Report on Consumer Behavior and Consumer Analysis

Introduction:

Today, almost all major corporations are actively marketing their products beyond their original homeland borders. In fact, the issue is generally not whether to market a brand in other countries but rather how to do it. Because of this emphasis on operating as a multinational entity, the vocabulary of marketing now includes terms such as glocal, which refers to companies that are both “global” and “local”.

Firms are selling products worldwide for several reasons. First, with the buildup of “multinational fever” and the general attractiveness of multinational markets, products or services originating in one country are increasingly being sought out by consumers in other parts of the world. Second many firms have learned that overseas markets represent the single most important opportunity for their future growth when their home markets reach maturity. This realization is propelling them to expand their horizons and seek consumers scattered all over the world. Moreover consumers all over the world are increasingly eager to try “foreign” products that are popular in different and far-off places.

Definition and Objectives of cross-cultural consumer analysis:

To determine whether and how to enter foreign markets, marketers need to conduct some form of cross-cultural consumer analysis. Cross-cultural consumer analysis is defined as the effort to determine to what extent the consumers of two or more nations are similar or different. Such analyses can provide marketers with an understanding of the psychological, social and cultural characteristics of the foreign consumers they wish to target, so that they can design effective marketing strategies for the specific national markets involved. According to  Berkman and Gilson, Cross-cultural research is a methodology for comparing cultures on the basis of similarities and differences as well as studying small segments of a total culture. Comparisons are usually made by analyzing the statistical, typological and content aspects of cultures.

Statistical                       what the demographics of a population are

Typological           what cultural types may be identified

Content                what kinds of values and norms people accept and live by

Traditionally, anthropologists have used cross-cultural research to explore at wide variety of topics. These include comparing love and courtship patterns and political power. Knowledge about the cultural meanings of color, for example, gives marketers some cues to effective product design, advertising and packaging for specific societies. For example, in twenty-three different cultures, “black and grey” are considered “bad” while white, blue, and green are perceived as “good”. Yellow, white, and grey are universally seen as weak but red and black are strong. And where black and grey are considered as passive colors, red is definitely active.

A major objective of cross-cultural consumer research is to determine how consumers of two or more societies are similar and how they are different. Understanding of similarities and differences that exist between nations is critical to multinational marketer who must devise appropriate strategies to reach consumers in specific foreign markets. The greater the similarity between nations, the more feasible it is to use relatively similar marketing strategies in each nation. On the other hand, if the cultural beliefs, values, and customs of specific target countries are found to differ widely, then a highly individualized marketing strategy is indicated for each country.  For example, advertising will be far different for American culture and Arabian culture.

How cross-cultural consumer analysis helps a multinational marketer?

• Cross-cultural study is an extremely important activity for a multinational marketer. There are a great many cross-cultural variations in consumer behavior that are of particular interest to the marketer operating in more than one culture.
• As differences in verbal communication system across cultures are found such as the symbolic communications, multinational marketers must also take that into active consideration for success in other cultures.
• Understanding cross-cultures help marketers to understand values of other cultures which influence their purchase behavior. This understanding helps marketers making proper adaptations in their product, pricing, distribution, and promotion policies.
• Since marketers cannot satisfy the needs of the entire market, markets must be segmented. To segment markets effectively, marketers also require an understanding of other cultures.
• Values also determine whether people of a particular culture will be influenced by others in the society. Knowing this aspect of a culture helps marketers identifying reference groups that will have bearing on consumer behavior. Thus it helps marketers to tailor their promotional programs on specific reference group.

Approaching World Markets:

Recently, cross-cultural methodology has been applied to marketing research, closely aligned with developments in multinational marketing. But a controversy has emerged over best means to approach world markets; one argument maintains that markets should be segmented along national boundaries and another contends that markets are sufficiently alike to standardize marketing initiatives.

Segmentation versus Standardization:

The more traditional technique has been to treat markets as local entities; each society, or part of a society, is regarded as a unique and well-defined cultural milieu.

Ernest Dichter conceptualized six different types of countries based on the degree of middle class development. In this context, he related each type to characteristics of automobile consumption. One group of countries was defined as almost classless and contented. In what are primarily Scandinavian countries, the middle class predominates and few people are either very rich or very poor. Attitudes toward products are rational rather than status oriented, and automobiles are regarded as strictly utilitarian.

