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Summary of IM 2013-2013 at UvT
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Summary International Marketing
Fall semester 2013-2014 (revised)
Table of Contents Lecture 1 - Introduction to Global Marketing .............................................................................. 1
1.1 Summary paper Levitt (lecture) ......................................................................................... 4
Lecture 2 - The decision to internationalize ................................................................................. 8
2.1 Internationalization ............................................................................................................ 8
2.2 Internationalization theories ............................................................................................ 10
2.3 Services – internationalization of services ...................................................................... 14
Lecture 3 - A firm’s competitiveness and the political and economic environment .................. 16
3.1 Political and legal environment ....................................................................................... 16
3.2 Porter ............................................................................................................................... 18
3.3 Corporate Social Responsibility ...................................................................................... 21
Lecture 4 - Cultural Perspective ................................................................................................. 23
4.1 Culture ............................................................................................................................. 23
4.2 Culture shock ................................................................................................................... 31
Lecture 5 - International Marketing research ............................................................................. 34
5.1 International marketing research ..................................................................................... 36
5.2 Equivalence ..................................................................................................................... 37
Lecture 6 - Designing the global marketing plan I ..................................................................... 41
Lecture 7 - The global marketing program II ............................................................................. 48
7.1 Country of Origin (COO) ................................................................................................ 48
7.2 Advertising ...................................................................................................................... 52
1
Lecture 1 - Introduction to Global Marketing
“Globalization is all around us”, but what does it exactly mean?
We should look at why and what actually changes, and give right to this change in terms of
global marketing.
Five trends exist which facilitate globalization:
1. Global power shift, power shifts from West to East;
2. Increasing concerns about social and environmental issues;
a. Generally this occurs all over the world; therefore it leads to convergence (e.g.
Depletion of natural resources, terrorism, and climate change).
3. Rising prosperity and growth of the middle class;
a. This is important to companies since they need to know who is able to buy their
products.
b. Especially in BRIC countries
4. Increased urbanization and aging of the population;
a. 70% of the population is expected to live in big cities by 2020.
b. Change of focus to elderly is what a company can ask their selves.
5. Communication increase.
a. It is hard to block out what is happening all over the world due to the increase of
communication usage, especially internet.
Gl.I.R.I.C
Globalization has different meanings. This is due to the perspective on how you look at it.
Economists say that globalization is the “Emergence of global markets”.
Sociologists claim that globalization is the “Convergence of life styles”.
Political scientists say that globalization is the “Reduction of National sovereignty”.
2
3 assumptions behind globalization exist:
1. Demand;
- Convergence of consumer behavior and marketing environment at Macro level
(meaning this is happening all over the world).
2. Supply and competition;
- Shift away from domestic industries operating in national markets to global markets
3. Cost reduction.
- Mainly due to economies of scale (in e.g. production, but also possible in marketing
costs if you have a standardized global campaign).
These assumptions of globalization lead to 5 consequences:
1. The political environment worldwide has moved toward a democratic system (with some
exceptions);
2. Powerful means of communication worldwide makes it hard to block out what is
happening in the world (although some countries do block certain media, internet, etc.);
3. Legal integration;
a. Laws exist on European level, but also on National level, which leads to some
confusion every now and then.
4. Marketing infrastructures are converging;
5. Supply is largely globalized.
Going global can have some advantages, 6 are listed below:
1. More consumers;
2. Access to larger talent pools (employees);
3. More profit;
4. More efficient;
5. Iterate faster and create better products;
6. It’s the future, “being global seems important”. (not moving forward or innovating is
considered to be negative)
3
What is a global brand?
A global brand is a brand which operates across multiple cultures, borders, etc. to fulfill the same,
one common, objective. Operating in multiple countries is not considered as global.
Why do not all companies globalize?
Three main reasons exist why a company chooses not to globalize:
1. Management myopia and organization culture;
a. Certain companies/managers have an attitude that does not fit with going global.
They rather keep everything local. Additionally, companies/managers can be
nearsighted and have a ‘know it all’ attitude which they see as a good reason not
to globalize.
2. National controls;
a. Countries can actually prevent companies from going global or entering their
market
3. Opposition to globalization.
a. Some are scared of globalizing. Known as globaphobia: hostility towards trade
agreements and global brands. Sometimes even protests arise against
policymakers and/or well-known global brands/companies (e.g. a small village in
the UK did not accept the new global coffee shop, and boycotted it buy only
buying tap water and sitting there all day without buying anything else).
However, the general attitude towards globalization is positive. Strangely, companies/countries
that benefit less from globalization are more positive than those who benefit more.
4
1.1 Summary paper Levitt (lecture)
This article is an important article since it was the first one to mention globalization
The paper is fairly extreme because the main message is that no adaption to your product is
needed.
This paper considers technology as the powerful force that drives the world to new commonality.
Technology is the antecedent of what happened last years and allows companies to globalize.
Technological advances lead to globalization, which lead to potential for global marketing since
commonalities are converging, interaction across countries increases, and preferences, lifestyles,
and knowledge converge. Due to the global marketing (standardized products and marketing mix)
Economies of scale can be reached, which lead to greater efficiency and the growth of a firm.
The paper distinguished 2 types of companies; the multinational and the global corporation.
A multinational company operates in a # of countries and adjusts its product to each, resulting in
knowing something about several things. This type is considered to be old fashioned.
A global corporation operates with resolute constancy, sells the same thing everywhere, resulting
in knowing a lot about one particular thing (e.g. product). According to Levitt this is the better
company.
This view puts forward several things:
1. Price is a universal concern;
2. Traditional differences in national tastes will disappear;
3. Consumers all over the world will look for quality/low-costing products;
4. Local preferences will become old fashioned.
5
So, to what extent is all of this true?
Global trends are happening at a Macro level:
- There is a significant demographic convergence. E.g. People grow older and more
foreigners are in countries;
- Growing equality between men and women;
- Demand for healthcare, ‘green’ products and services increases;
- Tendency forwards drinks with lower alcohol content and stricter drink-dive laws
But at a Micro level, differences still remain!
- E.g. drinking habits (beer drink habits differ between Germany, The Netherlands, and
U.K.);
- E.g of Campbell’s soup failing in Russia;
- E.g Ford in USA “One Size does not fit all”.
- E.g. Ikea “Americans were not willing to lower their ceilings for us”.
Global companies and local consumers:
So on the on hand trends happen that makes companies more and more global (e.g. free trade and
dismal treatment of diversity), but on the other hand culture and tradition lead to consumers
remaining (partly) local.
What does this mean for marketing?
Domestic marketing frequently changes to global marketing.
Domestic marketing is aimed at single market strategy development. This addresses two issues:
(i) choosing your target market (must be big enough to actually make profit), and (ii) developing
the marketing mix. Global marketing is 1 single strategy for an entire market. This lead to the
following issues: (i) global market participation, and (ii) adaption vs standardization.
