consumer behavior in global markets-marketing

8/3/2019 Consumer Behavior in Global Markets-Marketing

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4/18/2009

Assignment # 02 | M. Aslam Javed Roll # AB-523810

MARKETING

MANAGEMENT

GLOBAL MARKETING AND CONSUMER

BEHAVIOR


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M. Aslam Javed, Roll # AB-523810 Page 2

Marketing Management

Assignment # 02

Global Marketing and Consumer behavior:

Abstract

Consumer behavior in international markets is a topic that is still not well understood. Proposes

a framework, called the A-B-C-D paradigm. Suggests that a marketer examine four stages

access, buying behavior, consumption characteristics, and disposal covering the entire

spectrum of consumer behaviors with respect to a product/service. The paradigm is universally

applicable to any particular culture or country of interest. Since there has been no

comprehensive examination of consumer behavior in eastern Europe and the Third World,

focuses on using the A-B-C-D paradigm to gain a better insight into consumer behavior in thesecountries. Offers recommendations to companies wishing to market their products in these

countries.

Introduction

In the marketing literature a considerable amount of attention has been devoted to two groups

of countries: the Third World countries and the former socialist countries of eastern Europe.

Although there is no one term that precisely describes all the countries in this combined set,

most of these countries are characterized as less developed countries by the International

Development Association (IDA) and as developing markets in prominent textbooks ofinternational marketing (Cateora, 1990). Hence the term developing countries is used in this

article when alluding to both groups of countries jointly.

New markets

Over 40% of US exports of manufactured goods are to developing countries, and prominent

companies in the USA, Europe and Japan have made countries like South Korea, Taiwan,

Thailand and Poland their top priority for the future (Business Week, 1994a ;Cateora, 1990, p.

289). Despite this trend, consumer behavior in global markets is a topic that is not well

understood by marketers. The focus of this article is to provide a comprehensive view of

consumer behavior in global markets, especially in relation to the countries of eastern Europe

and the Third World.

Third World countries, like Brazil, South Korea, Taiwan, Hong Kong, Singapore and India, have

made considerable progress in the last few years. The market growth between 1981 and 1986

for selected Third World countries was 24.3% for Brazil, 44.9% for China and 41.3% for India,

as compared with 8.4% for the USA and 12.3% for Japan ( Cateora, 1990, p. 321). Several
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companies such as PepsiCo, Procter & Gamble, Unilever, Sony and Nestle already operate in

Third World countries, and others, like GE, see their entry into Third World markets no longer as

a matter of choice (Business Week, 1993a).

Eastern Europe, with a population of approximately 430 million, is also an emerging new

market. The eastern bloc accounted for 15% of the world gross national product (GNP) in 1989and the combined GNP of Hungary, Czechoslovakia and East Germany alone was more than

that of China (Quelch et al., 1991). In a recent survey, 67% of US executives expected eastern

Europe to rival western Europe as a major market in about 20 years (Alpert, 1990 ). Companies

like PepsiCo, Coca-Cola, Procter & Gamble, and McDonalds have already established

themselves in eastern Europe and the conversion to a market-oriented economy in these

countries is bound to offer many more future opportunities.

While many articles and books have focused on marketing in the Third World (Dawson, 1988;

Kaynak, 1982 ) and eastern Europe (Naor, 1986; Quelch et al., 1991), it is questionable

whether marketing findings from the West are directly generalizable to these countries (Akaah

et al., 1988). Consumer behavior, in particular, is likely to be somewhat different in developing

countries since it is largely influenced by social, political and economic conditions.

While research in consumer behavior is a top priority for marketers both in the Third World

(Albaum and Peterson, 1984; Kanwar, 1993) and in eastern Europe ( Kaynak and Samli,

1986), most researchers have studied only selected aspects of consumer behavior in one or a

few cultures. While such ad hoc studies are no doubt useful, there exists a great need for a

comprehensive examination of consumer behavior in order to provide generalizations and

recommendations to those wishing to market in the Third World or eastern Europe. However,

such a comprehensive examination is made especially difficult in the absence of a framework to

study consumer behavior in global markets.

