Marketing Latam - 03 Cultural Environment

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Global MarketingDoing Business in Latin America

3. Cultural Environment

This presentation (and extra material) belongs to Natalia Ceruti´s Global Marketing Course, within the Leading the Way to Success in Latin America Program. Should not be copied, nor reproduced, in full or in parts, without Natalia Ceruti´s permission.

Cultural Dynamics


Human Universals - Donald Brown

• Use metaphors

• Have a system of status and roles

• Are ethnocentric

• Create art

• Conceive of success and failure

• Create groups antagonistic to outsiders

• Imitate/Resist outside influences

• Consider aspects of sexuality private

• Express emotions with face

• Use mood altering drugs

• Overestimate objectivity of thought

• Fear of snakes

• Recognize economic obligations in exchanges of goods and services

• Trade and transport of goods


Understanding the Consumer


Definitions and Origins of Culture

• Humans make adaptations to changing environments through innovation

• Individuals learn culture from social institutions• Socialization (growing up)• Acculturation (adjusting to a new culture)• Application (decisions about consumption and production)

Culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned,

shared by a group of people, and transmitted from generation to generation.


Criterio de Autorreferencia y Percepción

http://www.youtube.com/user/nceruti?feature=mhum#p/c/0327A74D517AEA60

Culture


Global Perspective

• Culture deals with a group’s design for living

• The successful marketer clearly must be a student of culture

• Markets are the result of the three-way interaction of a marketer’s• Economic conditions• Efforts• All other elements of culture

• Culture not only affects consumption, it also affects production

• The use of something new is the beginning of cultural change• The marketer becomes a change agent


Origins, Elements, and Consequences of Culture


Geography

• Geography exercises a profound control• Includes climate, topography, flora, fauna, and

microbiology• Influenced history, technology, economics, social

institutions and way of thinking


Geography


History

• History• Impact of specific events can be seen reflected in

technology, social institutions, cultural values, and even consumer behavior


History


Political Economy

• Political Economy• Three approaches to governance competed for world

dominance• Fascism• Communism• Democracy/free enterprise


History, the Political Economy, and Technology

• Technology• Jet aircraft, air conditioning, televisions, computers,

Internet, etc.• None more important than the birth control pill


Social Institutions

• Family

• Religion

• School

• Media

• Government

• Corporations

These institutions function to reinforce cultural norms


Social Institutions

• Family• Nepotism (favoritism granted to relatives or friends regardless of merit)• Role of extended family• Favoritism of boys in some cultures

• Religion• First institution infants are exposed to outside the home• Impact of values systems• Misunderstanding of beliefs

• School• Affects all aspects of the culture, from economic development to

consumer behavior• No country has been successful economically with less than 50%

literacy


Social Institutions

• The media• Media time has replaced family time

• TV• Internet

• Government• Influences the thinking and behaviors of adult citizens

• Propaganda• Passage, promulgation, promotion, and enforce of laws

• Corporations• Most innovations are introduced to societies by companies• Spread through media• Change agents


Elements of Culture

• Rituals• Marriage• Funerals

• Symbols• Language

• Linguistic distance• Aesthetics as symbols

• Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render marketing efforts ineffective or even damaging

• Beliefs• To make light of superstitions in other cultures can be an expensive mistake

• Thought processes• Difference in perception

• Focus vs. big-picture


Elements of Culture - Hofstede

http://www.geert-hofstede.com/hofstede_dimensions.php

• Power Distance• Individualism/Collectivism• Masculinity• Uncertainty Avoidance• Long-term Orientation


Cultural Highlights

1. National Character

2. Non Verbal Language

3. Food Preferences

4. Symbols

5. Taboos

6. Ritual Activities

7. Transition Rites

• They reflect Culture into Society

• They allow marketeers to understand

Consumers and also to plan strategies


National Character


Non Verbal Language


Non Verbal Language


Non Verbal Language


Food


Symbols

http://www.youtube.com/watch?v=oIqZjfz4nUM&feature=related


Taboos


Ritual Activities


Transition Rites


Cultural Knowledge

• Factual knowledge • Has meaning as a straightforward fact about a culture • Assumes additional significance when interpreted within