The fundamental difference between these 2 is their scope of activities. Further, 3 main
differences exist:
1. Greater uncertainty;
a. Is a company aware of different events happening in all countries and does it has
the strength to response
6
2. Greater diversity;
3. Greater geographical and psychological distance.
a. Geographical distance decreased fast due to technology
b. Psychological distance is the perceived difference between my own country and
the country that I am selling to. This is subjective for each person and company,
and decreased not that rapidly.
The tradeoff between Adaption vs. standardization is important to global marketing. This leads to
choosing a globalization strategy or global localization strategy.
Globalization is developing standardized products which are marketed worldwide with a
standard marketing mix; the essence of marketing.
Global Localization is mixing standardization and customization in a way that minimizes costs
while maximizing satisfaction; the essence of segmentation. Think globally, act locally.
This tradeoff applies to every P of the marketing mix, and depends on the:
- Company size
- Product type (e.g. technology is often more standardized than food)
- Management orientation
4 management orientations exist: EPRG
Ethnocentric
- Home market oriented.
- Domestic strategies are seen as superior to foreign ones.
- No screening to search for foreign countries as possibility to enter.
- (is standardization)
Polycentric
- Host country
- Markets are dissimilar, hence strategies need to be adapted
- Little room for standardization, no meaningful integration
- (complete adaption)
7
Regiocentric
- Regions
- Emphasis on coordination and standardization whenever possible
- Regional trade areas are in the focus
- E.g. BeNeFraLux
Geocentric
- World
- Global marketing through worldwide integration
- Standardization with minimal adaption
- (is standardization)
The desirability of the particular international orientation depends on:
- Size of the firm (it is impossible for small companies to adapt everything);
- Experience in oversea markets;
- Size and degree of heterogeneity of the potential market
- Nature of product (technological/food)
ERPG is not fixed! The management orientation can change over time. Ethnocentric is often a
starting point, which changes over time when companies learn more.
8
Lecture 2 - The decision to internationalize
Internationalize is when a company expands business activities (e.g. R&D, production, sales) into
international markets.
When internationalizing 3 phases exist: (i) input, (ii) process, and (iii) output (international trial)
2.1 Internationalization
For the input phase for the internationalization process, a distinction between proactive motives
to internationalize and reactive motives to internationalize exist.
6 proactive motives exist: (these motives come from the company, e.g. strategy change)
1. Profit and growth;
2. Managerial urge (e.g. open-mindedness, drive to go abroad);
3. Technology competence/uniqueness (question how unique your product really is, if it is
hard to copy, and if it is a true competitive advantage);
4. Foreign market opportunities/market information
5. Economies of scale
6. Tax benefits
6 reactive motives exist: (refer to change in strategy due to external influences)
1. Competitive pressure (most common one! Be careful when reacting to quickly without
enough knowledge);
2. Domestic market is small and saturated;
3. Overproduction/ excess capacity;
4. Unsolicited foreign borders (countries may actually ask you to internationalize);
5. Extend sales of seasonal products;
6. Proximity to international customers (e.g. when being close to a border).
9
The second phase, the process, goes into triggers to internationalize. A distinction exists between
internal- and external triggers.
Internal triggers:
1. Perceptive management/personal networks (e.g. the network of a decision maker, and
decision maker characteristics (foreign travel and experience abroad, language
proficiency, background decision maker, personal characteristics (ambition, open-
mindedness, risktaking, etc)));
2. Specific internal event (e.g. new ceo);
3. Importing as inward internationalization.
a. A company can learn a lot form importing (e.g. information about locals etc.),
which often stimulates exporting and internalizing.
External triggers:
1. Market demand;
2. Network partners;
3. Competing firms;
4. Outside experts.
Another viewpoint to this firms’ decision to internationalize:
Organizational:
- Decision maker characteristics;
- Firm-specific factors (size, type of products);
Environmental:
- Unsolicited proposals;
- The bandwagon effect (trying to match rivals in overseas investments. Driving
along on other companies’ success. E.g. coke vs pepsi);
- Attractiveness of host country
10
Several barriers to internationalize exist:
1. No/inadequate information;
2. Not enough financial resources;
3. No connection in foreign markets;
4. Having enough profit in domestic market and being risk averse to try your success abroad.
All of this is influence by the subjective perception, aka the psychological distance. The
psychological distance is the perceived distance between characteristics of a firm’s home country
and a foreign country with which that firm is, or is contemplating doing business or investing. A
high psychological distance leads to a low probability to internationalize.
External cues can overpower your natural tendency to go with the flow (e.g. when Heineken went
to the USA to deliver the first brewery there after the prohibition).
2.2 Internationalization theories
How to internationalize?
Three models to internationalize exist: (i) The Uppsala model, (ii) transaction-cost model, and
(iii) network model.
The Uppsala model:
This model looks/covers the decision which market to enter and which type of entry. The model
begins with nearby markets and always enters through exporting first. 4 stages are distinguished:
1. No regular export activities;
2. Export via independent representatives;
3. Establishment of foreign sales subsidiary;
4. Foreign production/manufacturing units.
Commitment and experience are important factors to explain decision made by companies when
they internationalize. This model assumes that having more commitment leads to more market
knowledge, which leads more commitment, which leads being less risk averse, leading to lower
perceived risk, leading to higher commitment, and so on…..
11
Criticism towards this model:
- The model is about learning, which is outdated since knowledge is acquired more
easily nowadays (thanks to internet);
- Not valid for services;
- Does not take interdependence into account between different markets;
- Only looks at own company;
- Always starts in a nearby country, whereas strategically, companies can choose other
countries;
- Does not consider the psychological distance.
Transaction-cost model:
This model covers the decision on the mode of entry; internalizing or collaboration? The trade-
off is based on minimizing costs.
A firm will expand until the cost of organizing an extra transaction within the firm will become
equal to the cost of carrying out the same transaction by means of an exchange on the open
market.
Transaction costs kick in when markets fail to operate under the requirements of perfect
competition (aka friction free does not exist, since opportunistic behavior (self-interest seeking
behavior) always happens)/ also known as the related costs between operator and buyer)
To safeguard this, you have control mechanism.
This model distinguishes 2 types of costs: ex ante costs, and ex post costs.
Ex Ante costs are costs made before. These consist of search costs (finding, identifying parties),
and contracting costs (negotiating with parties).
Ex Post costs are costs made after. These consist of monitoring costs (costs to check whether the
agreements are met), and enforcement costs (costs related to taking action in order to make the
agreement rules correct again).
If the transaction costs are higher than control costs, the company should internationalize on its
own, by for example sales subsidiaries.
