity (Deutsche Zentrale für Tourismus e.V., 2016; Dalmia & Sadana, 2012, pp. XIV-XVII).

In business, Indians have diverse attitudes too, due to the variety of religions, ethnic groups and languages. According same religious orientation there will be commonalities, the way business is done in India. Indians search for guides and thinkers, gurus, they can trust in look up to. Indian businesspersons want to gain the boss’ favor; this explains the high PDI of 77 according Hofstede’s cultural dimensions in Figure 5. Even though, if they are not lucky with their boss or even with their forecast career prospects, other options will be taken into consideration (Rodewald, 2007, p. 66). Thus describes the relatively small UAI of 40 in Figure 5, which means that Indians do not avoid risks.

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Figure 5: Cultural Dimensions of India according Hofstede (Own Figure)

According their caste consciousness Indians index for individualism according Hofstede is 48 (Figure 5). Neither it is a high value nor is it a low one, as they stay together in a collective within one caste, whereas they are individual in the face of other people. Apart from the relatively low value of masculinity (56 in Figure 5), the women still expected to be submissive or obedient. However, these are continuous self-developing values determined by humans and of humans (Pawan S., 2010).

At the end of this passage the key is, to prepare oneself for provoking cultural mistakes, a lot of prearrangement is necessary. Whether it is India or – mentioned in section 3.2.1 – China.

3.3.2. Market, Competitors, Demand

A high percentage of 72% lived a rural life in 2001 according the census, where nowadays more and more young Indians move to bigger cities to work. The juvenescence makes India, as well as China with an average of 8.73%, a powerful economy with average growth of GDP of 7.18% including future predictions. This comparison, shown in Figure 6, makes the immense power clear by exposing the limitations for a global economy, as Germany is (StatisticsTimes.com, 2016).

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Figure 6: GDPs of India, China, and Germany from 2000-2020 (Own figure, data by StatisticsTimes.com, 2016)

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Details

Pages
59
Year
2016
ISBN (eBook)
9783668574977
ISBN (Book)
9783668574984
File size
1.6 MB
Language
English
Catalog Number
v380879
Institution / College
University of applied sciences, Cologne
Grade
2,1
Tags
intercultural product communication assessment consumer electronic products india china

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Title: Intercultural Product Communication. An Assessment of Consumer Electronic Products in India and China