4-1 Chapter 4 Social and Cultural Environments. 4-2 Preferential Trade Agreements Many countries...

4-1

Chapter 4Social and Cultural

Environments

4-2

Preferential Trade Agreements

Many countries seek to lower barriers to trade within their regions– Free Trade Areas– Customs Unions– Common Market– Economic Unions

4-3

1. Free Trade Areas

Two or more countries agree to abolish all internal barriers to trade amongst themselves

It is the second stage of economic integration

Countries continue independent trade policies with countries outside agreement

http://en.wikipedia.org/wiki/Economic_integration

4-4

2. Customs Unions

Evolution of Free Trade Area

Includes the elimination of internal barriers to trade (as in FTA) AND

Establishes common external barriers to trade

4-5

3. Common Market

Includes the elimination of internal barriers to trade (as in free trade area) AND

Establishes common external barriers to trade (as in customs union) AND

Allows for the free movement of factors of production, such as labor, capital, and information

4-6

4. Economic Unions

Includes the elimination of internal barriers to trade (as in free trade area) AND Establishes common external barriers to trade (as in customs union) ANDAllows for the free movement of factors of production, such as labor, capital, and information (as in common market) ANDCoordinates and harmonizes economic and social policy within the union

4-7

Economic Unions

Full evolution of economic union

– creation of unified central bank

– use of single currency

– common policies on issues ranging from agriculture to taxation

– requires extensive political unity

4-8

Economic Integration in the Americas

The North American Free Trade Agreement (NAFTA) created the world’s largest free market.

– 390 million U.S., Canadian, and Mexican consumers

The three countries have pursued different trade policies with non-members (for example, Mexico has signed FTAs with more than 40 countries in 12 agreements), making the possibility of creating a customs union hard to accomplish

4-9

EU

4-10

Is the world all the same?

4-11

World Hunger Facts

Worldwide, over 800 million people (one in seven) are undernourished– Don’t get enough

calories each day

– Susceptible to illness

– Unable to lead productive lives

4-12

World Hunger Facts

Over 20,000 people die each day due to causes related to undernutrition

¾ of these are children under the age of 5 – About 6 million/year

http://news.bbc.co.uk/olmedia/1555000/images/_1556880_baby150.jpg

4-13

Undernutrition and Child Death

ftp://ftp.fao.org/docrep/fao/008/a0200e/a0199e.pdf

4-14

Common Scenario

Mother– Poorly educated

– Food is scarce

– Several children

Youngest child– undernourished

– Disease resistance low

– Drinks unsanitary water

– Develops diarrhea

– Loses interest in eating

4-15

Common Scenario

Mother removes solids from child’s diet– Not enough nourishment

to fight disease

– Diarrhea continues

Mother removes liquids– Dehydration

– Death

4-16

Causes of Hunger

Poverty– 2.8 billion people

earn less than $2/day

4-17

Causes of Hunger

Extreme Poverty– 1.2 Billion people earn

less than $1/day

– 75% of these live in rural areas

• many unable to own land

– Worst in Sub-Saharan Africa

4-18

World Hunger Map

www.feedingminds.org/ img/map_world.jpg

4-20

Sub-Saharan Africa

4-21

WFP

4-22

What else?

4-24

Global summary of the HIV/AIDS epidemic, December 2003

Number of people living with HIV/AIDS Total 37.8 millionAdults 35.7 million Women 17.0 millionChildren under 15 years 2.1 million

People newly infected with HIV in 2003 Total 4.8 millionAdults 4.1 millionChildren under 15 years 630 000

AIDS deaths in 2003 Total 2.9 millionAdults 2.4 millionChildren under 15 years 490 000

4-26

Global HIV epidemic, 1990‒2005* HIV epidemic in sub-Saharan Africa, 1985‒2005*

Number of people living with HIV

% HIV prevalence, adult (15-49)

% HIV prevalence, adult (15‒49)

Number of peopleliving with HIV (millions)