The second group was described as affluent, and includes the United States, Canada, and Holland. Few people go hungry and there is potential for upward mobility, especially at the top end of the upper middle class. Individualistic, high quality products are sought after, and automobiles tend to follow that pattern.

The third group is termed countries in transition, such as England, France, and Italy. All of these nations sustain a working class of the 19^th century variety, but this class is really working at joining the middle class. Where upper class individuals still enjoy special privileges, automobiles may be opulent and expensive. England produces Rolls Royce and Italy Ferrari and Maserati. But in the United States no mass production cars appear in this $20,000-and-up category.

Group four consists of revolutionary countries; India and the Philippines are examples. Here there are extremely wealthy people, a small but growing middle class, and huge numbers of poor.

The fifth group is made up of primitive countries such as the new nations of Africa. In this there is a small, wealthy class of political leaders and foreign businessmen, but a predominantly illiterate and economically depressed population.

Finally, the sixth group is called the new class society and is made up of Russia and its satellite countries. Here a newly established class of bureaucrats represents a kind of aristocracy while everyone else seem grouped into a low middle class existence.

Generally, the recent trend in international marketing has veered away from segmentation toward greater standardization of markets. Because a significant degree of culture universally exists throughout the world marketing experts urge the more economical approach of viewing several countries one market. Erik Elinder notes that Europe has experienced a gradual breakdown in language and custom barriers due to media, migration, and tourism and suggests that advertising should be geared to all-European media rather than custom fitted for localities. Buzzell, citing the economic advantages of standardizing products, packaging, and promotion, cautions that segmentation may still be appropriate where income levels, shopping patterns, language, access to media, and other factors seem to warrant a more narrowly focused approach.

Market Expansion Strategies

In a cross cultural analysis of English, United States, Canadian, and Australian markets, Sommers and Kernan offer four strategies for expanding existing products into new markets. Their primary considerations are twofold: 1) the cultural values which will determine how a product is positioned and 2) cultural cues as to how a product may best be marketed. The strategies are:

1. Same product-same promotion: In this case, a new market’s established way of indicates that a given product will be accepted and the current promotion is sufficiently widespread to sell it. Coca-Cola represents a widely successful example.
2. Same product-different promotion: This method is appropriate where the new market reflects a way of life similar to that in the established market, but individual life styles are patterned differently. A standard ford, no great luxury, in the United States, would be an extravagant purchase for most New Zealanders.

1. Different product-same promotion: When a new market exhibits product-use styles quite different from the present market, some reworking of the product itself may be in order. A laundry detergent might be branded and packaged differently in Europe but would still be advertised with “brightness” claims.
2. Different product-different promotion: If both the cultural way of life and individual life styles is dramatically different in a new market, it may be most advisable to acquire existing firms there. Walgreen’s, for instance, entered the Mexican market by acquiring a retail chain known as Sanborn’s.

Acculturation is a needed marketing viewpoint

Too many marketers contemplating international expansion make the strategic error of believing that if its product is liked by local or domestic consumers, then everyone will like it. This increases marketing failures abroad. It reflects a lack of appreciation of the unique psychological, social, cultural, and environmental characteristics of distinctly different cultures. To overcome such a narrow and culturally myopic view, marketers must also go through an acculturation process. In a sense, cross-cultural acculturation is a dual process for marketers. First, marketers must thoroughly orient themselves to the values, beliefs, and customs of the new society to appropriately position and market their products. Second, to gain acceptance for a culturally new product in a foreign society, they must develop a strategy that encourages members of that society to modify or even break with their own traditions.

Basic Research Issues in Cross-Cultural Analysis:

The following table identifies basic issues that multinational marketers must consider when planning cross-cultural consumer research.

Differences in market segmentation

conditions and family structure:                 The style of family decision making

Differences in marketing research

Factors                                              Examples

Stage Five            Brand has lost national identity and consumers everywhere see it as “borderless” or global; not only can people not identify where it comes from but they never ask this question. Examples are CNN news services, Nescafe.