The objective of this article is therefore threefold. The first objective is to develop a framework

that can be used to study consumer behavior in global markets. The second objective is to

apply this framework to examine and understand consumer behavior in countries of the Third

World and eastern Europe. Based on this examination, the last objective is to offer

generalizations and recommendations to those wishing to market their products/services in the

Third World and eastern Europe. In accordance with these objectives, the next section develops

the framework, known as the A-B-C-D paradigm, and offers a brief description of this paradigm

and its rationale. The following section considers the four stages of the paradigm in detail,

illustrating them with examples drawn from eastern Europe and the Third World. Based on this

discussion, the final section offers a summary of generalizations and recommendations formarketing in eastern Europe and the Third World.
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Complex models and concepts

The A-B-C-D paradigm

Several comprehensive theories/models have been developed within the field of consumer

behavior (Engel et al., 1968 ;Engel et al., 1995;Howard and Sheth, 1969;Nicosia, 1966).

Models have also been developed for specific contexts, such as for family decision making

(Sheth, 1974) and information processing (Bettman, 1979). These theories/models have

played an important role by detailing how various factors influence consumer behavior.

However, the complexity of these models and the difficulties inherent in the operationalization of

the numerous concepts has made their application in the international context especially

difficult.

An extensive review of the literature reveals that there is no simple framework that lends itself to

a comprehensive study of consumer behavior in international markets. Problems with theexisting frameworks make it essential to provide some structure to the study of consumer

behavior across cultures. The paradigm proposed in this article uses four sequential stages to

represent the purchase and consumption processes within any culture. These four stages are

termed access, buying behavior, consumption characteristics, and disposal (with the acronym

A-B-C-D). A thorough understanding of each stage is essential for the global marketer since the

overall effectiveness of the marketing function is contingent on all four stages being facilitated

within any culture.Figure 1represents the four stages of the paradigm and identifies the major

factors within each stage.

Four stages of the paradigm

These stages are briefly described below:

Access. The first step in global marketing is to provide access to the product/service for

consumers within a culture. Access pertains both to physical access as well as to
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economic access.

Buying behavior. This stage encompasses all factors impacting on decision making and

choice within a culture. Examples of these factors include perceptions, attitudes, and

consumer responses such as brand loyalty.

Consumption characteristics. The specific products/services that are purchased and

consumed may be different in each culture. The cultural orientation (traditional versusmodern) and social class distribution, among other factors, will determine consumption

patterns within a culture.

Disposal. Most countries, including the developing countries, are becoming more

environmentally conscious and moving away from throw-away products. Hence

marketers need to design systems to facilitate the safe disposal, recycling, resale, or

remanufacturing of products. They must also meet their social responsibilities in other

countries, especially in relation to public safety and environmental pollution.

Hierarchical approach

The rationale for this paradigm comes from several perspectives. First, since the four stages are

universally applicable, the paradigm offers a general framework to understanding consumer

behavior within any global market. Second, in order to understand the broadest possible range

of consumer behaviors within any culture, the paradigm encompasses all aspects of purchase

and consumption within a simple framework. Third, the four stages of the paradigm are

arranged in a hierarchical fashion from the consumers viewpoint, i.e. there can be no buying

behavior unless products and services can be accessed, and no consumption unless there isbuying behavior, etc. If the marketer is able to facilitate every step of the process from the

consumers perspective (which is consistent with the marketing concept) then, by definition, the

marketing function would become very effective.

The hierarchical approach also gives the marketer a systematic way to prioritize the marketing

tasks within a country, i.e. access issues should be considered first and disposal issues should

be considered last. Note that this does not imply that disposal issues are any less important

than access, buying behavior or consumption issues since all four steps must ultimately be

addressed.