12
Difference to Uppsala/critical view:
- TC-model takes relationships into account;
- It does not suggest a step-by-step plan;
- It does not look at markets, but at how you internationalize;
- Does not take human nature into account (e.g. opportunism, economic objectives) or
other motives;
- Being a first mover can pay off despite higher costs;
- Internal transaction costs (internal friction) are ignored;
- Overstatement of transaction costs and under estimation of production and other
related costs.
Network Model
This model has received more attention in the last 20 years, and is used more nowadays.
It builds on the relationships of a firm in a domestic network, which can be used as bridges to
other networks in other countries.
It assumes that actors are linked to each other (exchanging relationships), and that any actor can
engage in relationships or terminate relationships.
A big difference from the Uppsala model is that the network model takes the network into
account and does not see the company as a vacuum.
Assumptions:
- See the exchange between firms as unit of analysis instead of a single company
moved to more long term oriented relationships where individual companies have to
depend on each other for resources which are controlled by other firms
- Developing a network takes time. Positions must be established first in relation to
counterparts in foreign networks
This network can extent internationally, and then internationalization can occur.
13
Degree of internationalization
The degree of internationalization is the extent to which a company is operating in various
different national nets. This is linked to different motives/triggers per different type of company
to internationalize. Below a table with the 4 different degrees/levels.
The early starter:
Other firms in the domestic market do not have international relationships, the own firms does
not have these either. (needs to follow all 4 stages of the Uppsala model).
Lonely international:
High degree on internationalization of the firm, but operating in a market that is relatively low on
internationalization. The firm has international experience, the other don’t. Therefore, this firm
can be an external trigger to promote its network to internationalize.
Late starter:
The market is international, but the firm is not. The international contacts can pull the firm out of
the domestic market. This is a more difficult position to be in than an early starter.
International among others:
Good, very international knowledgeable network.
14
In addition to these 4 degrees, there is also another one; known as Born Globals.
Some companies skip all stages (e.g. Uppsala model) and are global from their start.
These firms pursue a vision of becoming global from their creation. They are comparable with
the late starter and the international among others.
An ongoing trend is that the stage wise way of internationalization is disappearing. These born
globals don’t often even see their domestic market as a learning phase anymore.
These born globals have 3 characteristics:
- Company size (usually small to medium sized companies)
- High technologically focused products
- Decision-maker characteristics
o Born global firms are managed/founded by people with greater international
experience or access to better international business.
An example of a born global is IBM (international business machines)
2.3 Services – internationalization of services
Internationalization strategy for services is often considered more risky for service firms than
manufacturers. This is due to the fact that many services combine producer and production in the
actual service. Therefore, the face all problems related to entering a market directly because it is
not possible to follow a step-by-step procedure.
Services have 3 main characteristics:
1. Simultaneous production and consumption;
2. Consumer participates in the service;
3. Process consists of activities/series of activities rather than things.
4 factors to consider:
1. Information technology
a. Help to find different needs
2. Culture
a. E.g. different activities that add up in different cultures
15
3. Location
a. Geographically (e.g. city center, or industry terrain?)
4. Standardization vs adaptation
5 strategies exist for services:
1. Direct export
2. System exports (follow customers abroad)
3. Direct entry/own subsidiary
4. Indirect entry/immediate mode
5. Electronic marketing/internet
16
Lecture 3 - A firm’s competitiveness and the political and economic
environment
3.1 Political and legal environment
Governments play a crucial role in stimulating export (or not)
The general international environment exists of: (i) the Home country environment, and (ii) the
Host country environment. Below the factors on how the home and host country environment
influences internationalization:
(i) Home country:
- Promotional activities
Support by the government to stimulate export to make the home country
stronger
- Financial activities
Stimulating companies through the usage of e.g. subsidies
- Information services (an important one)
Offering information to companies to take away a barrier; especially good for
small companies
- Export facilitating activities
e.g. government fair
- Sales trading
(ii) Host country:
- Political risks
These risks vary and depend on each government. A government of the
host country can have import restrictions in order to protect the local industry.
The domestic market benefits by this. Another option is market controls;
restricting/preventing companies from entering the market to protect local
industry.
17
- Trade barriers
Paying fees to host country; this can lead to a price increase of the products
companies that want to enter, therefore benefitting the local market
- Non-tariff
Quota’s, refers to the type/amount of product that may enter the market
Political risk-analysis procedure
A tool for examining whether the political risks are high or not, and to what extend this will
influence your exporting.
Step 1: Issues of relevance to the firm
Determine critical economic/business relevant to the firm. Asses relative importance of
these issues.
Step 2: Potential political events
Determine: relevant political events, their probabilities, causal relationships,
governments’ ability and willingness to respond.
Step 3: Probable impacts and responses
Determine: initial impact of probable scenarios, possible responses to initial impacts,
initial and ultimate political risk
18
3.2 Porter
Porters Diamond (more at macro level)
It is crucial that a company adapts to the other environment: government, competitors, etc.
The idea behind this model is that all external factors have an influence on the competitiveness of
a company. It argues that the home nation plays a very important role in determining the
international success of the company. The home country can influence the capacity of how
innovative a company is, and thereby determining the international successfulness. It further
argues that the home country might actually provide a bunch of opportunities to company, but it
is crucial a company realizes these opportunities. The porter diamond provides means to decide
which industries to enter and what type of entry should be chosen. In making this decision the
dimensions below should be considered.
Factor:
- Basic factors: natural resources
- Advanced factors: human resources
These are needed in combination in order to make it work. You can’t make something out of the
basic factors without human factors.
Demand conditions:
Refers to the size/demand of the domestic market; with a low demand, you will need more export
to earn enough profit
19
Related and supporting industries:
If you have a good related and supporting industry, it can help you a lot; your success partially
depends on them. F.e. jewelry makers heavily depend on machines etc.
Firm’s strategy:
Competition in host country; a fiercer competition will lead to a higher force to explore your
strengths.
Chance:
First mover advantage; who has a great idea first?
Government:
e.g. enough airports, train stations, docks, roads, etc.; which will influence your success
This all provides an overview of factors on how the home market that can influence international
competitiveness.
Porters Five Forces (meso level)
Competitive factors which determine the profit potential of an industry. The industry in this
context is a bunch of companies that all sell a product or related products that are very close
substitutes to each other. E.g. the car industry
20
The market level:
Set of actual or potential buyers
The competitive advantage is best developed in a highly competitive market.
Substitutes:
Other products buyers can switch to. However, keep the switching costs in mind. These are costs
made when switching (e.g. buying other systems). Switching costs are influenced by loyalty, and
they are very important to determine competitiveness.
Suppliers:
When they have a lot of power, they can easily ask higher prices; avoid too much dependence.
New entrants:
How easy can other competitors enter the market?
Buyers:
They influence/determine who has more power.
