The world is becoming more and more competitive and complicated. This is evident in every sector and organisations cannot survive this tough competition if they concentrate on a single area. To remain competitive and in order to survive, grow and expand its operations, an organisation should cross international borders. Entering the international market is not simple for a firm to do and it will face factors or challenges which are entirely different from those it faced in its home country; for example, the change in culture. The success of a firm in the international market will mainly depend on its ability to adapt to the differences in the environment of different markets. The main obstacle to success in the international market is the Self Reference Criterion (SRC) which is of fundamental importance to cross-cultural analysis and cultural understanding. Another obstacle is ethnocentrism which refers to a belief that one’s own company or culture is the best. Both ethnocentrism and SRC obstruct an assessment of a foreign market. Responses to symbols, values, meanings, beliefs and attitudes relevant to one’s own culture will be different in another culture. Relying on one’s SRC will result in the failure of a marketing programme. In this essay, I will discuss SRC in more detail and its importance to a marketing firm as it enters the international market for the first time. (Muller, 2008)
The self reference criterion (SRC) can be defined as the unconscious reference to one’s own cultural knowledge, experiences and values as a basis for making decisions. The ideal way to control SRC is by recognising its impact on one’s behaviour. The best example of the SRC is that of a new manager from a Western country appointed to an Asian country like India who will struggle a lot during his initial stages. Likewise, a Japanese manager appointed to a Western country will also struggle until he gets a grip of the culture there. A manager or a firm should eliminate the SRC which can be an obstructing factor when assessing a foreign market in its true light and result in costly mistakes. For instance, a Japanese manager who is appointed in a Western country may ask the employees to start their work after a massed drill because in Japan every firm starts its day-to-day operations after a massed drill. This is the cultural difference between the two countries and the decision made by the manager is the result of SRC. (Muller, 2008)
2.1. Problems created by the self referencing criterion.
a) Failing to react in time due to unawareness of the importance or necessity for action:
The SRC will result in failure to take the right action at the right time since the person or manager will react to situations by applying his own experience in his home country and not on the basis of the requirements of the situation in the host country. For example, forcing female members of staff to work late at night would be an important issue in some parts of Asia but may not have the same impact in Western countries. (Michael R.Czinkota, 2007)
b) Offensive behaviour to hosts in certain situations:
Some actions taken on the basis of the SRC may at times result in offensive behaviour to the hosts. An example would be McDonald’s using bacon in its burgers in Arab countries.
The result would be significant and the result is that SRC hurts the host. (Michael R .Czinkota, 2007)
c) Discounting the differences in culture between countries:
Ignoring the difference in culture in different countries will eventually lead to strikes and lockouts and may finally result in a firm being banned. An example of this was the closure of the Coca-Cola factory in the southern part of India. Parts of India are known to be corrupt. The people at Coca-Cola misjudged the situation and presumed that every part of the country would be the same. They bribed the officials and did not assemble a water recycling plant. This resulted in a water shortage in that area and as a result, the closure of the factory. (Devidi, 2001)
d) An inability to assess a foreign market in its true light which results in mistakes:
SRC will result in an incorrect assessment of the foreign market and decisions made in that light will result in certain failure. For example, if a manager in an Asian automobile industry assumes that cheaper cars can be easily marketed in Western countries, he might get it wrong because almost 75% of the people in Western countries prefer stylish cars. (Chris Philips, 1994)
e) SRC results in ethnocentrism:
SRC will sometimes result in ethnocentrism which will influence the evaluation of the appropriateness of marketing plans and the marketing mix for a foreign market. Ethnocentrism presumes that one’s own company or culture knows how to do things best. An example is to be found in the experience of a US company relating to ‘Esso’ (brand name of a fuel), which in Japan it means ‘stalled car’. (Devidi, 2001)
Entering an international market is not a small thing and it is important for a firm to be very clear about what is going to happen in the international market prior to its first step. A firm which is planning to enter the international market for the first time must conduct a cross-cultural analysis as per the framework below:
a) Define and analyse the goals or issues in terms of your own and the foreign country’s norms, culture, habits and traits.
