When a business decides to enter the foreign market there are a several factors that a company should take into consideration before deciding to expand their product or service into foreign market. Among these factors are the cultural differences the company faces.
Cultural differences exist between different countries and these differences must be known and evaluated by the marketing firm. According to Lancaster et al (2002) a number of factors contribute a country’s overall culture including religion, education and aesthetic appreciation.
In last twenty years, learning cultural differences among nations and need for greater cross cultural awareness have been seen to be a very important factor in improving and facilitating marketing activities of a company outside their country of origin as different cultures has different ways of doing business, different cultural assumptions, values and attitudes. Therefore, culture is important and has to be appreciated by the managers running the company. It simply can make or break relationship and even may cost the business millions of dollars.
Moreover, adaptation to the environmental differences from one market to another is seen as the key to successful international marketing. It is vital for international marketer being able to anticipate the uncontrollable factors of both the foreign and domestic market that have great influence on a marketing mix, so he or she can adjust the marketing mix to minimize the effects.
After all, due to globalisation of markets and products, today increasing numbers of international marketing staff have to deal with ethical issues in cross cultural global economy. As a result, it is claimed by many international marketing researchers that the concept of “self reference criteria” has became the fundamental importance to cultural understanding and cross cultural analysis.
Self Reference Criterion
It is common that after selling a product or service successfully many firms assume that the product or service will, without adaptation, also be successful in foreign markets. Therefore, one of the primary barriers to international marketing, particularly for those firms approaching international marketing first time, is self reference criterion.
Self Reference Criterion is often defined as an unconscious reference to one’s own cultural values, experiences and knowledge as a basis for decisions. That is to say that one’s own culture or company knows the best how to do things (citeman.com). For example, people may make the wrong business decision in foreign country by thinking how they would handle the same situation if they were in their home country.
It also refers to the assumption that what is suitable for domestic market will be suitable for foreign markets too, that is to say there is no need to test whether the product or service has to be changed.
Moreover, Professor Lars Perner (consumerpsychologist.com) also notes that self reference criterion refers to the tendency of individuals, often unconsciously, to use the standards of one’s own culture to evaluate others. He gives a couple of good examples to prove his point. According to him, many Americans perceive more traditional or conservative societies to be “backward” or “unmotivated” because they fail to adopt new technologies or social reforms in order to preserve their traditional values. In 1960s, a well educated American psychology professor referred to India’s culture a sick, because the Hindu religion did not allow eating cows despite the severe food shortages.
In addition to Self Reference Criterion, closely connected is ethnocentrism. Ethnocentrism is the tendency to view one’s culture to be superior to others (Lars Perner). Ethnocentrism has been particularly a problem for American managers in the beginning of 21st century due to America’s dominance in world economy during the late 1990s. The main issues here are to consider how these biases and stereotypes that may come in the way when dealing with members of other cultures can be avoided or minimised. Both the Self Reference Criterion and ethnocentrism reduces the ability to assess a foreign market in its true light, which could result in serious mistakes and consequences.
The instinctive nature of Self Reference Criterion
When faced with set of facts or problems, people tend to react naturally on the basis of the knowledge that they acquired over their life time. That knowledge is product of one’s culture. One never thinks about a reaction or how to react but simply instinctively reacts. Therefore, when faced problem or situation in another culture, the tendency is to react too instinctively and refer to one’s Self Reference Criterion for a solution.
However, this reaction is based on meanings, values, symbols, norms and behaviour relevant to one’s own culture rather than rational thinking. Unfortunately, as we know, the values and norm of behaviours one’s reactions based on are usually different from, those of foreign culture. As a result, such decisions and reactions are often not good ones (citeman.com).
Illustrations of Self Reference Criterion in different cultures
To demonstrate effects of Self Reference Criterion we can simply consider misunderstandings or conflicts can happen between people of different cultures as the meaning of time, the attitudes towards the other people can be perceived different in different cultures. For example, in some cultures distance between individuals very close whereas it is much uncomfortable for Americans. When someone from different culture approaches an American too closely, without knowing that is normal behaviour in other cultures, American reacts adversely and tries to keep the distance. This results in confusion for both parties. Foreigner assumes American cold and unfriendly while American thinks that foreigners are pushy. It is clear that both sides react according to their values of their own Self Reference Criterion, making both victims of cultural misunderstanding.
According Perner ( consumerpsychologist.com) that there are different perspectives exist in different cultures on several issues such as:
- Monochronic cultures tend to value precise scheduling and doing one thing at a time, whereas in polychromic cultures promptness valued less and multiple task can be done simultaneously.
- Space is perceived differently across different cultures.
- Symbol has different meaning in different culture. For example, white is seen as symbol purity in US, but it is symbol of a death in China.
The effects of Self Reference Criterion on decision making
The ethnocentrism and Self Reference Criterion can influence an assessment of appropriateness of a product’s domestically designed marketing mix for a foreign market. However, the influence of both Self Reference Criterion and the ethnocentrism can be controlled effective simply by recognising their effects on our behaviour. It is crucial to have greater awareness of the need to be sensitive to differences and to ask questions and identify cultural values before doing business in another country. Case of Vicks company can be very food example to this. Before entering Germany, they carried out researches and questionnaires. As a result, it has been found that in German “Vicks” sounds like the rudest slang equivalent of “sexual intercourse”. So the name changed to “Wicks” before introducing the product in Germany and the company avoided making serious mistakes.
However, the case of Disneyland proved that how Self Reference Criterion can also make all efforts worthless if appropriate actions not taken. When they have opened their business in France, they faced a tremendous problem and lost billions of dollars. This was big mistake made by Disneyland stemming from reliance on their Self Reference Criterion in making decision.
How to isolate Self Reference Criterion effects when entering into international markets
As we seen above, perception of market needs can be blocked by one’s own cultural experience and knowledge. To reduce this perception and isolate effects of Self Reference Criterion Lee in 1965 (fao.org) suggested a four point approach:
A) Define the problem or goal in terms of home country traits, habits and norms
B) Define the problem or goal in terms of foreign culture traits, habits and norms
C) Isolate the Self Reference Criterion influence in the problem and examine it carefully to see how it complicates pattern
D) Redefine the problem without the Self Reference Criterion influence and solve for the foreign market situation
Though there are some problems with this approach, it still gives useful guidelines on the extent for the need of standardisation in marketing planning.
In summarising, it is clear that adverse effects of Self Reference Criterion can be prevented and turned into benefits by being aware of cultural differences and recognising the importance of those differences. Firms that entering into international market for the first time need to carry out in-depth marketing research into the concept of “self reference criterion” and its importance. They must follow procedure of marketing research step by step to get feasible and intelligent decisions in the international marketing (Kotler et al, 1999).
- “The Cultural Environment”, accessed on www.fao.org
- Kotler, Armstrong, Saundres, Wong (1999), “Principles of Marketing”, Prentice Hall Europe
- Lancaster Geoff, Massingham, Ashford (2002), “Essentials of Marketing”, McGraw Hill, London
- Perner, Lars, “International Marketing”, accessed on www.consumerpsychologist.com