0

10

20

30

40

50

1990 1995 2000 2005

0.0

1.0

2.0

3.0

4.0

5.0

1985 1990 1995 2000 2005

0

5

10

15

20

25

30

0.0

2.5

5.0

7.5

12.5

15.0

% HIV prevalence, adult (15‒49)

Number of peopleliving with HIV (millions)

Estimated number of people living with HIV and adult HIV prevalence

This bar indicates the range around the estimate

*Even though the HIV prevalence rates have stabilized in sub-Saharan Africa, the actual number of people infected continues to grow Because of population growth. Applying the same prevalence rate to a growing population will result in increasing numbers of people living with HIV

10.0

4-27

A global view of HIV infection38.6 million people [33.4‒46.0 million] living with HIV, 2005

4-28

Field, M. G. N Engl J Med 2004;351:117-120

Estimated Prevalence of HIV Infection and Number of People Living with HIV Infection or AIDS, End of 2001

4-29

0

200

400

600

800

1000

1994 1995 1996 1997 1998 1999 2000 2001 2002

Year of report

UkraineLatvia

Belarus

Russian Federation

Estonia

Casesper million

HIV infections newly diagnosed per million population1994-2002, selected countries, eastern Europe

EuroHIV

Lithuania

Upd

ate

at

30 J

une 2

003

20

40

60

8019

83

1985

1987

1989

1991

1993

1995

HIV

pre

vale

nce

(%)

Rapid HIV spread among IDUsPrevalence quickly rising to 40% or more

Edinburgh

Bangkok

Myanmar

Manipur & Yunnan

Odessa

Ho Chi Minh City

4-31

HIV/AIDS

4-32

At the same time in other countries…

Other health problems related to nutrition…

4-34

meanwhile, as worldwide hunger rates drop,

age

June 2002. Agency for Healthcare Research and Quality and the Centers for Disease Control. http://www.ahrq.gov/ppip/activity.htm

4-35

Who are western countries?Who are third world countries?

Family size?

Life expectancy?

4-36

Hans Rosling

Hans Rosling is professor of international health at Sweden's world-renowned Karolinska Institute, and founder of Gapminder, a non-profit that brings vital global data to life. With the drama and urgency of a sportscaster, he debunks a few myths about the "developing" world. (Recorded February, 2006 in Monterey, CA.)

4-37

Task of Global Marketers

Study and understand the country cultures in which they will be doing business

Incorporate this understanding into the marketing planning process

4-38

Introduction

“It is not just speaking a common language. It is sharing a culture and understanding friendships in the

same way”

Juan Villanonga – Former Chairman of

Telefonica

4-39

Society, Culture, and Global Consumer Culture

Culture – Ways of living, built up by a group of human beings, that are transmitted from one generation to another

Culture is acted out in social institutions

Culture has both conscious and unconscious values, ideas and attitudes

Culture is both material and nonmaterial

4-40

Society, Culture, and Global Consumer Culture“Culture is the collective

programming of the mind that

distinguishes the members of one

category of people from those of

another.”

- Geert Hofstede

4-41

Society, Culture, and Global Consumer Culture

Global consumer cultures are emerging– Persons who share meaningful sets of

consumption-related symbols– Pop culture; coffee culture; fast-food culture

Primary the product of an interconnected world

4-42

Attitudes, Beliefs and Values

Attitudes - learned tendency to respond in a consistent way to a given object or entity

Belief - an organized pattern of knowledge that an individual holds to be true about the world

Value - enduring belief or feeling that a specific mode of conduct is personally or socially preferable to another mode of conduct

4-43

Two senior vice presidents, Robert , VP of international sales, and Kate, VP of personnel, disagree on whom to send to Saudi Arabia to negotiate the sale of two major computer installations worth approximately 35$ million. CC company has an excellent products and enjoys a good reputation in the area. With effective negotiation they are certain they can make a profitable sale. There are two candidates for the job, Jane and Bill.

Case: Who will go to Saudi Arabia?

4-44

Jane: MBA degree, 6 years’ international experience with CC company, has successfully negotiated two major sales to firms in Norway and Sweden.

