International Marketing – Product and Cultures

As a marketer, we all know that a product is more than a physical item: It is a bundle of satisfactions (or utilities) that the buyer receives. These utilities include its form, taste, colour, odour, and texture; how it functions in use; the package; the label; the warranty; and any other symbolic utility received from the possession or use of the goods. In short, the market relates to more than a product’s physical form and primary function. The values and customs within a culture confer much of the importance of these other benefits. In other words, a product is the sum of the physical and psychological satisfactions it provides the user. A product’s physical attributes generally are required to create its primary function. The primary function of an automobile, for example, is to move passengers from point A to point B. This ability requires a motor, transmission, and other physical features to achieve its primary purpose.

The physical features or primary function of an automobile generally are in demand in all cultures where there is a desire to move from one point to another by ways other than by foot or animal power. Few changes to the physical attributes of a product are required when moving from one culture to another. However, an automobile has a bundle of psychological features that are as important in providing consumer satisfaction as its physical features. Within a specific culture, other automobile features (color, size, design, brand name, price) have little to do with its primary function—the movement from point A to B—but do add value to the satisfaction received. The meaning and value imputed to the psychological attributes of a product can vary among cultures and are perceived as negative or positive. To maximize the bundle of satisfactions received and to create positive product attributes rather than negative ones, adaptation of the nonphysical features of a product may be necessary.

Coca-Cola, frequently touted as a global product, found it had to change Diet Coke to Coke Light when it was introduced in Japan. Japanese women do not like to admit to dieting, because the idea of a diet implies sickness or medicine. So instead of emphasizing weight loss, “figure maintenance” is stressed. Adaptation may require changes of any one or all of the psychological aspects of a product. A close study of the meaning of a product shows the extent to which the culture determines an individual’s perception of what a product is and what satisfaction that product provides. The adoption of some products by consumers can be affected as much by how the product concept conforms to their norms, values, and behaviour patterns as by its physical or mechanical attributes. When analyzing a product for a second market, the extent of adaptation required depends on cultural differences in product use and perception between the market the product was originally developed for and the new market. The greater this cultural differences between the two markets, the greater the extent of adaptation that may be necessary.

When instant cake mixes were introduced in Japan, the consumers’ response was less than enthusiastic. Not only do Japanese reserve cakes for special occasions, but they prefer the cakes to be beautifully wrapped and purchased in pastry shops. The acceptance of instant cakes was further complicated by another cultural difference: Many Japanese homes do not have ovens. An interesting sidebar to this example is the company’s attempt to correct for that problem by developing a cake mix that could be cooked in a rice cooker, which all Japanese homes have. The problem with that idea was that in a Japanese kitchen, rice and the manner in which it is cooked have strong cultural overtones, and to use the rice cooker to cook something other than rice is a real taboo. The problems of adapting a product to sell abroad are similar to those associated with the introduction of a new product at home.

Products are not measured solely by their physical specifications. The nature of the new product is what it does to and for the customer—habits, tastes, and patterns of life. The problems illustrated in the cake mix example have little to do with the physical product or the user’s ability to make effective use of it and more with the fact that acceptance and use of the cake mixes would have required upsetting behaviour patterns considered correct or ideal. Finally, there are some interesting surprises in the area of adaptation. An interesting example is Harry Potter. About 20 percent of the sales of his last adventure book in Japan were in English. Japanese consumers were looking for ways to augment English lessons, and the books and associated audiotapes filled that particular need very well. For them Potter is not just entertainment; it’s education.

Innovative Products and Adaptation
An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market. How people react to newness and how new a product is to a market must be understood. In evaluating the newness of a product, the international marketer must be aware that many products successful in the United States, having reached the maturity or even decline stage in their life cycles, may be perceived as new in another country or culture and thus must be treated as innovations. From a sociological viewpoint, any idea perceived as new by a group of people is an innovation. Whether or not a group accepts an innovation, and the time it takes to do so, depends on the product’s characteristics. Products new to a social system are innovations, and knowledge about the diffusion (i.e., the process by which innovation spreads) of innovation is helpful in developing a successful product strategy. Sony’s marketing strategies for the U.S. introduction of its PlayStation 2 were well informed by its wild successes achieved six months earlier during the product’s introduction in Japan.

