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Slide 1 - Lars Perner - Consumer Behavior and Marketing Wisdom

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									ELECTRONIC COMMERCE
• • • • • Strategies Regional markets Risks Language issues Other cultural issues • Legal/regulatory issues
Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin. MKTG 376

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Strategies
• Exclusionary
– Solely domestic

• Inclusionary
– “Passively” international – “Glocals” (adaptive approach) – “Globals” (standardized approach)
Middle ground

Completely standardized (“Globals”)
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Completely adapted

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Evaluating Markets
• Economic viability
– Income distribution and averages – Segment potential

• Internet readiness
– “Least Internet Ready Areas of the World” (LIRAs) (35% of World population) – “Internet Ready Areas of the World” (IRAs) (50)% – “Internet Leaders” (15%)
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Internet Readiness Indices
• Economist
– Approximately 100 measures in 6 categories
• Technology infrastructure • General business environment • Consumer and business adoption of e-business • Social/cultural conditions affecting Internet use • Availability of ebusiness support services

• Information and Telecommunications (ITC) • International Telecommunications Union
– 26 indicators-e.g.,
• Technology infrasturctures • Market conditions

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Internet Readiness Criteria
• Infrastructure availability
– Performance – Types of access available

• Cost of access
– Metered – Unmetered – Dial-up issues

• Proportion of population with access
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LIRAS
• • • • • • •
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Southern Mexico Andean countries Most of Brazil Sub-Saharan Africa Remotest former Soviet Republics Laos, Cambodia Chinese interior
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Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

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IRAs
• • • • • • • •
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Coastal India Parts of Brazil Northern Mexico, Mexico City Hungary Estonia Malaysia Former Soviet Republics closer to Europe Parts of China (e.g., Shanghai, Hong Kong)
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Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

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Internet Leaders
• • • • • • • •
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U.S., Canada Western Europe Japan Australia New Zealand Taiwan South Korea Israel
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Countries with Largest Absolute Number of Internet Users
Number of Internet Users by Country
Number of Internet Users
250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0
St at es C hi na Ja pa n In U Ge di a ni te rm an d Ko Ki n y re gd o a (S m ou th ) Ita l Fr y an ce Br az R il us s C ia an In ad do a ne si a Sp a M in ex Au ic o st ra l Ta i a N et iwa he n rl a nd Po s la n Tu d rk ey ni te d U

Country

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Countries With the Largest Absolute Number of Users

Sources: World Bank, Nielsen

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Country Internet Penetration Rates by Per Capita GDP
0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

Note accounting issues!

0.1

0 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000

Source: Nielsen.
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Online Language Communities
• Sizable group of people communicating in the same language • Not proportional to percentage of off-line speakers
– Demographics of Internet users within a country – Willingness to use English or other language sites
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Risks in International Expansion
• • • • • • Over-expansion Brand dilution Over-estimation of revenue Under-estimation of costs Underestimation of competition Regulations

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Area Issues
• Europe
– High penetration rates; access outside home – Strong economies – Low credit card use – Competing technologies
• Interactive TV

• U.S./Canada
– Canadian specialty shopping – High penetration rates – Weakening U.S. dollar; strengthening Canadian dollar

• Mexico
– Growth potential – Low credit card penetration

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More Regions
• Asia/Oceania
– China/Japan
• Use of wireless technology for other purposes • Low rates of credit card use

– South Korea
• High Internet penetration rate (45%) • Faster high speed access than in the U.S.

– China
• Modest economic power

– Australia/New Zealand
• English language use • Relatively similar culture to U.S. • High shipping costs
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– Japan
• Internet ordering through local merchants
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Language Issues
• Prior to 2000, 96% of web sites were estimated to be in English, the “first language” of 6% of the World population • 40.2% of online users are estimated to speak English to some extent • 2000: Non-English speakers became majority of Internet users
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• 75% of Europeans are multi-lingual; 90% of these include English • Dangers of U.S. English
– British English is international standard – “American” often perceived as misspelled – Use of slang

• Lesser distance to British English than to other European languages
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Language Display
• Single-byte (Latin-based) vs. doublebyte languages (Cyrillic, Arabic, Chinese, Japanese, Korean)
– Characters may not be displayed correctly (“????” in Internet Explorer) – Conversion software – Brower adaptation may not be “backwards compatible” with other software
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Translation
• Whole vs. part
– FAQ, feedback forms, product specifications, warnings, shopping cart info, legal

• Quality of translation
– Superficial – “De-centering” (“back translation)

• English language instruction as a product
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Cultural Issues
• Color
– Black as background
• “Stylish” in U.S. • “Unlucky” in Asia, Europe, Latin America

• Symbolism
– Dogs as pets – Numbers
• “Unlucky” numbers
– 4, 9, 13 (Japan) – 4, 14 (China)