Bill: has an excellent reputation and has a broad understanding of the product line just as Jane. His only international experience was two years ago ,when he accompanied a senior executive to Japan to help negotiate a major sale, and he did a crucial role in the negotiation..

4-45

Religion

Religion is one important source of society’s

beliefs, attitudes, and values. The world’s

major religions include: Buddhism, Hinduism, Islam,

Judaism, and Christianity.

4-50

JC Penny 1928

4-51

Religion

4-52

Playground Outdoor Equipment Store

4-54

Aesthetics

The sense of what is beautiful and what is not beautiful

What represents good taste as opposed to tastelessness or even obscenity

Visual – embodied in the color or shape of a product, label, or package

Styles – various degrees of complexity, for example are perceived differently around the world

4-55

Dietary Preferences

Would you eat…..

– Kimchi – (Korea) – is a traditional Korean dish of fermented vegetables seasoned with chili peppers and salt.

– Blood sausage (Germany) -is a sausage made by cooking animal blood with a filler until it isthick enough to congeal when cooled.

4-56

Dietary Preferences

Would you eat…..– Pickled eggs – (USA) –

– Pigs blood with eggs – (Hungary)-

– Breast Milk - (China)

– Fried Crickets – (Philippines)

4-57

Sayings

Together we plan, together we act for a better community lifestyle. (Chinese Saying)

4-58

“Kwen-chan-ah,” in Korean – “It’s okay” or “It’s not a problem” actually means, – “I have no relationship with it” or “I have nothing

to do with it.”

Class of 2002– In USA vs Korea

4-59

Referring People

family name vs first name

In Korea: A woman with a child named Kildong would be ‘Kildong’s mom’

In Arab states: Ummu Gulsum – Abu Bekir

Korean language does not strictly distinguish singular and plural forms “I” vs “We”.

4-60

Addresses in Korea

A typical mailing address in America takes the form of “John Doe, 123 Main Street, Anycity, Anystate,”

which will be exactly reversed in Korea to “Anystate, Anycity, Main Street 123, Doe John.”

4-62

Language and CommunicationLinguistic Category Language Example

Syntax English has relatively fixed word order; Russian has relatively free word order

Semantics Japanese words convey nuances of feeling for which other languages lack exact correlations; ‘yes’ and ‘no’ can be interpreted differently than in other languages.

Phonology Japanese does not distinguish between the sounds ‘l’ and ‘r’; English and Russian both have ‘l’ and ‘r’ sounds.

Morphology Russian is a highly inflected language, with six different case endings for nouns and adjectives; English ahs fewer inflections.

4-64

Pepsi in China

"Come Alive: You're in the Pepsi Generation"

"Pepsi brings your ancestors back from the dead."

4-65

Motorola in India

Hellomoto

Hello Fatty!

4-66

Coors in Spanish

"Turn it loose"

"Suffer from diarrhea"

4-67

Few Others

Kentucky Fried Chicken in China– "finger-lickin' good" – "eat your fingers off".

Salem cigarettes in Japan– "Salem-Feeling Free", – "When smoking Salem, you will feel so

refreshed that your mind seems to be free and empty".

Schweppes in Italy– Schweppes Tonic Water – "Schweppes Toilet Water".

4-68

Language and Communication

Verbal Cues

Nonverbal cues or body language– Shrug– Head wobble - In Western countries, "Yes,

definitely!" is communicated by nodding the head multiple times. In South Asia, it is communicated by a single strong head-wobble.

4-69

Showing the thumb held upwards in Latin America, especially Brazil, means "everything's ok", while it is understood in some Islamic countries as a rude sexual sign.

4-71

Hook 'em Horns salute or …

George W. Bush gives the Hook 'em Horns salute to the Texas Longhorns marching band at his second inauguration.

Devlet Bahceli gives the salute to the crowd

4-72

Laughing is connoted in most countries with happiness - in Japan it is often a sign of confusion, insecureness and embarrassment.

In Africa, avoiding eye contact or looking at the ground when talking to one's parents, an elder, or someone of higher social status is a sign of respect. In contrast, these same actions are signals of deception or shame (on the part of the doer) in North America and most of Europe.