The fourth and final rationale for the A-B-C-D paradigm is that it is consistent with the concept ofbusiness process reengineering ( Hall et al., 1993; Hammer, 1990), which encourages

businesses to improve corporate performance by using a cross-functional perspective (

Cypress, 1994). The A-B-C-D paradigm encourages managers to examine each stage from

multiple perspectives (finance, economics, trade, public relations, etc.), and is therefore

consistent with the cross-functional approach.
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Each of these stages will now be discussed in depth and illustrated with respect to the countries

of eastern Europe and the Third World.

Application of the paradigm

Access

As noted earlier, access can be divided into two types: economic access and physical access.

High inflation rates

Economic access. Economic access relates to the issue of affordability of the product/servicefor the general population. Personal incomes in developing countries are fairly low, although

there could be wide disparities as among the countries of eastern Europe ( Peterson, 1990). In

addition, high inflation rates in many of these countries make many products and services

inaccessible to consumers. Hungary, for instance, was recently reported as having an inflation

rate of 30% (Bosze, 1991). While this may not seem encouraging, a marketer can often target

the affluent consumers, who are the primary buyers of major appliances and electronic goods in

most developing countries.

In India, although the per capita national income is only $270 per year (Aswathappa, 1991),

there is also a thriving group of upper-middle and upper class consumers (Gandhi, 1985, p.62). Although much of eastern Europes population is rural and poor, a third of Hungarys

population is considered to be relatively affluent and Poland has a fairly large urban population

with jobs in the private sector (Bruner, 1994;Miller, 1993). While the affluent segment might

comprise only a small proportion of the population, one might note that the population base is

itself quite large in eastern Europe and the Third World. For example, India has a population

base of about 850 million (India, 1992) and eastern Europe has a population of about 430

million, 40 million of which are from Poland alone (Miller, 1993;Quelch et al., 1991).

Repositioning and redesign of products

Owing to the large population base and income disparities, the ability to sell to different income

classes would definitely be an advantage to marketers in eastern Europe and the Third World (

Bruner, 1994). A marketer has several possible options to accomplish this. The first option is to

reposition products that are sold in developing countries. While most inexpensive items may not

require any repositioning, durable goods and even moderately expensive items would have to
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be repositioned to appeal to the affluent consumers. Kitchen appliances and small electrical

gadgets which are commonplace in Western households can only be afforded by the upper

class in most developing countries.

Another option would be to make products functional yet affordable through product redesign.

For example, only 15% of Mexican consumers can afford to buy a car, so cars are usuallyredesigned without many high-tech extras for that country (Business Week , 1994a). A third

option, especially suited to developing countries, would be to enhance after-sale maintenance

and repair services since consumers in these countries often cannot afford to discard old

products. Designating authorized repair centers, having trained service personnel, and

monitoring both service quality and spare part inventories are strategies that can be very helpful

in building a favorable company image.

While economic access is important, the evaluation of different countries on this dimension can

often pose a problem to marketers. Marketers have traditionally relied on statistics such as

personal income distribution or gross domestic product (GDP) for this purpose. An important

point to keep in mind, however, is that traditional GDP figures (based on market exchange

rates) can sometimes be quite misleading for developing countries. A newer method, based on

purchasing-power parities, appears to be more accurate and shows many developing countries

to have much stronger economies than originally envisioned (The Economist, 1993;Terpstra

and David, 1991, pp. 234-8). Marketers should therefore exercise caution so that they do not

incorrectly dismiss east European or Third World countries as being low on the economic

access dimension based on traditional methods.

Physical access. Gaining physical access to global consumers is generally a function of three

factors: international trade regulations/barriers; the distribution system within the country; the

infrastructure of the country.