– Red as a “lucky” color in China but can be over-used – White and green are “unlucky” in Cina
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• “Lucky” numbers
– 1, 8 (China)

• Formality of communication

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More Cultural Issues
• Measurement issues
– Metric vs. U.S., British systems – Clothing sizes

• Offensive content
– Specific body parts – “Revealing” content – Gestures

• Representation of numbers
– 1,000.00 vs. 1.000,00 – Dates
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Government Issues
• Regulation
– Extraterritorial laws and regulations – Privacy
• “Safe Harbor” procedures

• Extent of regulation
– Protection of small businesses – Limitations on online advertising (China)

– Encryption restrictions

• Taxation • Censorship • Fraud
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International Internet Users
• Finding buyers – Local search engines
• Advertising • Search engine optimization

– Mailing lists from catalogs prior to Internet entry • Demographics
– Gender ratios – Socioeconomic status of users
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• Access speed – High broadband access rates in Europe and Korea • Out-of-Home Access – Portable systems
• Web enabled cell phones/PDAs • Solar/battery powered devices for developing World

• Pirates and piracy
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Selected Issues
• Internet governance
– Running of “top domain” and IP numbering systems – Fear of constraining influences if countries with reputations for censorship participate

• Gambling
– U.S. based
• Indirect ownership of foreign sites

– Foreign based – Loopholes in rules

• Cross-border spamming
– Identification – Action against offenders

• Import/export constraints • Government oversight/ regulation
– Extent of regulation – Policy on competition

• Censorship issues
– Extreme (China, Singapore) – More modest (Europe)
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The Culturally Customized Web Site
• Book objectives
– Describe comprehensive study of web site evaluation by consumers in five countries – Make suggestions for adapting web sites for different cultures

• Book web site
http://theculturallycustomizedwebsite.com/

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Chapter 1: Cultural Customization
• Some issues
– – – – Values depicted Aesthetics Conventions Symbolism
• Color

• Some areas considered
– Hofstede’s dimensions – High vs. low context orientation of culture

– Desirability of features
• For reassurance • To affirm values

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Research
• Level of customization vs.
– Attitude (liking) – Purchase intention

• Both more favorable attitudes and higher purchase intentions for customized web sites in several countries
– – – – –
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Italy India Netherlands Switzerland Spain

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Web Site Classifications (Somewhat Arbitrary)
• Standardized
– Same content for whole world – http://www.Tyco.com

• Highly localized
– Country specific URLs – Local formats (e.g., zip vs. postal code, time) – Local content – http://www.Amazon.com; http://www.Amazon.co.uk

• Semi-Localized
– Limited local information—e.g., contact info for foreign subsidiaries – http://www.Gap.com

• Culturally customized
– “Complete immersion” – Three levels
• Adaptation • Symbolism • Behavior

• Localized
– Country specific pages – Translation into local languages as needed – http://www.Dell.com
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– None identified; closest is http://www.Ikea.com
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Ch. 2: The Rationale for Cultural Customization
• Web return on investment (ROI) • Characteristics favoring customization
– – – – Open Interactive  dialogue, culturally sensitive Hyperlinks, self search  need for motivation Customization opportunities from technology  ability to meet diverse customer needs – Increasing bandwidth  opportunities for integrated experience based on customization – Need to “hold” customers  need for motivation
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Relevant Cultural Issues: Perception, Language
• Perception—what is
– Noticed – Processed

• Implications
– Spatial orientation (right-left, left-right, up-down)  navigation modes – Translation issues
• Idiomatic equivalence • Vocabulary equivalence • Conceptual equivalence
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• Language
– Chinese found to learn faster visually due to pictoral alphabet

• Color perception
– Associations, preferences – Naming

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More Language Issues
• Dialects • Text length  formatting implications
– Language structure – Use of acronyms

• Color categories

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Cultural Issue: Symbolism
• Association of concepts or images with meaning (e.g., flag with patriotism) • Associations will tend to vary; often based on language and experience or word sounds (Chinese) • Country specific symbols

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Cultural Issue: Behavior
• National norms • Expectations of how to do things • Relationships between people

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Ch. 3: A Cultural Values Framework for Web Design
• Cultures vs. countries  may need to subdivide—e.g.,
– India, Ireland, Switzerland

• Culture vs. within-culture variation— e.g., lifestyle segmentation (VALS2)

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Chapter 4—Cultural Customization: Individualism-Collectivism
• The extent to which goals of the individual, as opposed to the group, are valued • Extent to which individual differences in behavior are accepted and/or encouraged

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Country Examples
• High
– – – – – – U.S. Australia U.K. Netherlands Canada New Zealand

• Low
– – – – – – – – – – Guatemala Ecuador Panama Venezuela Columbia Indonesia China Pakistan Indonesia Taiwan

• Middle
– – – – India Japan Argentina “Arab World”