4-73

If invited to dinner, in some Asian countries and Central America it is well-mannered to leave right after the dinner: the ones who don’t leave may indicate they have not eaten enough. In the Indian sub-continent, European and North American countries this is considered rude, indicating that the guest only wanted to eat but wouldn’t enjoy the company with the hosts.

4-74

Marketing’s Impact on Culture

Universal aspects of the cultural environment represent opportunities to standardize elements of a marketing program (McDonaldization, Cocacolonization)

Improved communications have contributed to a convergence of tastes and preferences in a number of product categories

4-75

Marketing’s impact on culture

fridge aspirin kleenex spandex trampoline rollerblading xeroxing fedexing granola googling

ZippernylonSelpak Orkid

“I Rolexed and realized I was late?”

The B. F. Goodrich Company coined the name Zipper in 1923 for the line of rubber overshoes that it made using the fastener.

4-76

Cultural imperialism

embracing of a foreign culture

the "receiving" culture but instead absorbs the foreign culture passively through the use of the foreign goods and services.

4-80

High- and Low-Context Cultures

High Context– Information resides in

context– many things are left unsaid – Emphasis on background,

basic values– Less emphasis on legal

paperwork– Focus on personal

reputation

Saudi Arabia, Japan

Low Context– Messages are explicit and

specific– Words carry all information– Reliance on legal

paperwork– Focus on non-personal

documentation of credibility

– change drastically from one generation to the next

Switzerland, US, Germany

4-81

Contextual Background of Various CountriesSource: Hall, 1984

Contextual Background of Various CountriesSource: Hall, 1984

JapaneseJapanese

ArabicArabic

Latin AmericanLatin American

SpanishSpanish

ItalianItalian

English (UK)English (UK)

FrenchFrench

North American (US)North American (US)

ScandinavianScandinavian

GermanGerman

SwissSwiss

High context implicit

High context implicit

Low context explicit

Low context explicit

4-82

High- and Low-Context CulturesFactor/Dimension High Context Low Context

Lawyers Less Important Very Important

A person’s word Is his/her bond Not reliable – get it in writing

Responsibility for

Organizational error

Taken by highest level Pushed to the lowest level

Space People breathe on each other

Private space maintained

Time Polychronic Monochronic

Competitive Bidding

Infrequent Common

4-83

Hofstede’s Cultural Typology

Power Distance

Individualism / Collectivism

Masculinity

Uncertainty Avoidance

Long-term Orientation

4-84

Geert Hofstede’s 5 Dimensions of Culture

1. Power distance - The degree to which the less powerful members of society expect there to be differences in the levels of power. – Latin American and Arab nations are ranked the

highest in this category; Scandinavian and Germanic speaking countries the least. Countries with high power distance rating are often characterised by a high rate of political violence.

4-85

SURVEY OF HOFSTEDE’S CULTURAL DIMENSIONS

Instructions: Rate yourself on each of the four dimensions by circling a response. Next, rate your native culture by drawing an X through the appropriate response.

Power distance: How readily do individuals accept the unequal distribution of power in organizations and institutions?Low power distance (equality) High Power distance (rank)

1----2----3----4----5----6----7----8----9----10

4-86

2. Individualism vs. collectivism - refers to the extent to which people are expected to stand up for themselves, or alternatively act predominantly as a member of the group or organisation.

– Latin American cultures rank the lowest in this category, while U.S.A. is the most individualistic culture.

4-87


Individualism-collectivism: Are people responsible for their own welfare within a loosely knit social framework, or does the group look out for individuals in exchange for loyalty?

Personal responsibility Collective responsibility

1----2----3----4----5----6----7----8----9----10

4-88

ArgentinaIran

SpainJapan

South Korea

Brazil

SingaporeChina

Mexico

Italy

India Russia

FranceGermany

Canada

United StatesGreat Britain

0

10

20

30

40

50

60

70

80

90

100

20 30 40 50 60 70 80 90 100Power Distance

Individualism

Cultural DimensionsSource: Hofstede, 1980, 1991Cultural DimensionsSource: Hofstede, 1980, 1991

4-89

3. Masculinity vs. femininity - refers to the value placed on traditionally male or female values. Masculine cultures value competitiveness, assertiveness, ambition, and the accumulation of wealth and material possessions, whereas feminine cultures place more value on relationships and quality of life.