In sum, this model suggests Five Forces which influence the competitiveness and basically put
pressure on a company.
These Forces, can also be seen as Sources:
It suggests collaborating with parties and using them as sources for competitive advantage.
Companies must balance competitiveness and collaboration.
Competitive triangle
Customers can choose between firm A and firm B, and the likelihood of a company being chosen
depends on the perceived value, which is offered by the company.
21
Competitive benchmarking is a technique for assessing relative marketplace performance
compared with main competitors. e.g. you can take a competitors’ product apart to compare the
performance of those components to your own components.
3.3 Corporate Social Responsibility
CSR means that you are a social responsible firm, employees conduct business in an ethical
manner. CSR is an important tool nowadays, which can enhance competitiveness. Research has
shown that 42% of how a consumer feels about a company is based on their perception of the
firms CSR.
CSR is more complicated for global companies since it is the question in which society they
should have their best interest since the best interests of every society differs depending on their
culture and values.
Summary of “Does doing good always lead to doing better? ” (lecture summary)
This article covers when, how, and why consumers react to CSR
The reaction to CSR is not universal but depends on (i) the domain of CSR, and (ii) personal
position of the consumer. The effect of CSR depends on the perceived congruence between my
own character and that of the company. The model below has 2 DV’s (which are important for
companies to consider if they want to be successful: 1. Company evaluation, and 2. Purchase
intention.
The effect of CSR information (telling you
are engaging in CSR) has an influence on
company evaluation and purchase
intention. But it depends on certain other
variables: CSR domain and CSR beliefs.
Additionally, it is very dependent on
congruence (the amount of overlap I
perceive between the company’s character
and my own character). A higher congruence leads to a higher evaluation.
22
H1 argues: If a company engages in CSR, the congruence increases.
But this depends on the domain the company engages in. the CSR domain functions as a
moderator. If I like this domain, I will even perceive them more similar to me than someone who
doesn’t like the domain.
Effects/findings:
! Positive effect of CSR initiatives on consumers’ company evaluation is mediated by their
perception of congruence. This effect is moderated by their support of the CSR domain (how
much the consumer supports this domain).
Purchase intention can be influence directly and indirectly.
CSR-CA beliefs: CSR initiatives can have a negative effect, especially when consumers don’t
believe that the company’s CSR activities enhance their corporate ability (CA). If it is unrelated,
it can have a negative effect. E.g. Luxury brands are harmed by participating in CSR (decline in
image); these brands are bought for self-enhancement, which is not in line with the CSR-CA
beliefs. Brands, therefore, are boundary conditions in which CSR can have a negative effect.
23
Lecture 4 - Cultural Perspective
4.1 Culture
“Culture is shared ideas, customs and social behavior of a particular people or society”
This is the most straightforward definition of culture.
Habits are central to local consumer behavior. Habits limit options since we do not scan all
possibilities. They are seen as passive decision making and largely grounded in local culture.
Companies have to understand they will encounter differences in between cultures or else they
can fail like Campbell’s soup did in Russia, because it is a habit in Russia to make your own
soup.
Culture exists out of 4 elements:
1. Language
a. Primary mechanism of sharing and transmitting information
b. The language we learn shapes and structures our world view/social behavior
c. Different languages are perceived differently in an emotional context
2. Institutions
a. E.g. Familiy, political institutions, social organizations
b. Function is to group individuals into a group and to teach them certain norms,
values, obligations, rules/regulations that people are basically programmed with
and that heavily shape their way of thinking and acting
3. Material productions
a. Artistic (music/art)
b. Intellectual (books, articles)
c. Physical (products/factories)
d. Service (media/banks)
24
4. Symbolic productions (contrast of material productions)
a. Very often rooted in religious matters. Traditional societies are more consciously
involved in symbolic thoughts than Western societies.
b. Food is also an important symbol since cultural variations are manifold
(consumption differs in e.g. # meals per day, whether eating is a social gathering
or not, composition of meals, the way it is put together, duration of meals etc.).
This can lead to the need of adapting products to different cultures (e.g. Bigger
Airfryer in cultures that see eating as a social gathering, since they need more food
at once)
Sources of Culture:
These are sources from what a culture actually emerges
1. Nationality (this source is mentioned most frequently in literature as the most important
source, but nationality alone is too simple to understand culture since the others also
shape a culture)
2. Language
3. Social class
4. Family
5. Religion
6. Group (ethnicity)
7. Education
8. Profession
Not one of these sources is more important than another. This depends on the overall context.
The difference between the sources and elements is said to be fuzzy, Klesse couldn’t answer that
question directly.
25
How these cultural differences can exist and what the cultural differences would be.
Cultural differences exist due to the 6 dimensions of culture, made by Hofstede. He suggests that
cultures differ based on 6 dimensions:
1. Power distance (PDI)
2. Masculinity vs Feminity (MAS)
3. Long-term oriented vs. Short-term oriented(LTO)
4. Indulgence vs. restrained (IVR)
5. Individualism vs. collectivism (IDV)
6. Uncertainty avoidance (UAI)
1. Power distance (PDI)
The degree to which the less powerful members accept this and expect power is distributed
unequally. A fundamental issue is that how a society handles in equalities among people. A
large degree of power distance is acceptance of hierarchical order, and a small degree of
power distance is striving for equality. The general idea of PDI is reflected in various
domains of daily life, some examples below:
Small power distance Large power distance
Use of power should be legitimate and is
subject to criteria of good and evil
Power is a basic fact of society antedating good
or evil: its legitimacy is irrelevant
Parents treat children as equals Parents treat children obedience
Older people are neither respected nor feared Older people are both respected and feared
Student-centered education Teacher-centered education
Hierarchy of means inequality of roles,
established for convenience
Hierarchy means existential inequality
Subordinates expect to be consulted Subordinates expect to be told what to do
Corruption rare; scandals end political careers Corruption frequent; scandals are covered up
The general assumption is that terms of power is reflected in various different domains, and
thereby encourages completely different programming and might evolve different habits.
26
2. Masculinity vs. Femininity (MAS)
Masculinity refers to a preference for achievement, heroism and material reward for success.
Masculinity is seen as competitive and striving for ego goals.
Femininity refers to a preference for corporation, modesty, caring for the weak and quality of
life. Femininity is seen as consensus oriented and striving for social goals. Reflected in life
as: see table below.
3. Long-term oriented vs short-term oriented (LTO)
Short-term oriented societies focus on: normative way of thinking, respect for tradition, quick
results. Long-term oriented societies focus on: search for virtue, truth depends on situation,
time and context, perseverance in achieving results.
How important is e.g.
tradition? Saving for the
future? These are
questions a company has
to ask in certain cultures.