Marketing strategies can guide and control, to a considerable degree, the rate and extent of new product diffusion because successful new product diffusion is dependent on the ability to communicate relevant product information and new product attributes. The goal of a foreign marketer is to gain product acceptance by the largest number of consumers in the market in the shortest span of time. However, as discussed in Chapter 4 and as many of the examples cited have illustrated, new products are not always readily accepted by a culture; indeed, they often meet resistance.

Although they may ultimately be accepted, the time needed for a culture to learn new ways, to learn to accept a new product, is of critical importance to the marketer because planning reflects a time frame for investment and profitability. If a marketer invests with the expectation that a venture will break even in three years and seven are needed to gain profitable volume, the effort may have to be prematurely abandoned. The question comes to mind of whether the probable rate of acceptance can be predicted before committing resources and, more critically, if the probable rate of acceptance is too slow, whether it can be accelerated. In both cases, the answer is a qualified yes. Answers to these questions come from examining the work done in diffusion research— research on the process by which innovations spread to the members of a social system.

Diffusion of Innovations
Everett Rogers noted that “crucial elements in the diffusion of new ideas are (1) an innovation, (2) which is communicated through certain channels, (3) over time, (4) among the members of a social system.” Rogers continued with the statement that it is the element of time that differentiates diffusion from other types of communications research. The goals of the diffusion researcher and the marketer are to shorten the time lag between introduction of an idea or product and its widespread adoption. Rogers and others give ample evidence of the fact that product innovations have varying rates of acceptance. Some diffuse from introduction to widespread use in a few years; others take decades. Patterns of diffusion also vary substantially, and steady growth is the exception—high-tech products often demonstrate periods of slow growth interspersed with performance jumps or early declines followed by broader takeoffs. As mentioned in Chapter 8, cultural and other national differences affect the takeoff of new products.

Also, spillover effects from adopters in neighbouring countries can influence diffusion rates. Analyses of both factors can suggest ideal countries for new product introduction. At least three extraneous variables affect the rate of diffusion of an object: the degree of perceived newness, the perceived attributes of the innovation, and the method used to communicate the idea. The more innovative a product is perceived to be, the more difficult it is to gain market acceptance. That is, at a fundamental level, innovations are often disruptive. Consider alternative-fuel cars in the United States. Although they are popular with consumers, dealers did not appreciate their low maintenance requirements, which reduced after-sale service revenues. Analyzing the five characteristics of an innovation can assist in determining the rate of acceptance or resistance of the market to a product. A product’s (1) relative advantage (the perceived marginal value of the new product relative to the old), (2) compatibility (its compatibility with acceptable behaviour, norms, values, and so forth), (3) complexity (the degree of complexity associated with product use), (4) trialability (the degree of economic and/or social risk associated with product use), and (5) observability (the ease with which the product benefits can be communicated) affect the degree of its acceptance or resistance.

In general, the rate of diffusion can be postulated as positively related to relative advantage, compatibility, trialability, and observability but negatively related to complexity. The evaluator must remember that it is the perception of product characteristics by the potential adopter, not the marketer, which is crucial to the evaluation. A market analyst’s self-reference criterion (SRC) may cause a perceptual bias when interpreting the characteristics of a product. Thus, instead of evaluating product characteristics from the foreign user’s frame of reference, the marketer might analyze them from his or her frame of reference, leading to a misinterpretation of the product’s cultural importance. Once the analysis has been made, some of the perceived newness or causes for resistance can be minimized through adroit marketing. The more congruent product perceptions are with current cultural values, the less resistance there will be and the more rapid product diffusion or acceptance will be. Finally, we should point out that the newness of the product or brand introduced can be an important competitive advantage; the pioneer brand advantage often delivers long-term competitive advantages in both domestic and foreign markets.