the context of the culture• Needs to be learned

• Interpretive knowledge• Requires a degree of insight that may best be described as a

feeling• Most dependent of past experience for interpretation• Most frequently prone to misinterpretation• Requires consultation and cooperation with bilingual

natives with marketing backgrounds


Social Class

TOP TEN - Buy / Use designer brands

HUN ARG HK BRA CHI MEX POR SA GRE TH

56%57%62%64%65%65%66%70%73%73%

Argentina Brazil Chile Mexico

Source: Nielsen – Consumer & Designer Brands, June 2006


Social Structure

AB - $ 24.000/m - ! 4.000/m

C1 - $ 12.000/m - ! 2.000/m

C2 - $ 6.000/m - ! 1.000/m

D - $ 3.000/m - ! 500/m

E - $ 1.000/m - ! 150/m

Source: Adaptaded from Cuore – Grupo CCR 2009


Social Class


Aesthetics & Healthyness


Class Pride


Class Pride


Social Groups


Social Groups


Social Groups


Education

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Family Lifecycle


http://www.youtube.com/nceruti#p/c/F5234A8F8A804A2F/101/T5q76zlFaXsRenault Logan - Mariana

Family Lifecycle


Family Roles

http://www.youtube.com/user/nceruti?feature=mhum#p/c/F5234A8F8A804A2FMovistar


Kids Power

ClaroPrimer Cobayo


Aspirational Segments


Latin Consumer Value in Uncertainty

• Consumers are always learning• Realistict• Stretching Budget• Fashion!• Less resistance to changes (Innovation!)

• Dimensions to Integrate in Brands and Image• Economic Value (Smart Pricing)• Self Gratification (Sofistication)• Belongingness (Aspirational)• Honesty and Transparency• Imported vs National


Global Trends & Impact on Latam

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Out-of-Mouth Trends Trends impacting in Consumption

Social Situations impacting in Consumption

Health

Save the Planet

Hyper-connectivity

Women’s role

Massive Threats

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Myths and Truths

• Poor people don´t care about fashion and clothing.

• Brands are not important in lower levels.

• Only price matters.

• Higher levels always buy expensive brands.

• Poor people would prefer to shop in big supermarkets.

• Poor people have a small purchasing power.

Based on strategy+business - Issue 346 Truths about Emerging-Market Consumers


Cultural Change

• Dynamic in nature – it is a living process

• Paradoxical because culture is conservative and resists change• Changes caused by war or natural disasters• Society seeking ways to solve problems created by changes

in environment• Culture is the means used in adjusting to the environmental

and historical components of human existence


Cultural Borrowing

• Effort to learn from others’ cultural ways in the quest for better solutions to a society’s particular problems• Imitating diversity of other makes cultures unique• Contact can make cultures grow closer or further apart

• Habits, foods, and customs are adapted to fit each society’s needs


Similarities – An Illusion

• A common language does not guarantee a similar interpretation of word or phrases• May cause lack of understanding because of apparent and

assumed similarities

• Just because something sells in one country doesn’t mean it will sell in another• Cultural differences among member of European Union a

product of centuries of history


Resistance to Change

• Gradual cultural growth does not occur without some resistance• New methods, ideas, and products are held to be suspect

before they are accepted, if ever

• Resistance to genetically modified (GM) foods• Resisted by Europeans• Consumed by Asians• Not even labeled in U.S. until 2000


Planned and Unplanned Cultural Change

• Determine which cultural factors conflict with an innovation

• Change those factors from obstacles to acceptance into stimulants for change

• Marketers have two options when introducing and innovation to a culture• They can wait• They can cause change

• Cultural congruence • Marketing products similar to ones already on the market in a

manner as congruent as possible with existing cultural norms


Summary

• A complete and thorough appreciation of the origins and elements of culture may well be the single most important gain to a foreign marketer in the preparation of marketing plans and strategies.

• Marketers can control the product offered to a market – its promotion, price, and eventual distribution methods – but they have only limited control over the cultural environment within which these plans must be implemented.

• When a company is operating internationally each new environment that is influenced by elements unfamiliar and sometimes unrecognizable to the marketer complicates the task.

• Special effort and study are needed to absorb enough understanding of the foreign culture to cope with the uncontrollable features.