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4. Indulgence vs. Restrained (IVR)
Countries that score high on indulgence stimulate/communicate about enjoying life, and
engaging in the things you like. Countries that score high on restrained
stimulate/communicate to suppress gratification of needs and rather act according to specific
social norms.
5. Individualism vs. Collectivism (IDV)
In countries that score high on individualism, individuals are expected to take care of
themselves and their direct families only. It is up to you to make the best out of all options,
choices, and freedom in the world. In countries that score high on collectivism, individuals
are expected to look after relatives/members of a particular in-group to look after them – “we
look after each other”. This dimension is also called the ‘I or We’ dimension.
These dimensions correlate with the performance of a country; Individualism and wealth
correlate, and small power distance and wealth. Additionally, these dimensions heavily correlate
with the personal characteristics of people in a given country. This explains difference in peoples’
behavior and habits, and how they view the world.
The sixth dimension Uncertainty avoidance is discussed later.
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Somewhere here the article of the lecture is summarized:
Indians possess the conjoint model of agency; meaning that choice is derived from situation,
other individuals’ expectation and social roles.
People in an individual mindset have way less pity, less incline to help you because they
understand your choice was a consciousness decision that was your own responsibility. ‘If I am
not construing something as your own choice, it is not your responsibility, so not your fault’. This
has great consequences on how you act towards each other and what you will actually do to help.
E.g. If people perceive less as a choice, they may need less options (conjoint model of agency).
But if choice is important to an individual, to express who that individual is, that individual wants
more options to choose from (disjoint model of agency).
A company should check if it is good, required and asked for to provide choice.
Choice has different meanings
Individualistic cultures see choice as an act of self-expression. It is important to express your
individuality and to appear unique. This means that every single choice you make, you express
who you are. Since choice has meaning, you want to make the choices according to presenting
yourself in the best light.
Collectivistic cultures see choice as an interpersonal task. Someone else makes the choice for
you, thus not reflecting your own individual desire.
In western cultures, choosing different, various products (e.g. beer, candy bars) is seen as
positive. This is due to the fact that it helps to express your individuality, and it helps you to show
you are a very creative, open minded, cool person. Choosing the same candy bar is seen as
boring. In collectivistic cultures, this above does not hold.
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In class assignment:
Choosing 5 candy bars from a whole set. 2 groups (choices kept private/choices made public) had
to choose 5 bars. This resulted in the people in the public group choose more different candy
bars, even integrating candy bars they did not like. This is the desire to make impression, by
variety seeking.
6. Uncertainty avoidance (UAI)
This dimension expresses the extent to which a culture feels uncomfortable with uncertainty.
Cultures with strong uncertainty avoidance do not like uncertainty, and cultures with weak
UAI are more relaxed and open to see what is happening.
Uncertainty can have some consequences. For example with unexpected gifts; these gifts from
companies can delight consumers. However, East Asian consumers are less pleasured than
Western consumers since Asians can’t handle uncertainty. They responded less surprised and not
that happy at all. This is linked to the need to avoid uncertainty; they can’t react easily and dear
with uncertain actions. Therefore, an unexpected gift can backfire and have a negative influence.
A boundary condition is luck; if it is just luck that they won something, they perceive it as fine
and let them restore their inner balance.
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Uncertainty and risk:
Uncertainty is not associated with probability; it is a situation in which anything can happen. Risk
however, is quantifiable – it has an associated probability. People may engage in risky behavior
to reduce ambiguity. Perceived risk is important in a decision making process. Seven types of risk
exist:
1. Psychological
2. Financial
Less important in collectivistic cultures due to the cushion theory – the idea
that if I am risking something and failing, there will be a cushion (social
network/group) that will help and protect me. This differs in individual
cultures – “you should not have bought this own fault you failed”.
3. Performance
Important in Western cultures. E.g. will my product perform the way it
should? Especially important when checking for alternatives. So when
operating in Western cultures, companies should minimize this risk.
4. Physical
5. Social
Most important type of risk in Eastern cultures (collectivistic). They are most
sensitive to lose faith in their collectivistic group. Therefore, they consider the
social risk when buying a product. Due to their conjoint model of agency.
6. Time
e.g. getting the product, time spend looking for information etc.
7. Convenience
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4.2 Culture shock
Ethnocentrism: meaning that you perceive your own group as the center and judge everything
according to your standards and norms. In making decisions you will apply the norms you know,
which lead to a bias.
In less extreme forms it is very natural for people to refer to their own standards/symbols and
judge others according to these norms. In extreme forms you see your culture as superior.
Ethnocentrism is linked to self-reference criterion – in making decisions you always judge what
is my own habit, what is common, how would I do it, how would we judge it?
To reduce the self-reference criterion you have to follow 4 steps:
1. Define problem/objective according to your own custom behavior/own country
2. Define problem/objective according to foreign country
3. Compare and isolate the self-reference criterion, and identify to which extent it
complicates the decision-making problem
4. Re-define problem/objective without self-reference bias.
Marketing as an exchange of meaning
Consumers buy for meaning, which is communicated by marketing. Many of those meanings are
culture based. Therefore, it is crucial to understand what actually the meaning in a particular
culture is in order to address this and position the product correctly. In this, culture functions as a
sort of meta-language that can add ‘vocabulary’ which might change the meaning of the product.
For marketers it is important to:
- be aware of the environmental differences;
- critically evaluate theories that appear universal;
- compare whether the decision-maker is the same across cultures;
- compare consumer behavior;
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This results in the fact that cultural differences must be taken into account when formulating a
global marketing plan. The environmental sensitivity represents the extent to which a product
must be adapted to culture specific needs. A higher sensitivity more adaption needed.
Consumer products are generally more sensitive than industrial products.
Another way to look at this is how culture bound products are; referring to the direct connection
between the product and the culture. While looking at this, it is crucial to concern elements and
sources of culture. E.g. furniture and electronics. They are influenced by the local physical
environment ikea in USA example.
Products that involve relationships with each other – products which are used between people are
very culture bound due to the way people interact and the way people have relationships are
culture bound.
Hierarchy of needs
This shows different needs. Basic needs need to be met before you move to the next level. These
hierarchy of needs differ across cultures. It is important for companies to understand this and
know what the needs are in order to position their products optimally.
Figure below: Western Hierarchy of Needs
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Figure below: Asian Hierarchy of Needs
The big difference between the hierarchy of needs between Western and Eastern needs is the fact
that Asians do not have a personal level. Additionally, your needs differ in extreme states
Word-of-mouth is of high importance in collectivistic cultures since sharing your experience in
your group is seen as important. So companies might utilize WOM as relatively easy and cheap
marketing in collectivistic cultures by facilitating situations in which WOM can spread.
Dissatisfaction might be the same state for all cultures, but what causes the dissatisfaction might
be completely different. Standards may be high in one culture, but low in another. Know the
criteria that are important in each culture to prevent dissatisfaction.