Trade barriers

The first is a rather broad dimension pertaining to trade in the global marketplace. Trade

barriers and restrictions may in some cases be direct, such as the existing trade embargo of the

USA against Vietnam which is preventing many US companies from gaining access to the

Vietnamese market (Business Week, 1994b). In many cases, however, trade barriers could bemore subtle. In China, Western companies are forced into joint ventures with local companies

because direct import, other than in basic and hi-tech industries, is not encouraged by the

Government (Zimmerman, 1986). In Turkey, the Government prohibits the import of caramel

coloring although it allows foreign soft drink manufacturers to operate bottling facilities. In India,

foreign ownership of companies was previously restricted to 49%, although this constraint has
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now been relaxed to encourage foreign investment.

In eastern Europe, the newfound freedom in the former socialist countries is a major attraction

to marketers. However, centralized planning and national goals of economic development often

pose indirect barriers to trade. Prices of goods may not be determined by market conditions in

these countries. The rate of progress toward a market economy also differs from country tocountry. While Hungary, Czechoslovakia, Poland and eastern Germany are adjusting rather

quickly, Bulgaria, Romania and the former Yugoslavia are lagging behind (Quelch et al., 1991).

Countertrade

One way to gain physical access to less-developed countries is through countertrade

(Okaroafo, 1992). Countertrade is a market entry strategy involving various types of exchange

of goods and is notably used by firms wishing to export to countries which are experiencing

shortages of hard currency. Since developing countries often demand to engage incountertrade, the reluctance of a Western company to oblige can result in its being excluded

from a specific country market. To complicate matters, many developing countries do not have

specific countertrade policies, making this an ad hocactivity that is dependent on the situation

at a particular moment. Western companies therefore need to be proactive and know what to

expect with respect to trade with a particular country.

Motivations of east European countries to countertrade include balance of payments

considerations, foreign trade planning, and technology updating (Matheson et al., 1977). Often

countries can be clustered on their propensity to countertrade based on variables such as the

foreign exchange availability and balance of payments.

India, Brazil, Iraq, Iran and Mexico belong to the cluster of countries that are not only engaged

in countertrade, but also have the highest average countertrade deal (Okaroafo, 1992). On the

other hand, Kuwait, Taiwan and the former Yugoslavia can be characterized as

noncountertraders. Many other countries fall in intermediate clusters. A company therefore

would be well advised to consider countertrade as a possibility when trading with developing

countries, especially those that belong to pro-countertrade clusters. One survey of Canadian

corporations showed that engaging in countertrade is likely to become a source of competitive

advantage since demands for countertrade from eastern European countries are growing (

Kindra et al., 1993).

Mega-marketing

Mega-marketing is another concept that is relevant to trade with developing countries (Kotler,

1986). Many bureaucratic obstacles in trade can be overcome only through astute negotiations
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with local governments and prominent public officials within a country. The company might be

able to offer something that the local politicians and consumers perceive as a definite benefit.

Pepsi was able to introduce its product in India over the opposition of domestic soft drink

companies and many legislators through the clever use of mega-marketing (Kotler, 1986). As

part of the deal Pepsi offered to focus on both rural and urban areas and bring new food

processing, packaging and water treatment technology to India. Today Pepsi is one of theleading soft drink brands in India. Coca-Cola has also made a bid to reenter the Indian market

with a recent announcement of a $20 million dollar capital investment for soda production and

bottling (Business Week, 1993b ).

The second dimension of physical access is the quality of the distribution system within a

country. It is a well-known fact that distribution systems in eastern European and Third World

countries are often not efficient. The Indian distribution system comprises nearly 200,000

wholesalers and 3,300,000 retailers (Gandhi, 1985, p. 72). Dealing with such an extensive and

vastly different system might pose a problem for Western companies. In eastern Europe, the

weak distribution system restricts the sale of most Western products to the major cities (Quelch

et al., 1991). In Poland, companies still have little freedom to develop their own distribution

channels in spite of the economic reforms of the early 1980s (Guzek, 1986).