– Japan is considered by Hofstede to be the most "masculine" culture, Sweden the most "feminine." The U.S. and UK are moderately masculine.

4-90

SURVEY OF HOFSTEDE’S CULTURAL DIMENSIONS (continued)

Masculinity-femininity: How important are masculine attitudes (assertiveness, money and possessions, and performance) versus feminine attitudes (concern for people, the quality of life, and the environment)?Masculine attitudes Feminine attitudes

1----2----3----4----5----6----7----8----9----10

4-91

4. Uncertainty avoidance - reflects the extent to which a society attempts to cope with anxiety by minimizing uncertainty. Cultures that scored high in uncertainty avoidance prefer rules (e.g. about religion and food) and structured circumstances, and employees tend to remain longer with their present employer.

– Mediterranean cultures and Japan rank the highest in this category.

4-92


Uncertainty avoidance: How threatening are uncertain and ambiguous situations, and how important are rules, conformity, and absolute truths?

Avoid uncertainty (rules) Accept uncertainty (chance)

1----2----3----4----5----6----7----8----9----10

4-93

5. Long vs. short term orientation - describes a society's "time horizon," or the importance attached to the future versus the past and present. In long term oriented societies, thrift and perseverance are valued more; in short term oriented societies, respect for tradition and reciprocation of gifts and favors are valued more.

– Eastern nations tend to score especially high here, with Western nations scoring low and the less developed nations very low; China scored highest and Pakistan lowest.

4-94

China

Singapore

United States

India

Great BritainCanada

Germany

Brazil

South KoreaJapan

0

20

40

60

80

100

120

0 10 20 30 40 50 60 70 80 90 100

Uncertainty Avoidance

Long-Term Orientation

Cultural DimensionsSource: Hofstede, 1980, 1991

Cultural DimensionsSource: Hofstede, 1980, 1991

4-97

Comparison Turkey and other Muslim Countries

PDI IDV MAS UAI PDI IDV MAS UAI

4-100

Comparison China and Japan

PDI IDV MAS UAI LTO PDI IDV MAS UAI LTO

4-102

Self-Reference Criterion and Perception

Unconscious reference to one’s own cultural values; creates cultural myopiaHow to Reduce Cultural Myopia:– Define the problem or goal in terms of home country

cultural traits– Define the problem in terms of host-country cultural

traits; make no value judgments– Isolate the SRC influence and examine it– Redefine the problem without the SRC influence and

solve

4-103

For Discussion

How close is “too close” when you are carrying on a business conversation with a stranger?

4-104

Diffusion Theory

The Adoption Process

Characteristics of Innovations

Categories of Adopters

4-105

Marketing Implications

The topics in this chapter must be considered when formulating a global marketing plan

Environmental Sensitivity reflects the extent to which products must be adapted to the culture-specific needs of different national markets

4-106

Environmental Sensitivity

4-107

Comparing CulturesAspect Mexico Canada/USA

Family Family is the first priority.Children are celebrated and sheltered.Wife fulfills domestic role.Mobility is limited.

Family is usually second to work.Children often minimally parented; are independent.Wife often fulfills dual roles.Mobility quite common.

Religion Long Roman Catholic tradition.Fatalistic outlook. "As God wills."

Mixed religions."Master of own life" outlook.

Education Memorization.Emphasis on theoretical.Rigid, broad curriculum.

Analytical approach.Emphasis on the practical.Narrow, in-depth specialization.

4-108

Comparing CulturesAspect Mexico Canada/USA

Nationalism Very nationalistic.Proud of long history and traditions.Reluctant to settle outside Mexico.