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Lecture 5 - International Marketing research
Sources of data:
Primary data (gathered firsthand and tailored) and secondary data (collected by others for other
purposes) exist.
Advantages of Secondary data:
- Less expensive
- Less time consuming
- Low level of commitment
- Speed
Disadvantages:
- Non-availability
- Reliability
- Data classification
- Comparability
- Data privacy concerns
- Ask yourself who collected the data,
for what reasons, and how it is
collected
2 types of data sources exist: (i) Internal (sales numbers, pricing info, etc.) and (ii) External
(library, internet, databases, etc.)
When collecting primary data, question the following:
- How much attention did the participants pay to the questions? ask about the subject of
the questionnaire at the end in order to measure/estimate this
- How involved were the participants? as on a 7-likert
- Did they understand the questions? ask about their language (e.g. English) skills
- Are these participants in whom I am interested? relevant demographics
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The marketing research process
Qualitative data:
This type of data provides a holistic view of the research problem, is exploratory, and usually
small in sample size. Qualitative data provides some distance as the construction of the
questionnaire, data retrieval, and analysis take place in separate phases.
Quantitative data:
Quantifies data, larger samples and is descriptive (describes relationships between variables,
measures correlations) and/or causal (describes causal relations between variable by manipulating
cause variables (IV) and measuring DV).
Research obviously needs qualitative as well as quantitative data.
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Reliability:
If the same phenomenon is measured repeatedly with the same measurement device and results
stay similar.
Validity:
If the measurement method actually measures what it supposed to.
5.1 International marketing research
= Linking consumer, customer, and public to the marketer through information on a global scale.
Marketers, however, are challenged to recognize and respond to important cultural differences,
which influence how information is perceived. Cultural systems need to be considered when:
- Deciding the goal of the research
- Information requirement
- How it can be collected
Major challenges
Environment:
1. Complexity of research design due to environmental differences
2. Lack and inaccuracy of secondary data
3. Time and cost requirements to collect data
4. Coordination of multi-country research efforts.
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Methods:
1. Difficulty in establishing comparability across multi-country studies
2. Difficulty to find suitable measures for different cultures
2 research approaches exist: (i) EMIC and (ii) ETIC
(i) = attitudes/behavorial phenomena are expressed in a unique way in a culture; resulting
in adapting the research instrument to every culture
(ii) = concerned with identifying universal constructs; therefore, being culture free.
5.2 Equivalence
Management must provide guidelines for systematic collection of data. Therefore, making a
concrete plan that outlines various steps of the research process.
It is important to assure cross-cultural equivalence; 6 types of equivalence exist:
1. Conceptual equivalence
2. Functional equivalence
3. Translation equivalence
4. Measure equivalence
5. Sample equivalence
6. Data collection equivalence
1. Conceptual equivalence
Things may seem universal, but conceptual aren’t. For example, beauty, family, well-
being, etc.
“Do the concepts studied have similar meaning across cultures?”
This is an obstacle to direct usage of constructs specifically designed for Western
cultures. Additionally, even if a construct is relevant in another culture, it may have a
different meaning (e.g. trust could constitute of different attributes different items
needed to measure trust). Furthermore, even if a general theory applies, a specific
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construct may not be relevant or have the same meaning in another context (e.g. in the
Islam it is evil to talk about death, but Muslims do not fear death).
Another example is perceived risk; it differs across cultures. 7 types with each having
more or less importance in different cultures the weight one puts on the different
type/dimensions of risk differs.
Fishbach behavioral intention theory suggests that attitudes can be used to predict
behavioral intention of e.g. buying a product and it that would eventually influence
behavior. But this model differs per culture. A specific distinction is made between
collectivistic and individual cultures, and they put different emphasis on different
dimensions of attitude. For some people it might be extremely important what the
individualistic opinion is and that leads to a behavioral intention that might be different
than a collectivistic person/culture.
2. Translation equivalence
It is pretty difficult to translate correctly to communicate the same message/question
In order to assure translation equivalence, it is a solution to use back-translation. This
means that a translation is translated back by another person, and the meanings are
compared. E.g. someone translates something from English into to Dutch. Another person
translates the Dutch back to English, and these two versions are compared to see to what
extent they are comparable.
Another solution is to simply use English. But this leads to another issue:
Summary article Bilinguals (from lecture)
The research suggests that the language in which you communicate something immediately
influences how emotional you perceive this message to be. Meaning, if the messages are identical
and the only thing that differs is whether you present it in English or in Dutch, it has an influence
on how emotional the consumer perceives the message to be.
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When looking at bilinguals the first language (mother tongue) is perceived more emotional than
the second language that is learned later on. This is due to the fact that when presented something
in your mother tongue, you connect it with your memory, and will perceive it as more emotional,
because you contain more traces in your memory of words, slogans, etc. in your own language in
comparison with your second language.
Perceiving your second language as less emotional results in the following; when bilinguals have
to talk about something (personally) difficult, they switch to their second language because it
provides some emotional distance.
So, if you have a slogan that is presented in your first language (L1), it is perceived more
emotional than when it is presented in language 2 (L2).
First experiment:
The effect happened for both Dutch and French native speakers, which is important because this
shows that it doesn’t have to do with the emotionality attached to a language, but that it is a
general phenomenon. They talked to trilingual people in Brussels in English in order to not prime
them with French or Dutch, which could lead to a bias.
They did test if it happened for other impressions as well, but it is proven that this is not
happening for originality of the ad. But explicitly for emotions because when you learn your
main language that is pretty much associated with and linked to your emotionality.
So, this influences researches too when presenting in L1 or L2.
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3. Measure equivalence
Refers to the type of method you use to measure a construct (e.g. trust). Is the type of
measurement you use equivalent across cultures?
4. Perceptual equivalence
Refers to the perceptions of for example color, smell, etc., which differ across cultures.
5. Metric equivalence
Refers to whether the scores participant give, actually have the same meaning. E.g. how
likely are you to buy a beer? It is important that a 6 in one culture is not always equal
to a 6 in another culture.
These differences exist, especially avoiding extreme responses (lowest and highest
possible) and social desire in for example China. This limits comparability of you data.
A possibility to prevent this is to use visual scales (smiling faces as scales) instead of
metrics.
6. Data collection equivalence
Secrecy/unwillingness to answer (respondents’ corporation equivalence), response biases
(data-collection context equivalence), and differences in response styles (response-style
equivalence). Reluctance to answer: intrusions of privacy, social desirability.
Context equivalence:
Refers to the difference in terms of responding (e.g. if you are using the whole scale or
not). If you are aware that differences exist in terms of the context, in terms of for
example whether to people are speaking or willing to speak about a certain topic, to
include certain character trades which give you an idea of how this consumer is.