The firm must conduct an analysis of the goals and issues of both the home country and the foreign country, based on own norms, culture, habits, and traits. Another important step is to consult with the target country’s natives. (Justin Paul, 2008)
b) Make no value judgements:
Never make value judgements. Only evaluate the reality of the facts on both parts.
c) Examine and isolate your SRC influence
Examine and re-examine the impact of SRC on the problem and isolate the SRC influence on your side. (Justin Paul, 2008)
d) Redefine the problem without SRC and solve the situation in the foreign country.
The last step is to redefine the problem without the influence of SRC and solve the problem in order to achieve the optimum goal. Finally, apply the new method and develop a successful business in the international arena (Sean De Burca, 2006)
The SRC is one of the major issues to be considered by organisations that plan to expand at the international level and by those that are already in the international market. Hence, it is very important for firms to conduct cross-cultural evaluations and frame their plans and procedures according to such an evaluation and by eliminating the SRC factor. There are firms that have fallen into the trap of SRC and have come back after eliminating and rectifying the SRC effects. One example is that of McDonald’s which sells Big Macs with beef in Europe and America, but in India it sells Big Macs with mutton. In short, eliminating SRC by cross-cultural evaluation is like applying facial cream by looking at a mirror. Just imagine applying cream to your face without a mirror. Difficult, isn’t it? Similarly, the managers and all the employees who will be assigned to international branches must be provided with cross-cultural training and methods to eliminate SRC. This group of people will form an organisation and the training will make them adaptable to all types of international expectations and barriers. This is imperative because the employees represent an organisation and if they do so appropriately, the organisation will do more business and make more profits. (Ferrel, 2008)
A thorough and complete knowledge of the culture is vital for international marketers when attempting to segment markets in countries or regions. It would be easier for firms if the culture was the same in every part of a selected country but this is often not the case. In a single country, there will be people with different cultures and different languages. Just take the case of India; even though the national language is Hindi, in many parts of the country, a different language is spoken and people do not know a single word of Hindi. Another example is that, in the northern part of India, the cow is regarded as a god by some religions and hence beef is not permitted. But in the extreme south, beef is not banned and easily available in the market. These examples underline the need for knowledge of subcultures. A subculture is a group of people with shared beliefs, attitudes, behavioural patterns and values. Organisations have only limited control over cultural aspects. They cannot change the culture but they can supply the products to suit the culture. A good example of this was the adjustment made by McDonald’s when it started its operation in India. In the northern part, the company used mutton in its burgers and in the southern part, it used beef. Likewise organisations must make sure that before they make a parity statement and start their sales, they should have a clear knowledge of the subcultures of the country. (Dunbar, 2004)
