IMPACT OF CULTURE & VALUE SYSTEM ON CONSUMER BEHAVIOUR

Presented By, HIMANSHU TRIPATHI MBA-IB

What is Culture ?
Culture is the integrated sum total of learned behavioral traits that are shared by members of a society Terpstra (1994)

Cultural symbols include language, religious rituals and art whose shared meanings form the unique fingerprint of a particular society.Morrison (2002)

 According to Czinkota (2007), cultural factors have an important impact on the flow of business. Each society has its own elements of culture. These elements of culture are manifested through: Language (Verbal & Non-Verbal) Religion Values & Attitudes Manners & Customs Aesthetics Education Social Institutions

Factors Affecting The Culture In Different Countries:

Cultural Forces- Family, Education & National Identity Cultural Messages- Ethics & Morality, Behaviour & Roles Consumer Decision Process- Needs & Wants, Consumer Trends

Cultural Forces -family -education -national identity

Cultural Messages

Consumers Decision Process -needs and wants -consumer trends

-ethics and morality -behavior and roles

Culture in Country A

Reconciliation -reduce conflict -cope with differences -harness tension

Culture in Country B

Synthesis Of Cultures -integrate different cultural perspectives -seek a dynamic solution

A Synthesis Of Cultural Influence On Buyer Behaviour. (Bradley F.,2002)

Follow up
No co- operation Culture in Country A
Family Education National Identity Behavior and roles Ethics and morality Customs Attitudes Thoughts and feelings Manners

Follow up

Culture in Country B Conflicts

Family Education National Identity Behavior and roles Ethics and morality Customs Attitudes Thoughts and feelings Manners

Agreement

Follow up
Negotiation
Language problems Different thinking and priorities Personal relationships or direct contracts Honour, dignity and respect Knowledge about cultural background The negotiation process

Follow up

No co- operation

Conflicts

Conflicts

No co- operation

Follow up

Price negotiation
Quality, service and delivery Competition Cost structure Strategic objectives

Follow up

No co- operation

Conflicts

Conflicts

No co- operation

Follow up

Co-operation between Country A and Country B

Follow up

Additional learning and experiences for both Country A and Country B

Easier future cooperation Between Country A & B

Process Of Resolving Problems Faced Due To Cultural Differences

CROSS-CULTURAL MANAGEMENT
Two leading studies are done by:
Geert Hofstede Fons Trompenaars

Cultural Dimensions
1. Relationship Between People 2. Motivational Orientation 3. Attitudes towards Time

Relationship Between People

Hofstede- Individualism & Collectivism Trompenaars- Universalism vs. Particularism

Motivational Orientation
Hofstede- Masculinity vs. Femininity - Uncertainty Avoidance - Power Distance

Attitudes towards Time

Hofstede- Long-Term vs. Short-Term Trompenaars- Sequential vs. Synchronic

Decision-Making Styles Of Consumers

Quality Conscious Decision-Making Style Brand Conscious Decision-Making Style Innovative Decision-Making Style Recreation Conscious Decision-Making Style Price Conscious Decision-Making Style Impulse Buying Decision-Making Style Confused By Overchoice Decision-Making Style Brand Loyal Decision-Making Style

Quality Conscious Decision-Making Style

A significant factor in consumer decision-making is quality. Quality conscious consumers search for the best quality products by shopping systematically and carefully. Quality-conscious decision-making implies the perception of a hierarchy of quality levels. Hofstedes (2001) cultural dimension of power distance deals with inequality in prestige, wealth and power. Cultures with higher power distance would be more likely to engage in the quality conscious decisionmaking style as it refers to hierarchy vs equality. The seeking of quality also implies a desire for a product that will last.

Brand Conscious Decision-Making Style

Brand conscious decision-making refers to a consumers orientation towards the purchase of expensive and well-known brands. There are two dimensions of Hofstede that have relevance for this decisionmaking style; individualism/collectivism and uncertainty avoidance. Brands are symbols of status and prestige. Cultures, having high power distance, perceive social status and prestige as important. Brands are symbols that convey meanings to consumers, some brands such as BMW convey meanings of prestige and quality however there are also brands that convey meanings relating to low price such as Tato Nano. Brands assist consumers in effort minimization and provide a sense of familiarity, this reduces the risk involved in purchasing and appeals to consumers who have high uncertainty avoidance.