Social desirability scale is used a lot! measures how socially desirable a participant
answers which could reveal a bias.
In order to make sure samples are comparable you should ask relevant demographics, and
screen according to characteristics.
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Lecture 6 - Designing the global marketing plan I
Are we standardizing or adapting p’s in the marketing mix? This is the main question.
General influencers on the likelihood to adapt vs. standardize:
- Company size
- Product type
- Management orientation
Product type:
e.g. Dell adapts its promotion, but standardizes products; whereas Kitkat adapts its product, but
standardizes promotion.
Adaption on physical attributes (e.g. size, weight, colors) needed? Adapting your products is very
expensive, and standardization gives huge economies of scale.
Reasons for adaption Reasons against adaption
- Cost reduction
o By using cheaper materials when
standards are lower in different
cultures.
- Local standards
- Local knowledge
- Hygiene and safety regulations
- Experience effects
- Economies of scale
- International standards
In addition to voluntary adapt your product; it is also common to have compulsory adaptions.
These are needed when:
- Industrial standards for supply of electricity differ;
- Safety standards per country/regions (e.g. lighting and brakes in the motor industry);
- Hygiene regulations (e.g. exporting foie grass into the USA is not possible without and
FDA certification. Coca cola uses different sweeteners due to local requirements).
These adaptions are often relatively minor.
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Adapting products to local product usage:
The usage of seemingly standard products can vary subtly (e.g. Indians don’t freeze left overs,
Japanese desire bigger freezing compartments, and Norwegians want very energy efficient
appliances due to rising electricity costs).
Symbolic attributes:
A lot of products are not bought for their utility but for a symbolic value attached to it. These
symbolic values are heavily influenced by culture.
Are global products always better?
Article summary from lecture
Starting point/reason for research towards this topic:
The following results have been claimed by previous research in favor of global brands/products:
- Consumers prefer superior quality and reliability of global brands/products.
- Standardization can actually increase preference
- Global products are equated with modernity, progress, and efficiency
The article “A global investigation……”, looks deeper into the attitudes toward global and local
brands. These attitudes are general attitudes toward the local and global product, which equally
influence consumers’ response to local vs global products. The authors claim that consumers vary
systematically and predictably in their attitude toward global vs local products. They come up
with antecedents why you like it or why you don’t. They asked 3 research questions:
1. How are AGP and ALP related?
2. What is the motivational structure underlying AGP and ALP? (why do people differ?)
3. Is what we discuss generalizable?
They talk about attitudes towards local/global products. An attitude is the psychological tendency
that is expressed when evaluating stimuli for a degree of favor or disfavor. Consumer culture
helps to explain why consumers generally have attitudes that differ toward global vs local
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Traditionally, consumers’ culture was locally oriented. This changed, due to globalization, to
more an orientation of foreign countries and became the global consumer culture. This led to: (i)
a desire to participate in the ‘global village’, and (ii) an attempt to find meaning in their lives
through products recognized as international.
Companies seem to realize GCC and LCC since 81% of all ad refer to GCC or LCC.
Relation between AGP and ALP:
To some extent they are opposites, meaning a positive attitude towards one leads to a negative
attitude towards the other. But this is considered being too simple. Therefore the authors created
4 different attitudes:
1. Localization
2. Homogenization
3. Glocalization
4. Glalienation
1. Localization (high on ALP, Low on AGP)
The person is ethnocentric ( Thinking your country is the best).
Or you follow a self-preserving attitude, because the world is changing and remaining local
helps you to be who you are.
2. Homogenization (Low ALP, High AGP)
Homogenization is associated with being very open, participating in global world, modern,
very much international, success, dream, utilitarian, and convenient.
3. Glocalization (High ALP, High AGP)
Combining both to have a mixture of local and global. E.g. Indian barbie
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4. Glalienation (negative to both)
Consumption generally is shallow. People who generally are against materialism,
consumption, and it don’t really matters whether a product is global or local. In general they
do not have a positive attitude.
Why do these different consumers hold varied generalized attitudes toward global vs local
products?
These attitudes are influenced, and being able to be predicted, on the basis of the values a
consumer has. Knowing these values leads to knowing the attitudes. Values serve as goal setting,
guiding principles in people’s lives that vary in importance and are central to their identity. 3
levels of values exist:
(i) National-cultural values:
Highest level of abstractness
These values are collectively held beliefs that are generally shared among people living in
the same country, about abstract goals and modes of conduct that transcend specific
situations and behavioral domains (e.g. survival vs. self-expression).
(ii) General values
Medium level of abstractness
These values are individual held beliefs about abstract goals and modes of conduct that
promote these goals that transcend specific situations and behavioral domains (e.g. power,
universalism, and security).
(iii) Consumer domain-specific values
Lowest level of abstractness
These values are individually held beliefs about concrete goals and modes of conduct that
promote these goals in the consumers’ domain (e.g. materialism, environmentalism).
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The article suggests the model below:
Despite globalism, national-cultural values still influence our beliefs very much by e.g.
education, language, etc. Traditional is associated with family oriented, sticking what you are
used to, so it is more local. Self-expression is negative towards global products
10 different general values (Schwartz,….) are in this model that predicts our attitude. These 10
values can be organized and subcategorized in 4 dimensions:
- Openness to change (associated with AGP)
- Conservations (associated with ALP)
- Self-transcendence
- Self-enhancement
The results:
It is possible to profile people according to collected information
The profile of someone who is positive to AGP:
- Demographic:
o Younger, female elite (higher education/class)
o Smaller households
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- National values:
o Higher for secular-rational cultures
o Lower for countries on self-expression
ALP: Schwartz:
- ALP is positively associated with values: tradition, conformity, and security
- ALP is positively correlated with: ethnocentrism and nostalgia
Positive to Both: (Glocalization)
- Materialism is positively correlated with ALP and AGP
- Females have more positive attitude toward both
Interactions between different values:
- The effect of specific individual-level antecedents varies across countries as a function of
different national culture. E.g. the influence of ethnocentrism is not the same across all
different cultures. The effect of ethnocentrism depends on whether a country is traditional
or more secular-rational. Ethnocentrism has a stronger positive effect on ALP if the
culture is traditional, and a weaker effect if the culture is secular-rational. Additionally, it
has a stronger negative effect towards AGP for traditional cultures.
- Universalism is influenced by whether the country is survival or self-expressive.
Know that national values and consumers specific values interact
Summary:
- Findings provide support for the existence of consumer AGP and ALP that generalizes
across product domains;
- Values are clear antecedents of attitude, and the paper suggests clear values for AGP;
- ALP and AGP are complex and distinct, yet related products;
- ALP and AGP are NOT polar opposites, that would be too simple.