Poor-quality retail outlets

The quality of the retail establishments in many developing countries further adds to distribution

problems. Retail outlets in eastern European countries are often characterized as insufficient,

unattractive, time consuming and frustrating (Quelch et al., 1991). Third World countries share

this problem, although there is a slow and gradual trend toward modernization in the form ofself-service stores and supermarkets. However, factors such as the small number of potential

customers, low income levels, acute income disparities, and traditional lifestyles in Third World

countries tend to hinder the acceptance of supermarkets (Kaynak and Cavusgil, 1982). A

major obstacle to physical access of goods in many countries is also the attitude of the

shopkeepers. In eastern Europe, retailers often do not stock the products that they agreed to

stock, but instead stock off-brand products with little advertising support. They apparently take

pride in their individuality and the head office is unable to control such behavior ( Bruner,

1994).

One way for marketers to overcome the limitations of the distribution systems in developing

countries is to devise innovative ways to distribute their products. For example, conditions inHungary seem conducive to the use of direct marketing techniques ( Gehrt et al., 1989).

However, Western retailing practices and marketing institutions should be carefully evaluated

for their appropriateness in specific contexts and not be blindly transplanted to developing

countries (Gehrt et al., 1989).
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Infrastructure has a huge impact

The third factor influencing physical access is a countrys infrastructure, which is comprised of

essential services such as transportation systems, communication systems, utilities and banking

systems. Infrastructure not only has a tremendous impact on the ease of conducting business ina particular country, but is also vitally important for the future economic growth of developing

countries ( Pitroda, 1993). However, Third World and eastern European countries often rate

poorly on the dimension of infrastructure.

In India, the highway system is poor, utility systems are strained, water is scarce and telephone

and banking systems are not efficient. Hungary has only 0.135 automobiles per capita as

compared with 0.540 in the USA and it also has many fewer miles of roadway per person. The

public transportation system is outdated and inefficient. There are only 140 telephones per

1,000 population as compared with 760 in the USA. Banking and credit operations need reform.

Less than 2.5% of the consumer purchases were credit transactions in 1985 ( Gehrt et al.,

1989). These factors create great problems for distributing goods and services.

Companies therefore have to be creative and learn to work around these constraints. Shipping

goods overnight, and using telemarketing and other direct marketing techniques, could pose

major problems in developing countries. Also, products might have to be designed to function

under less than optimum conditions, such as electrical appliances having to withstand repeated

power outages. Since computer technology might also not be advanced, the establishment and

maintenance of computerized databases might prove to be more difficult in these countries.

However, such obstacles might also present opportunities for Western companies. Developing

countries are often eager to negotiate trade with companies which offer to improve their

infrastructure in some way. Companies could make such collaborative efforts and deals part ofa planned strategy to gain access to eastern Europe and Third World markets.

Market research is necessary

Buying behavior

Once a company has ensured both economic and physical access to its products it needs toevaluate the buying behavior of consumers in the country that it is seeking to enter. However,

little is known about consumer attitudes, buying habits, purchase motives, lifestyles, etc. in

eastern Europe and Third World countries (Kaynak and Samli, 1986). Marketers who seek to

enter these markets might therefore find it necessary to engage in some a priori marketing

research relating to such issues (Peterson, 1990). It would be beyond the scope of this article

to present a comprehensive discussion of all aspects of buying behavior in international
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markets. However, we will explore three dimensions of buying behavior that are critical to

international marketers and examine them in Third World and eastern European markets. These

three dimensions are consumer perceptions, consumer loyalty, and attitudes toward

marketing/consumerism. These dimensions can be further broken down into finer concepts, as

will be evident in the discussion below.

Consumer perceptions. First, perceptions of companies and their products are very different in

different countries. Three types of consumer perceptions are especially important to marketers.