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Authors’ Caveats
• Numbers represent averages • Web sites which happen to portray individualist and/or collectivist values may do so without actually having sought to customize for the particular culture • Other variables are important

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Suggestions for Sites for Collectivist Societies
• Clubs
– May be “offline”—sense of belonging – Chat rooms

• Links to local web sites
– Demonstration of connection to local community

• Emphasis on community relations • Family (“we”) theme
– Family bonds

• Symbols/pictures of national identity
– – – – Flags Architecture Important buildings Local role models

• Loyalty programs
– To company or brand – Japanese: amae—loyalty to the group

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Suggestions for Sites for Individualist Societies
• Independence theme
– “I-consciousness” – Individual determinism – “Invest on your terms”

• Personalization and product uniqueness
– Unique content (e.g., self-selected news, features, adjustment of view) – Personalized products, if applicable

• Strong privacy statement

• Personal product recommendations
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Chapter 5—Uncertainty Avoidance
• Relative importance of predictable environment, defined structure, order vs. acceptance of risk taking, reduced structure, and acceptance of ambiguity • Extent of acceptance of new ways of doing things if not known • Valuing conservatism and “traditional” beliefs • Example: Mexican beverage company explicitly lists behaviors expected from employees

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Countries
• High
– – – – – – – – – – – Greece Portugal Guatemala Uruguay El Salvador Belgium Japan Germany Thailand Iran Finland

• Low
– – – – – – – Singapore Jamaica Denmark Hong Kong Sweden Ireland U.S.

• Medium

Note that no clear geographic patterns are evident.

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Suggestions for Sites for High Uncertainty Avoidance Societies
• Customer service
– Personnel positioned as experts – Easily accessible on the site

• Free
– Trials – Downloads

• Guided navigation • Traditional theme • Connection to local stores
– Depictions – Ability to return merchandise

• Transaction security • Testimonials

• Local terminology
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Suggestions for Sites for Low Uncertainty Avoidance Societies
• None listed. Ideas?

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Chapter 6—Cultural Customization: Power Distance
• Extent to which hierarchy and status are emphasized as opposed to a preference for more “distributed” power and decision making • High sensitivity to those older, with seniority, and in authority • Tendency to obey “suggestions” from authority figures • Preference for face-toface contact for display of respect • Emphasis on hierarchical structures • Emphasis on organization charts

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Countries
• High
– – – – – – Malaysia Panama Guatemala Philippines Mexico “Arab World”

• Low
– – – – – – Austria Israel Denmark New Zealand Ireland Norway

• Middle
– – – – Taiwan Iran Spain Poland

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Suggestions for High Power Distance Societies
• Hierarchy information • Picture of CEO and other “important” people • Use of proper titles • Quality assurance
– “Superior quality”

• Awards • Vision statement by CEO
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Suggestions for Low Power Distance Societies
• None specifically listed. Ideas?

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Chapter 7—Cultural Customization: Masculinity-Femininity
• Value of achievement, assertiveness, ambition vs. nurturance, care for others • Masculine societies
– Tendency toward clear gender roles – “Success orientation” – Decisiveness – Directness (depending on levels of collectivism, power distance)
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• Feminine societies
– – – – “Oneness with nature” Service orientation Harmony Modesty

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Countries
• High masculinity
– – – – – – – – – – – Japan Hungary Austria Venezuela Switzerland Mexico Malaysia Brazil Singapore Israel West Africa

• High Femininity
– – – – – – Sweden Norway Netherlands Denmark Costa Rica Finland

• Middle:

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Recommendations for Masculine Societies
• Indication of product effectiveness • Quizzes, games (competitive element) • “Realism” theme
– Decisiveness vs. fantasy, imagery – “Rational”/performance appeals

• Clear depiction of gender roles and segregation
– E.g., female section of Japanese search engine

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Recommendations for Masculine Societies
• Similar considerations to “high context” societies • Harmony • Aesthetics • Soft sell

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Chapter 8—Cultural Customization: High-Low Context
• Importance of “context” in communication style— important information may be “embedded” in society as opposed to being more detailed and explicit with unambiguous explanation. • High context societies
– Politeness/indirectness are emphasized – Soft sell approach – Aesthetics

• Low context societies
– Hard sell – Superlative word usage – Emphasis on rank and prestige of company – Explicit terms and conditions – Emphasis on logical, “linear” thinking – Action orientation – Emphasis on rationality

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Countries
• High Context
– – – – – – – – – – Asia (generally) Africa South America Parts of Middle East Japan China Spain Thailand Turkey Taiwan

• Low context
– – – – – Most of Northern Europe North America New Zealand Australia U.K.

– Philippines

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Recommendations
• For High Context Societies
– – – – Aesthetics Politeness Indirectness “Soft-sell” approach

• For Low Context Societies
– Harder sell – Terms and conditions – Rank – Prestige – Superlatives

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