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So what? Implications
Brand portfolios:
- Prevalence of ALP indifferent countries: companies should be careful in relying too much
on global brands;
- Careful combination of local and global brand is preferable instead of focusing on global
brands only.
Positioning strategies for global firms:
- Findings can pinpoint when a GCC or a LCC positioning might be better
Local-global identity scale
Could give insight in whether customers have a more global or local attitude. However, this scale
is not so good. It sees ALP and AGP too much as polar opposites, which they in reality aren’t.
Additionally, it does not say anything about buying local or global products, only about
perceiving myself as local or global.
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Lecture 7 - The global marketing program II
- COO
- Advertising
7.1 Country of Origin (COO)
- Refers to where a product is manufactured.
COO is seen as an attribute of a product (like e.g. price, and brand). It is used as a node in an
associative network. Companies can use COO to e.g. enhance brand equity, when COO is used
correctly. COO is used symbolically, and the effect is influenced by the perceived congruence
between the product and image of a given country (e.g. German cars +, French wine +, Chinese
chocolate -).
COO is perceived as an extrinsic cue to judge product quality, especially when consumers don’t
really know how to judge something. COO can be manipulated without changing the actual
product.
The effect of COO depends on favorability of country of origin:
- Consumers evaluations of a specific product from country X are based on the match
between product and country;
- Few stereotypical images exist, and these heavily depend on the own culture of people
Consumer prefer country X as an origin for specific products when they believe that there is a
match between the perceived strengths of country X and the skills needed for manufacturing this
product.
Companies should ask yourself whether communicating your COO is wise, since it can have a
negative effect if the congruence between your COO and product X is perceived negative.
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Article of this lecture
3 mechanisms for COO are distinguished:
1. Cognitive: COO is used as an extrinsic cue to judge quality
2. Affective: COO has symbolic and emotional value to consumers (e.g. starbucks in china
is associated with higher social class)
3. Normative: Consumers hold social and personal norms related to COO (e.g. good or bad
to buy a product from this country)
These mechanisms intertwine.
Results:
- The effect COO is largest for perceived quality and smallest for purchase intention.
Attitude is in the middle;
- COO is NOT larger for consumer products than for industrial products;
- The effect of COO is smaller for multi-cues (more of real life setting since e.g. price,
brand and other related cues are communicated with COO!!) than for single-cues (only
COO is communicated, e.g. wine and French wine).
- Within-subjects design yield larger COO effects than between-subjects design. Within-
subjects design is when each participant receives all treatments (French wine and wine),
and between-subjects design is when the sample is split in 2 groups (or more) where each
participant is exposed to only one treatment (group 1: French wine, group 2: wine);
- COO results did no differ between studies with student samples and those that used
‘representative’ samples.
Moderators on the relation between COO and quality perception:
- Customer awareness of COO
Stronger effect when only provided the COO
- Knowledge/familiarity with the product
Higher knowledge/familiarity leads to less reliance on extrinsic cues and vice
versa. E.g. wine, often a lot of people are unfamiliar with wine therefore they rely
more on extrinsic cues (COO, price, name, etc.) than when they are familiar with
wine.
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- Consumer ethnocentric tendencies
- Product category
- Uncertainty avoidance
Some cultures strongly try to avoid uncertainty, and there are those that don’t
really mind. If consumers are presented with unfavorable COO, especially those
that are highly avoiding uncertainty, would be way less likely to try these products
or to judge them as being better. Those who don’t really mind are not really
affected by unfavorable COO images.
Mediator:
Perceived risk is a mediator on the relationship between COO and product evaluation.
When a consumer is presented with a favorable or unfavorable image of COO it might
immediately influence consumers’ perception of how risky it would be to try this product, which
obviously influences the likelihood of trying or evaluating it. E.g. ethnocentrism plays a role
since ethnocentric consumers perceive it as risky to try products from another country (also keep
the 7 different types of risk in mind).
Ambiguity:
Some discussion exists on the usage of COO since consumers nowadays are actually unaware of
the origin of product (e.g. Apple, US brand, made in all over the world). As the ambiguity
increases, then the association with a COO gets weaker, this leads to a lower effect of COO on
for example quality perceived quality. COO was (and still is) a extrinsic cue, but the effect
decreases due to globalization, and where the product is put together (all over the world
nowadays).
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The image of COO can change over time, it can even happen rapidly.
Despite all the above, companies use COO well. An example is Häagen-Dazs, an American ice
cream brand that named their brand in such a way it is perceived as an Scandinavian
brand/sounding Scandinavian since that is associated with high quality in the USA.
Answer to the example exam question from this lecture:
Question 1:
A favorable COO image leads to a higher perceived quality
An unfavorable COO image leads to a lower perceived quality
Not providing information regarding COO doesn’t have an effect on perceived quality.
Additionally, a direct effect between COO and purchase intention exists, but this effect is
relatively weak.
Question 2:
Refer to multi-cue and single-cue, and the difference in effect.
Multi-cue is more realistic, but has a lower effect of COO. Despite the lower effect of a multi-
cue, it is way more realistic and option one should be chosen. This should only be done when the
image of the COO is favorable for the product category, and when the perceived strengths from
country X are match good with the necessary skills needed to produce chocolate.
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7.2 Advertising
6 steps in (global) advertising
1. Problem to be solved
2. Define target group
3. Communication objective
4. Media strategy
5. Creative strategy most influenced by internationality/type of culture
6. Implementation and control (also pre- and post-test + campaign evaluation)
Reasons for standardizing advertising:
- Consistent image across markets (people travel more frequent nowadays and can become
confused due to different images in different markets)
- Decreased costs
- Better control over planning and execution
Levels to standardize advertising at
- Mission same long term identity and vision
- Implementation of campaigns (better not standardized)
Types of appeals
- Indirect vs. direct
- Explicit vs. implicit
- Rational (MAS) vs. emotional (Femininity)
Communication style
- Persuasive
- Informative
- Oneiric / dream oriented
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Humor in advertising is used a lot, but differs in meaning per culture. The sheets provide
additional information regarding this topic, based on literature. The results/conclusion of that
paper is presented below:
- Individualistic cultures (low on the uncertainty avoidance dimension), such as the UK,
use more risky, aggressive and affective humorous advertisements
- UK ads seem to incorporate more frequently humorous appeals compared to Greek ads.
- In collectivistic cultures (high on the uncertainty avoidance dimension), such as Greece,
use more neutral humorous advertisements whose appeal is not perceived as very
offensive.
- In Greece, there is a lower percentage of print ads that use humor.
Maslow and advertising:
Specific products are associated with physiological needs (e.g. food, insurance, and housing) in
one culture, whereas the same products are associated with actualization (e.g. travel, literature,
and status) in the other culture. Focus on intrinsic, simplicity, etc. for physiological needs, and
focus on intelligence, extrinsic, lifestyle for actualization.
