IB - The Global Marketing Environment [LESSON]

The Global Marketing Environment

Social and Cultural Environment

While cultural differences between the US and foreign nations may seem small, those who ignore them risk failure in marketing programs.

Cultural environments consist of the influence of religious, family, educational, and social systems within the marketing system. Marketers who intend to market products overseas must be sensitive to foreign cultures. While the differences between our cultural background in the United States and those of foreign nations may seem small, marketers who ignore these differences risk failure in implementing marketing programs.

This task is not as easy as it sounds, as various features of a culture can create an illusion of similarity. Even a common language does not guarantee similarity of interpretation. For example, in the U.S. we purchase "cans" of various grocery products, but the British purchase "tins". The following are a few cultural differences that may cause marketers problems in attempting to market their products oversea. Click on each one to learn more.

Illustrations of Cultural Differences Around the World

Please read several differences between cultures around the world below:

Maxwell House advertised itself as the “Great American Coffee” in Germany. It found out that Germans have little respect for American coffee. General Motors “Body by Fisher” slogan became “Corpse by Fisher” when translated into Japanese. In German, “Let Hertz put you in the driver’s seat” means “Let Hertz make you a chauffeur.” In Hong Kong, Korea, and Taiwan, Triangular shapes have a negative connotation. In Quebec, a canned fish manufacturer tried to promote a product by showing a woman dressed in shorts, golfing with her husband, and planning to serve canned fish for dinner. These activities violated cultural norms. If you offer a compliment to a Chinese-speaking person, he or she will decline it, because disagreeing is the polite way to accept praise. Do not say ‘Merci” (thanks) to a French person’s compliment. You might be misinterpreted as making fun. Italians wave goodbye as Americans beckon someone with palm up and fingers moving back and forth; but in Asia, waving with the palm down is not interpreted as goodbye, but rather, “come here.’ Offering gifts when you visit as home is expected in Japan, but in the Soviet Union it may be considered a bribe. In Ireland, the evening meal is called tea, not dinner. In Asia, when a person bows to you, bow your head forward equal or lower than theirs. A nod means “no” in Bulgaria and shaking the head side-to-side means “yes.” Red is a positive color in Denmark but represents witchcraft and death in many African countries. Americans usually smile as they shake hands some Germans consider smiles overly familiar for new business acquaintances. Americans should not say “Wei Gehts?” (How goes it?); It is also too information for first meetings. The number 7 is considered bad luck in Kenya, good luck in Czech Republic, and has magical connotations in Benin. Pepsodent toothpaste was unsuccessful in Southeast Asia because it promised white teeth to a culture where black or yellow teeth are symbols of prestige. In Brazil and Portugal businesspeople like to entertain foreigners in their homes. When it is time to go, the host may feel constrained to insist that the foreigner stay. Foreigners should politely take their leave.

Political and Regulatory Environment

Political stability, trade blocs, tariffs, and expropriation are risks that should be evaluated prior to marketing in foreign countries.

  • Business activity tends to grow and thrive when a nation is politically stable.
  • US companies make one-third of their revenues from products marketed abroad, in places such as Asia and Latin America. The United States - Mexico - Canada Agreement (USMCA) further boosts export sales by enabling companies to sell goods at lower prices because of reduced tariffs.
  • The creation of the single European market in 1992 was expected to change marketing worldwide. It meant the birth of a market that was larger than the United States, and the introduction of European Currency (Euros) in place of the individual currencies of member nations.
  • Most nations encourage free trade by inviting firms to invest and to conduct business there, while encouraging domestic firms to engage in overseas business. However, some governments, such as Communist nations, openly oppose free trade.
  • Multinational firms face the risk of expropriation (''The surrendering of a claim to private property the act of depriving of private propriety rights.'') which place them at the mercy of foreign governments, which are sometimes unstable, and which can change the laws they enforce at any point in time to meet their needs.

Trade Barriers

  • Tariff - a tax on imports.
  • Quota - limits either the quantity or the monetary value of a product that may be imported. These help local business compete with foreign companies.
  • Embargo - a total ban on specific goods coming into and leaving a country. An embargo can be imposed for different reasons, like poisoned goods, defective goods or political reasons.
  • Protectionism - a government's establishment of economic policies that systematically restricts imports in order to protect domestic industries. It is the opposite of free trade.

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