Innovative Decision-Making Style

An innovative decision-making style refers to consumers that seek variety and novelty in their purchase decisions. According to Hofstede, the predisposition to purchase new and different products and brands is related to two cultural characteristics, namely, high individualism and future orientation (long-term orientation). Consumer innovativeness was found to be more prevalent in cultures that are more individualistic, masculine and lower in uncertainty avoidance. For instance, consumers with individualist and masculine values are less likely to be concerned with the image they portray to others and they value new things. Alternatively, consumers that are high in uncertainty avoidance and past time orientation tend to resist novelty or change. They possess varietyseeking tendencies due to the cultural assumption that choice is indicative of an act of self-expression.

Recreation Conscious Decision-Making Style

Recreation conscious and hedonistic shopping refers to the extent to which shopping is considered pleasurable and fun. Pleasure and fun are internal states and thus are unlikely to be effected by cultural display rules. Display rules refer to prescribed norms for verbal and nonverbal displays and people modify their expressions on the basis of these cultural display rules. Thus, cultural display rules are societal prescribed norms for verbal and nonverbal expression. As such, culture is not expected to influence the experienced pleasure of shopping but rather the types of shopping pursued.

Price Conscious Decision-Making Style

Price conscious has been defined as a buyers unwillingness to pay a higher price for a product and/or "the exclusive focus" on paying low prices. Similar to brand conscious decision-making, collectivist cultures are expected to be more concerned with the status attributed to a given brand and more sensitive to maintaining prestige and status. The masculine orientation of cultures which place emphasis on ego goals such as careers and money, price-conscious decision-making means that items are bought for less and thus, more material goods can be accumulated.

Impulse Buying Decision-Making Style

Impulse buying is defined as an unplanned purchase Cultures which are high in uncertainty avoidance (UAI) would be expected to be less inclined to impulse buy. They tend to require more information before acting and resist innovation and change.

Confused By Overchoice Decision-Making Style

Consumers are confused by overchoice when they experience information overload. Cultures with collectivistic nature, search more and rely on social networks for information. Cultures that score highly on the Hofstede dimension of uncertainty avoidance may feel stressed by the ambiguity that too many choices present.

Brand Loyal Decision-Making Style

Brand loyalty measures the extent to which consumers form habitual purchases and remain with their favourite brands or stores. Brand loyalty is a risk reduction strategy, which is consistent with Hofstedes (2001) cultural dimension of uncertainty avoidance (UAI) as uncertainty avoidance increases risk aversion. Consumers high in UAI prefer to avoid uncertainty and are likely to use the familiarity of brands to reduce ambiguity.

Table 11 Implications of Hofstedes Typology for Consumer Decision Making Power distance Uncertainty Individualism Masculine avoidance orientation Definition Quality conscious Brand conscious
Inequality in prestige, wealth and power Power distance involves a hierarchy of quality rather than equality Status and prestige can be reflected through brands High risk propensity and low resistance to change Lack of need for approval from the group for particular brands. Brands express the individual Less concerned with making mistakes in front of others Individualist cultures are more price sensitive and dont care about how being perceived as cheap. Low price often means low quality Require little information before acting, resist innovation and change Less likely to consider a greater range of product information and alternatives
Brand loyalty is a risk reduction strategy

Long term orientation

Stability, persistence and respect for tradition

Tolerance for ambiguity

Emphasis is on the individual rather then the group

Emphasis is on egogoals such as careers and money

Innovative

Recreation conscious Price conscious

Greater emphasis on material goods and increases propensity to purchase new things Price-conscious behaviour results in items bought for less, more goods can be accumulated

Tradition outweighs the need for variety or innovation

Impulse-buying

Confused by Overchoice Brand loyal

Tend to rely more on own sources of information rather than social networks Brands used to express individual identify Long-term orientation promotes continuity

Culture & Value Systems in Selected Countries and Regions

China
1. The Chinese people place values and principles above money and expediency. 2. Business meetings typically start with pleasantries such as tea and general conversation about the guests trip to the country, local accommodations, and family. 3. The Chinese host will give the appropriate indication for when a meeting is to begin and when the meeting is over. 4. Once the Chinese decide who and what is best, they tend to stick with these decisions. Although slow in formulating a plan of action, once they get started, they make fairly good progress. 5. In negotiations, reciprocity is important. If the Chinese give concessions, they expect some in return. 6. During negotiations, it is important not to show excessive emotion of any kind. Anger or frustration is viewed as antisocial and unseemly. 7. Negotiations should be viewed with a long-term perspective. Those who will do best are the ones who realize they are investing in a long-term relationship.