(U.S.)Very patriotic.Proud of "American way of life."Assumes everyone shares his/her materialistic values.(Canadian) Less than U.S.. Often has more " World" view.

Personal Sensitivity

Difficulty separating work and personal relationships.Sensitive to differences of opinion.Fears loss of face, especially publicly.Shuns confrontation.

Separates work from emotions/personal relationships.Sensitivity seen as weakness.Tough business front.Has difficulty with subtlety.

4-109

Comparing Cultures

Aspect Mexico Canada/USA

Personal Appearance

Dress and grooming are status symbols.

Appearance is secondary to performance.

Status Title and position more important than money in eyes of society.

Money is main status measure and is reward for achievement.

Aesthetics Aesthetic side of life is important even at work.

No time for "useless frills".

Ethics Truth is tempered by need for diplomacy.Truth is a relative concept.

Direct Yes/No answers given and expected.Truth seen as absolute value.

4-110

Looking Ahead to Chapter 6

Global Information Systems and Market Research

4-112

Social Institutions

Family (cultural differences – last names, brothers and sisters)

Education (not necessarily schooling)

Religion (not necessarily perceived the same)

Government (Autocracy, democracy …)

Business

These institutions function to reinforce cultural norms

Return

4-113

Material and Nonmaterial

Physical components of culture– Objects– Artifacts

• Clothing• Tools• Pictures• Homes

Subjective or abstract culture– Religion– Perceptions– Attitudes– Beliefs– Values

4-114

ClothingHindu women, once married, wear sindoor

Men and women of the Western world may wear wedding rings

Return

4-115

Aesthetics and Color

What do you associate with Red?

– Active, hot, vibrant

– Weddings in some Asian cultures

– Poorly received in African countries

With white?

– Purity, cleanliness

– Death in parts of Asia

4-116

In Chinese symbolism, red is the colour of good luck and success, and is used for decoration and wedding attire (during the traditional half of the wedding ceremony, while the bridal attire in the modern half is usually white).

4-117

In Chinese and Indian tradition, white is the color of mourning, death, and ghosts. In India white also stands for Peace and Purity

Return

4-118

Phonology in action

Colgate is a Spanish command that means ‘go hang yourself’

Technology implications for Text messages– 8282 means ‘hurry up’ (Korea)– 7170 means ‘close friend’ (Korea)– 4 5683 968 means ‘I Love You’ (Korea)

4-119

Chinese number definitionsCantonese frequently assign the following definitions, which may differ in other forms of Chinese:1- 一 sure

2- 二 easy

3- 三 live

4- 四 - considered unlucky since the pronunciation of 4 ( sì ) sounds like the word for death ( sǐ ). 5- 五 - the self, me, myself, nothing, never

6- 六 - easy and smooth

7- 七 - together

8- 八 - sudden fortune, prosperity

9- 九 - long in time Some lucky number combinations include:

168 - road of prosperity or to be prosperous together - many premium-pay telephone numbers in China begin with this number. Many businesses also prefer to have this number as part of their names. 518 - I will prosper, 888 - prosperity x3.

Return

4-120

The Adoption Process

The mental stages through which an individual passes from the time of his or her first knowledge of an innovation to the time of product adoption or purchase– Awareness

– Interest

– Evaluation

– Trial

– Adoption

Return

4-121

Characteristics of Innovations

Innovation is something new, five factors that affect the rate at which innovations are adopted include– Relative advantage– Compatibility– Complexity– Divisibility– Communicability

Return

4-122


Classifications of individuals within a market on the basis of their innovativeness.

Five categories1. Innovators – venturesome, educated, multiple info sources.

2. Early adopters – social leaders, popular, educated.

3. Early majority – deliberate, many informal social contacts.

4. Late majority – skeptical, traditional, lower socio-economic status.

5. Laggards – neighbors and friends are main info sources, fear of

debt.

4-123


Return

4-1 Chapter 4 Social and Cultural Environments. 4-2 Preferential Trade Agreements Many countries...

Documents

Transcript of 4-1 Chapter 4 Social and Cultural Environments. 4-2 Preferential Trade Agreements Many countries...