These are perceptions relating to the country of origin, brand equity, and price-quality

relationships. The country of origin, in particular, may be an important cue that creates a first

impression and provokes consumers to think more specifically about a products attributes and

the desirability of those attributes (Hong and Wyer, 1989). For example, while the phrase

made in America is perceived positively in China (Zimmerman, 1986), the same cannot be

said of several Middle Eastern countries. The importance attached to the country of origin could

also vary among cultures. Eastern Germans do not perceive the country of origin for durable

goods to be as important as do western Germans ( Johnson and Johnson, 1993). The

emphasis placed on the country of origin in a products advertising and promotion would

therefore have to be carefully assessed by the marketer, based on these considerations.

Brand equity

Brand equity is another aspect of perception. Many Western and Japanese brands are well

known in eastern Europe and the Third World, and consumers often view them as being of

higher quality than local brands. For example, one study reported that Hungarian consumers

recognized 252 Western brands, while the Poles recognized 175, and the Russian consumersrecognized about 100 (The Economist, 1990, p. 71). Purchase and consumption of Western

brands may also be used to make a political statement by consumers in these countries.

The popularity of American brands such as Marlboro, Colgate and Caterpillar is cited as one

reason US companies usually have an easier time entering Third World markets in spite of their

late start in countries such as Vietnam (Business Week, 1994b ). It might therefore be

advantageous to retain Western brand names, packaging and graphics in eastern European

and Third World countries, although companies might want to use the local language on the

package itself. One useful technique for marketers is to categorize brands using the two

dimensions of country equity and brand equity in order to design marketing strategies uniquely

suited to specific brands (Shimp et al., 1993).

Price-quality relationships

The third aspect of perception is price-quality relationships. While a positive price-quality
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relationship is likely to exist in most cultures, the higher prices in developing countries due to

high inflation often force the consumer to discount the impact of price and resort to other means

to evaluate quality. Consumers in Turkey, for example, have been found to rely on word-of-

mouth communication more than price as a means to judge quality (Yucelt, 1989 ). Similarly,

eastern Germans have been found to rely on personal experience and the opinions of friends

and relatives to a greater degree than do western Germans in judging the quality of products (Johnson and Johnson, 1993). The effective use of word-of-mouth communication might

therefore be critical to marketing success in developing countries.

Consumer loyalty. Consumer loyalty can be broken down into two components: brand loyalty

and store loyalty. While there is some disagreement on whether east European consumers are

brand loyal ( Bruner, 1994), most evidence seems to suggest that consumers in developing

countries are more brand loyal. The brand loyalty of east European and Third World consumers

may be due to their risk-averse nature resulting from limited financial resources and the spotty

quality of products (Johnson and Johnson, 1993 ;Kanwar, 1993).

A second reason for this risk aversion might be the limited brand information available to

consumers. This may be caused by the inadequate retail facilities which prevent brand

comparisons or the lack of meaningful objective messages about consumption choices. Also,

the centralized bureaucratic structure in eastern Europe ( Johnson and Johnson, 1993) and

the low literacy rates in Third World countries ( India, 1992, pp. 8-9) might make it difficult for

consumers to gain access to available information.

A third reason for risk aversion may be the more conservative and traditional norms found in

developing countries. Many Middle Eastern countries are opposed to the materialistic values

implied by the consumption of Western products. This makes them more resistant to change

and they might also not be easily persuaded by advertising terms such new and improved,which are commonly used in the West (Kanwar, 1993). Advertising, especially in the case of

durable goods, therefore has to be informative and geared toward reducing risk in developing

countries. Countries could also be clustered on the basis of product perceptions in an effort to

standardize advertising strategies within countries that belong to the same cluster (Sood, 1993).

Store loyalty

Store loyalty is the second aspect of consumer loyalty. In India, a considerable proportion of the

population shops in neighborhood stores, making location an important factor in store choice.Consumers tend to favor specific local outlets because of prior contact and/or satisfaction with

the retailer. Sometimes store loyalty might be even more important than brand loyalty in

determining brand choice. It is important for marketers to understand the factors that lead to

store loyalty in different cultures. For example, in evaluating retail stores, the Chinese value the

manner of salespeople and location more than the quality of the merchandise and return policy
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while the reverse is generally true for Americans (Ettenson and Wagner, 1991 ).