Management Style and Business Systems


High and Low Context Cultures

• High Context• Information resides in context• Emphasis on background, basic values, societal status• Less emphasis on legal paperwork• Focus on personal reputation

• Low Context• Messages are explicit and specific• Words carry all information• Reliance on legal paperwork• Focus on non-personal documentation of credibility


Contextual Background


High and Low Context Cultures

Factor/Dimension High Context Low Context

Lawyers Less Important Very Important

A person’s word Is his/her bond Is 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


P-Time versus M-Time

• Monochronic time• Tend to concentrate on one thing at a time• Divide time into small units and are concerned with promptness• Most low-context cultures operate on M-Time

• Polychronic time• Dominant in high-context cultures• Characterized by the simultaneous occurrence of many things• Allows for relationships to build and context to be absorbed as parts of

high-context cultures

• Most cultures offer a mix of P-time and M-time behavior• Have a tendency to be either more P-time or M-time in regard to the

role time plays

• As global markets expand more businesspeople from P-time cultures are adapting to M-time.


Corruption Defined

• Types of Corruption• Profits (Marxism)• Individualism (Japan)• Rampant consumerism (India)• Missionaries (China)• Intellectual property laws (Sub-Sahara Africa)• Currency speculation (Southeast Asia)


Corruption Perceptions Index 2010

http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results


Bribery

• Bribery and Extortion• Voluntary offered payment by someone seeking unlawful advantage

is bribery• If payments are extracted under duress by someone in authority

from a person seeking only what he are she is lawfully entitled to that is extortion

• Subornation and Lubrication• Lubrication involves a relatively small sum of cash, a gift, or a

service given to a low-ranking official in a country where such offerings are not prohibited by law

• Subornation involves giving large sums of money, frequently not properly accounted for, designed to entice an official to commit an illegal act on behalf of the one offering the bribe


Bribery

• Agent’s Fees• When a businessperson is uncertain of a country’s rules and

regulations, an agent may be hired to represent the company in that country

• The Foreign Corrupt Practices Act• Change will come only from more ethically and socially

responsible decisions by both buyers and sellers and by governments willing to take a stand


A Synthesis – Relationship-Oriented vs. Information-Oriented Cultures

• Studies are noting a strong relationship between Hall’s high/low context and Hofstede’s Individualism/Collective and Power Distance indexes

• Not every culture fits every dimension of culture in a precise way

• Information-oriented culture (United States)

• Relationship culture (Japan)

• Synthesis of cultural differences allows us to make predictions about unfamiliar cultures


Dimensions of Culture, A Synthesis


Summary

• Some cultures appear to emphasize the importance of information and competition while others focus more on relationships and transaction cost reductions

• Businesspersons working in another country must be sensitive to the business environment and must be willing to adapt when necessary

• Understanding the culture you are entering is the only sound basis for planning

• Business behavior is derived in large part from the basic cultural environment in which the business operates and, as such, is subject to the extreme diversity encountered among various cultures and subcultures


Summary

• Environmental considerations significantly affect the attitudes, behavior, and outlook of foreign businesspeople

• Varying motivational patterns inevitably affect methods of doing business in different countries

• The international trader must be constantly alert and prepared to adapt when necessary

• No matter how long in a country, the outsider is not a local – in many countries that person may always be treated as an outsider

• Assuming that knowledge of one culture will provide acceptability in another is a critical mistake



Sources

• Cateora, P., Gilly, M. and Graham, J. (2009). International Marketing, 14th ed. New York: MacGraw-Hill.

• Czinkota, M. and Ronkainen, I. (2010). International Marketing, 9th ed. New York: Cengage Learning.

• Keegan, W. and Green, M. (2011). Global Marketing, 6th ed. New Jersey: Pearson Education.

• Kerin, R., Hartley, S. and Rudelius, W. (2007). Marketing The Core, 2nd ed. New York: MacGraw-Hill Irwin.

• Kotler, P. and Armstrong, G. (2006). Principles of Marketing, 11th ed. New Jersey: Pearson Education.

• Kotler, P. and Keller, K. L. (2009). Marketing Management, 13th ed. New Jersey: Pearson Education.

Marketing Latam - 03 Cultural Environment

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