Production of Innovations
Some consideration must be given to the inventiveness of companies and countries. For example, it is no surprise that most of the new ideas associated with the Internet are being produced in the United States. The 227 million American users of the Internet far outnumber the 92 million Japanese users.

Many Japanese firms also take advantage of American innovativeness by establishing design centers in the United States—most notable are the plethora of foreign auto design centers in Southern California. At the same time, American automobile firms have established design centers in Europe. Recent studies have shown that innovativeness varies across cultures, and companies are placing design centers worldwide. Indeed, the Ford Taurus, the car that saved Ford in the 1980s, was a European design. Research is also now focusing on the related issue of “conversion-ability” or the success firms have when they take inventions to market. Three main factors seem to favour conversion, at least in the global pharmaceutical industry: patience (nine years seems optimal for taking a newly patented drug to approval), focus on a few important innovations, and experience. Another study demonstrates that strengthening patent protections tends to favour firms in developed countries differentially more than firms in developing countries. If evidence continues to accumulate in this vein, policy makers will have to reconsider the current global application of a “one-size-fits-all” intellectual property system. Analyzing Product Components for Adaptation

A product is multidimensional, and the sum of all its features determines the bundle of satisfactions (utilities) received by the consumer. To identify all the possible ways a product may be adapted to a new market; it helps to separate its many dimensions into three distinct components, as illustrated by the Product Component Model in Exhibit 13.1. By using this model, the impact of the cultural, physical, and mandatory factors (discussed previously) that affect a market’s acceptance of a product can be focused on the core component, packaging component, and support services component. These components include all a product’s tangible and intangible elements and provide the bundle of utilities the market receives from use of the product.

Core Components
The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. It is on the product platform that product variations can be added or deleted to satisfy local differences. Major adjustments in the platform aspect of the core component may be costly, because a change in the platform can affect product processes and thus require additional capital investment. However, alterations in design, functional features, flavours, color, and other aspects can be made to adapt the product to cultural variations. In Japan, Nestlé originally sold the same kind of corn flakes it sells in the United States, but Japanese children ate them mostly as snacks instead of for breakfast. To move the product into the larger breakfast market, Nestlé reformulated its cereals to more closely fit Japanese taste. The Japanese traditionally eat fish and rice for breakfast, so Nestlé developed cereals with familiar tastes—seaweed, carrots and zucchini, and coconut and papaya. The result was a 12 percent share of the growing breakfast cereal market.

Functional features can be added or eliminated depending on the market. In markets where hot water is not commonly available, washing machines have heaters as a functional feature. In other markets, automatic soap and bleach dispensers may be eliminated to cut costs or to minimize repair problems. Additional changes may be necessary to meet safety and electrical standards or other mandatory (homologation) requirements. The physical product and all its functional features should be examined as potential candidates for adaptation.

Packaging Component
The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product’s package. Apple Computer found out the hard way how important this component can be when it first entered the Japanese market. Some of its Macintosh computers were returned unused after customers found the wrapping on the instruction manual damaged! As with the core component, the importance of each of the elements in the eyes of the consumer depends on the need that the product is designed to serve. Packaging components frequently require both discretionary and mandatory changes. For example, some countries require labels to be printed in more than one language, while others forbid the use of any foreign language. Meanwhile, one study has found that consumers in the United States respond negatively to bilingual packaging. At Hong Kong Disneyland, the jungle cruise ride commentary is delivered in Cantonese, Mandarin, and English.