Culture & Value Systems in Selected Countries and Regions

Russia
1. Build personal relationships with partners. When there are contract disputes, there is little protection for the aggrieved party because of the time and effort needed to legally enforce the agreement. 2. Use local consultants. Because the rules of business have changed so much in recent years, it pays to have a local Russian consultant working with the company. 3. It is traditional in Russia to give gifts to those with whom one wants to transact business. 4. Be patient. In order to get something done in Russia, it often takes months of waiting. 5. Russians like exclusive arrangements and often negotiate with just one firm at a time. 6. Russians like to do business face-to-face. So when they receive letters or faxes, they often put them on their desk but do not respond to them. 7. Keep financial information personal. Russians wait until they know their partner well enough to feel comfortable before sharing financial data.

Culture & Value Systems in Selected Countries and Regions

Russia (contd.)
8. Research the company. In dealing effectively with Russian partners, it is helpful to get information about this company, its management hierarchy, and how it typically does business. 9. Stress mutual gain. The Western idea of winwin in negotiations also works well in Russia. 10. Clarify terminology. The language of business is just getting transplanted in Russia so double-check and make sure that the other party clearly understands the proposal, knows what is expected and when, and is agreeable to the deal. 11. Be careful about compromising or settling things too quickly because this is often seen as a sign of weakness. 12. Russians view contracts as binding only if they continue to be mutually beneficial, so continually show them the benefits associated with sticking to the deal.

Culture & Value Systems in Selected Countries and Regions

India
1. It is important to be on time for meetings. 2. Personal questions should not be asked unless the other individual is a friend or close associate. 3. Titles are important, so people who are doctors or professors should be addressed accordingly. 4. Public displays of affection are considered to be inappropriate, so one should refrain from backslapping or touching others. 5. Beckoning is done with the palm turned down. 6. When eating or accepting things, use the right hand. 7. The namaste gesture can be used to greet people; it also is used to convey other messages. 8. Bargaining for goods and services is common; this contrasts with Western traditions, where bargaining might be considered rude or abrasive.

Culture & Value Systems in Selected Countries and Regions

France
1. When shaking hands with a French person, use a quick shake with some pressure in the grip. 2. It is extremely important to be on time for meetings and social occasions. Being fashionably late is frowned on. 3. During a meal, it is acceptable to engage in pleasant conversation, but personal questions and the subject of money are never brought up. 5. The French tend to be suspicious of early friendliness in the discussion and dislike first names, taking off jackets, or disclosure of personal or family details. 6. In negotiations the French try to find out what all of the other sides aims and demands are at the beginning, but they reveal their own hand only late in the negotiations. 7. The French do not like being rushed into making a decision, and they rarely make important decisions inside the meeting. 8. The French tend to be very precise and logical in their approach to things, and will often not make concessions in negotiations unless their logic has been defeated.

Culture & Value Systems in Selected Countries and Regions

Arab Countries
1. It is important never to display feelings of superiority, because this makes the other party feel inferior. Let ones action speak for itself and not brag or put on a show of self-importance. 2. One should not take credit for joint efforts. A great deal of what is accomplished is a result of group work, and to indicate that one accomplished something alone is a mistake. 3. Much of what gets done is a result of going through administrative channels in the country. 4. Connections are extremely important in conducting business. 5. Patience is critical to the success of business transactions. This time consideration should be built into all negotiations. 6. Important decisions usually are made in person, not by correspondence or telephone. This is why an MNCs personal presence often is a prerequisite for success in the Arab world. Additionally, while there may be many people who provide input on the final decision, the ultimate power rests with the person at the top, and this individual will rely heavily on personal impressions, trust, and rapport.

Culture & Value Systems in Selected Countries and Regions

South America
1. A firm handshake accompanied with smile and appropriate greeting is normal in a business setting. 2. Direct eye contact is important. 3. Some women may not shake hands with man, although this is becoming less common. 4. Chileans stand very close when conversing. 5. Always use surnames and titles-wait to be invited to use someones first name. 6. Business cards are exchanged on the initial meeting at the very start. 7. Try and have one side translated into Spanish. 8. Keep cards in good condition-a tatty card will reflect badly on negotiation staff.

Culture & Value Systems in Selected Countries and Regions

South America
9. Chile has a relationship driven culture so initial meetings should be used to build a relationship and established trust. 10. As well, it is important to be patient as time is not of the essence in Chilemeetings will last as long as they need to last. 11. Chileans are generally indirect in their communication style. 12. Communication style tends to be tuned to peoples feelings. 13. Chileans never openly criticize anyone.