6.0. The need for knowledge of subculture groups by international groups in market segmentation.
The knowledge of subculture groups is a vital factor in international marketing for market segmentation and specialisation. Market segmentation means targeting a customer group with specific characteristics. In the international market, it is necessary for organisations to be very precise in producing and distributing the products to the segmented groups because in order to sell a product the organisations need to produce what the people want. Thus the knowledge of subcultures will provide a clear-cut idea about what to produce, how to produce it, when to produce it and where to sell the product in order to make a profit. The table below shows the elements of culture. In short, marketers must be familiar with the impact of culture on customer behaviour and exploit the marketing opportunity generated by subcultures. The analysis of a subculture helps managers in the marketing sector to focus on measureable market segments. Market segmentation:
(Sub cultures and consumer behavior, 2007)
. (Dunbar, 2004)
Hence we can investigate the need for subculture group knowledge as follows:
a) The world is heterogeneous:
The world is heterogeneous in nature and people have different tastes, styles, cultures etc. Hence, what people prefer to buy in the UK will not necessarily be acceptable to the people in Saudi Arabia. Moreover, what children buy may not be the taste of their elders in the UK. Organisations have to focus on different subcultures in order to deliver goods and services. For example, ASOS.com focuses on online sales of fashionable goods, targeting people in Europe between16 and 34 years old. This is a region-centric policy. An example of polycentric policy is that of India’s major IT businesses which are in USA. (Bradley, 2005)
b) Homogenous regions with heterogeneous cultures:
In some areas, even though the country or region seems to be homogenous in nature, there may be subculture groups within the population An example of this can be found in Middle East countries. It is not mandatory for women to wear the ‘Burqa’ (black outer garments worn by women) in UAE but it is mandatory in Saudi Arabia. The organisations dealing in clothing will consider this subculture aspect before supplying goods to these areas. (Bradley, 2005)
c) Single geopolitical boundary with heterogeneous cultures:
There are some countries in which there are different religions, different languages and different people. Let’s take the example of India where there are 29 states and seven union territories. An interesting point is that in almost all the states, people speak different languages even though the national language is Hindi. Another point is that there are also plenty of religions. Hence organisations have to be really careful when opening branches in these multicultural areas. (Bradley, 2005)
d) National subculture:
This refers to the category of people who value their nationality and consume their home country dishes and purchase their national clothing etc. An example is the case of Chinese noodles; Chinese people, wherever they go, like to have them. (Bradley, 2005)
e) Religious subculture:
This refers to the consumption of products based on religious restrictions; for example, Islamic people do not consume pork. Another example is that of a certain religious group in India which only consumes vegetarian dishes. (Jean Claude, 2009)
f) Age subculture:
This refers to consumerism based on age categories. For example, in the UK there is a selected category of formal trousers which are purchased by old people but not purchased by youngsters. This states that they belong to old people. (Weinstein, 2004)
g) Gender subculture:
Men and women have different tastes in the products they consume. In India, women will spend more on cosmetics and men will spend more on alcohol and cigars. (Croft, 1994)
International marketing is a complicated task. In this competitive world, firms not only have to survive the competition but also have to face various cultural and subculture barriers as discussed above. Hence, in order to survive, firms should have clear-cut ideas about market segmentation and a great deal of knowledge about cultures and subcultures in the selected region or country. A small miscalculation could result in heavy losses for the firm. Therefore, it is always better for international marketers to have a consultant in the area whose role is to obtain the exact picture of that market area. There are two ways for marketing firms to cope with subcultures: one is by adaptation and the other is by innovation. Innovation means developing those products which are suitable for the selected subculture group. (Samli, 1995)
Bradley, F. (2005). International Marketing Strategy. UK: Pearson Education Ltd.
Chris Philips, I. D. (1994). International Marketing Strategy analysis development and implementation. London: Routledge.
Croft, M. J. (1994). Segmentation- Marketing for managers. London: Routledge.
Devidi, A. B. (2001). Self reference and Self awareness. Netherlands: John Benjamin’s publishing Company.
Dunbar, M. M. (2004). Market Segmentation. UK: Elsevior Butter worth.
Ferrel, F. F. (2008). Business Ethics – Ethical Decision Making and cases. USA: Houghton Mifflin Company.
Jean claude, J. A. (2009). Marketing Across Cultures. UK: Pearson Education Ltd.
Justin Paul, R. K. (2008). International Marketing. India: McGraw Hill publishing company.
Michael.R . & Czinkota, L. (2007). International Marketing. USA: Edward Brothers.
Muller, B. (2008). Communicating with multicultural consumers. UK: Lang Publishing.
Samli, A. C. (1995). International consumer behavior. UK: Quorum Books.
Sean De Burca, R. F. (2006). International Marketing; an SEE Perspective.
Segmentation, M. (2008). Market Segmentation. Retrieved from http://www.investorwords.com/2988/market_segmentation.html
Sub cultures and consumer behavior. (2007). Retrieved from http://www.scribd.com/doc/22360436/Lesson-13
Weinstein, A. (2004). Hand book of Market Segmentation. New York: The Haworth press.