Several countries are now requiring country-of-origin labelling for food products. Elements in the packaging component may incorporate symbols that convey an unintended meaning and thus must be changed. One company’s red-circle trademark was popular in some countries but was rejected in parts of Asia, where it conjured up images of the Japanese flag. Yellow flowers used in another company trademark were rejected in Mexico, where a yellow flower symbolizes death or disrespect. A well-known baby-food producer that introduced small jars of baby food in Africa, complete with labels featuring a picture of a baby, experienced the classic example of misinterpreted symbols: The company was absolutely horrified to find that consumers thought the jars contained ground-up babies. In China, though not a problem of literacy per se, Brugel, a German children’s cereal brand that features cartoon drawings of dogs, cats, birds, monkeys, and other animals on the package, was located in the pet foods section of a supermarket.

The label had no Chinese, and store personnel were unfamiliar with the product. It is easy to forget that in low-literacy countries, pictures and symbols are taken literally as instructions and information. Care must be taken to ensure that corporate trademarks and other parts of the packaging component do not have unacceptable symbolic meanings. Particular attention should be given to translations of brand names and colors used in packaging. When Ford tried to sell its Pinto automobile in Brazil, it quickly found out that the car model’s name translated to “tiny male genitals.” Reasons a company might have to adapt a product’s package are countless. In some countries, laws stipulate specific bottle, can, and package sizes and measurement units. If a country uses the metric system, it will probably require that weights and measurements conform to the metric system.

Such descriptive words as “giant” or “jumbo” on a package or label may be illegal. High humidity or the need for long shelf life because of extended distribution systems may dictate extra-heavy packaging for some products. As is frequently mentioned, Japanese attitudes about quality include the packaging of a product. A poorly packaged product conveys an impression of poor quality to the Japanese. It is also important to determine if the packaging has other uses in the market. Size of the package is also a factor that may make a difference to success in Japan. Soft drinks are sold in smaller-size cans than in the United States to accommodate the smaller Japanese hand. In Japan, most food is sold fresh or in clear packaging, while cans are considered dirty. So when Campbell introduced soups to the Japanese market, it decided to go with a cleaner, more expensive pop-top opener.

Support Services Component
The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. Many otherwise successful marketing programs have ultimately failed because little attention was given to this product component. Repair and maintenance are especially difficult problems in developing countries. In the United States, a consumer has the option of obtaining service from the company or from scores of competitive service retailers ready to repair and maintain anything from automobiles to lawn mowers. Equally available are repair parts from company-owned or licensed outlets or the local hardware store. Consumers in a developing country and in many developed countries may not have even one of the possibilities for repair and maintenance available in the United States, and independent service providers can be used to enhance brand and product quality. In some countries, the concept of routine maintenance or preventive maintenance is not a part of the culture.

As a result, products may have to be adjusted to require less frequent maintenance, and special attention must be given to features that may be taken for granted in the United States. The literacy rates and educational levels of a country may require a firm to change a product’s instructions. A simple term in one country may be incomprehensible in another. In rural Africa, for example, consumers had trouble understanding that Vaseline Intensive Care lotion is absorbed into the skin. Absorbed was changed to soaks into, and the confusion was eliminated. The Brazilians have successfully overcome the low literacy and technical skills of users of the sophisticated military tanks it sells to Third World countries. The manufacturers include videocassette players and videotapes with detailed repair instructions as part of the standard instruction package.

They also minimize spare parts problems by using standardized, off-the-shelf parts available throughout the world. And, of course, other kinds of cultural preferences come into play even in service manuals. Complementary products must be considered increasingly in the marketing of a variety of high-tech products. Perhaps the best example is Microsoft’s Xbox and its competitors. Sales of the Xbox had lagged those of Sony’s and Nintendo’s game consoles in Japan. Microsoft diagnosed the problem as a lack of games that particularly attract Japanese gamers and therefore developed a series of games to fi ll that gap. An early offering, a role-playing game called Lost Odyssey, was developed by an all-Japanese team. The Product Component Model can be a useful guide for examining the adaptation requirements of products destined for foreign markets. A product should be carefully evaluated on each of the three components to determine any mandatory and discretionary changes that may be needed.