Do Stereotypes Make Us Market Incorrectly To The Modern World?

Successful business globalization

implicates understanding the needs of potential customers in a foreign country, and tailoring the business strategy to suit the new culture. Moving a business into new countries involves the need to market to novel cultures, which will differ from the home country. Where a company may be able to sell a product with a risqué advertisement in the United States, it would be unlikely to do so in a conservative Middle Eastern country. Failure to understand the new culture will often lead to businesses failing to penetrate the new market.

There are countless examples of American businesses that, due to a lack of cultural understanding, failed to expand into Europe and Asia. For example, ecommerce giant eBay, despite its success in America and Europe, had difficulties launching in China, where it initially failed to differentiate itself from “TaoBao”, the local ecommerce site which contained the popular chat function that allowed buyers to chat with sellers prior to purchasing products. eBay also struggled initially in Japan, where the lack of flexibility in payment options was noted by Forbes India – at the time, it was extremely unpopular in Japan to provide credit card information online. After the intial struggles, however, eBay did manage to adapt to the local culture.

A recent study at the University of St Andrews suggests that our stereotypes of cultures in the modern world may be outdated, and that our lack of understanding of the evolution of cultures may be a detriment to businesses that rely solely on popular sociological models when trying to expand into new markets. The study, which surveyed 173 participants across Europe and North America, investigated the relationships between materialism, individualism and personal values in order to better understand the cultural component of values, and their correlation with materialism. The study was formed of three questionnaires, each tackling one of the three variables of the research question materialism, individualism and personal values (self-transcendence, self-enhancement, openness and conservation).

The findings did not fully correlate with the expected results for the relationship between individualism and personal values– the prediction prior to the implementation of the study was that individualistic cultures would hold individualistic values, and collectivist cultures would hold collectivist values (refer to side-bar). In fact, although collectivism correlated positively with conservation (a collectivist value) and individualism correlated positively with self-enhancement (an individualist value), as hypothesized, the other two higher-order personal values investigated (openness and self-transcendence) did not correlate significantly with individualism or collectivism. In other words, an individual’s status as a collectivist or individualistic citizen did not reveal their levels of openness or self-transcendence.

Materialism, however, could predict all four investigated personal values (refer to Table 1). Interestingly, the two values that were held most often with highly materialistic participants, self-transcendence and conservation, were a mix of individualistic and collectivist traits, respectively. This suggests that neither collectivist nor individualistic cultures are more materialistic – in terms of business globalization, this means that the differing levels of materialism across cultures cannot be blamed for businesses failing to launch in a “less materialistic” country. Instead, the blame is on the way in which businesses choose to research (or not research) the countries they are expanding to.

Higher-order personal value

Correlation with materialism

Self-transcendence

Positive

Self-enhancement

Negative

Openness

Negative

Conservation

Positive

Table 1: Correlation between higher-order personal values and materialism.

In terms of business globalization, this study suggests that we may have to think past the cultural stereotypes of a nation in order to predict potential customer buying behaviour. Committing the fallacy of false attribution of values to a society may be the downfall of a marketing campaign, and consequently a misstep in the exploit of business expansion across borders.

There are more examples of businesses that failed to expand internationally due to false attribution of traits based on sociological models. Mattel, a US based toy store, opened a six-story Barbie store in an expensive district in China in 2009 assuming that Chinese children, like American children, would enjoy playing with Barbie. Unfortunately, they did not take into account the cultural difference between American and Chinese children - in particular, the fact that Chinese parents valued education and consider frivolous toys to be an indulgence – and consequently the store was shut down within two years. Disney, on the other hand, approached the Chinese market in a more informed fashion – they tied their playful toy merchandise, Mickey Mouse, to English Learning Centres so that Chinese children were having fun while also learning English.

Another American company that failed to launch in China made an incorrect assumption about the foreign culture. Home Depot, a large “do-it-yourself” haven with all the tools and materials necessary to renovate the home or fix furniture, expanded to China with the hopes of appealing to thrifty and allegedly tool-savvy Chinese people. In actual fact, DIY was neither popular in China and nor necessary, as their recent rise in home owners meant that most homes were new and did not require renovating. Additionally, labour in China was so cheap that most people would simply hire a handyman if anything required repair. Within 6 years, Home Depot admitted defeat in the Chinese market, closed down all their stores and fired their 850 workers in China.

The Global Post ran an article speculating why American businesses so often failed to succeed in China. The usual culprits were lack of flexibility and failure to localize, but the biggest cause of international blunders is the inability to understand just how much the market differs firstly from American culture, but secondly from the stereotypes that many Westerners attribute to China.

The conclusions of the aforementioned St Andrews-based study suggested that further research be done to test the assumptions made in the study. For example, investigating whether high levels of materialism necessarily predict spending habits, and whether marketing that specifically targets an individual’s personal values will inevitably be more successful in attracting the individual as a customer. However, the current findings yield significant enough results with regards to the relationship between individualism, materialism and personal values to highlight the importance of cultural understanding and encourage business wishing to expand to new cultures to think past stereotypes and effectively research new cultures prior to expansion.