Store loyalty might also result from the quality of service provided by the retailer. Service quality

is not a well-developed concept in eastern European and Third World countries, and retailers

typically pay very little attention to it. In eastern Europe consumers usually have little choice

among stores. Most stores have no self-service and often employ the notorious three-linesystem to select, pay for and pick up items (Quelch et al., 1991). In Third World countries the

problem is not as much with store choice as with the tremendous variation in service quality

among stores, which makes consumers reluctant to switch from a store they like. One writer

attributes the low retail service quality in Third World countries to the general contempt for

selling in societies which have historically accorded more importance to production (Thakore,

1993 ). However, recent improvements in retailing such as good manners, customer

friendliness, credit assessment, shop layout, and computerized billing systems are evident both

in the Third World and in eastern Europe (Quelch et al., 1991;Thakore, 1993).

Consumer status/customer orientation

Attitudes toward marketing/consumerism. The status of consumerism and the degree of

customer orientation in a culture can give marketers important insights into marketing within a

country. For instance, consumer-protection has historically not been given much prominence in

India, and the Government has only recently attempted to set up consumer complaint forums. In

some countries, consumers are reluctant to complain even when they have a problem. The

reluctance of Chinese consumers to complain has been attributed to the values of desire for

harmony, moderation, and pao(a fatalistic concept preaching that every action will reap its own

rewards) ( Le Claire, 1993).

The lack of customer orientation in developing countries is not due merely to economic factors

but might also be the result of religious and socio-cultural factors (Das and Das, 1988). One

study found a high level of skepticism regarding the operating philosophy of business, and a

general dissatisfaction with advertising, complaint handling procedures and information

availability among both managers and consumers in India (Varadarajan et al. , 1991). Not

surprisingly, consumers preferred government regulation and price controls to address theseissues while managers preferred industry self-regulation. In general, consumerism appears to

be on the rise in developing countries as these countries acquire more Western expectations

(Darley and Johnson, 1993). Marketers might therefore have to allocate sufficient resources

and devise specific methods to combat the negative attitudes and skepticism of consumers in

these countries.
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Social norms

In addition to the three major dimensions of buying behavior discussed above there are also

other consumer behavior concepts that have been examined in the literature. However, owing to

the limited amount of research that exists at present in the international context these conceptswill be mentioned only briefly here. There has been some research which shows that societal

norms and values might have a greater impact on consumer behavior in developing countries

as a result of the close-knit nuclear and extended family structure in these countries. For

example, social norms were found to have a greater impact on the buying intentions of Korean

consumers than on those of US consumers (Lee and Green, 1991).

Psychological orientation

Research has also shown that there might be cultural differences in psychological orientation.Japanese consumers were found to be more right-brain oriented and Chinese consumers more

left-brain oriented than American consumers (Jacobs et al., 1993). As a result, emotional

advertising appealed more to the Japanese while factual advertising appealed more to the

Chinese. While Japan is not a developing country, such findings illustrate the importance of

studying cultural differences with respect to deeper psychological and sociological variables for

marketing purposes. At the same time, similarities among cultures also should not be ignored.

For instance, there is considerable similarity between Singapore and US consumers in the way

they use various information sources (Tan and Dolich, 1983). Such similarities might allow the

standardization of marketing strategies used in different countries at least to a degree.

Consumption characteristics

The service sector is not as large or as well developed in eastern Europe and the Third World

as it is in the West. While the developed economies average 60% of their GDP in the service

sector, the lesser developed economies average only about 30% of their GDPs from services (

Aronson and Cowhey, 1984). In Poland, for example, telecommunications is still considered

only as voice communication between two people and no advanced services such as 800 and

900 numbers or data transmission are offered (Miller, 1993). Services such as communications,

financial services, tourism and travel services, etc. are therefore likely to offer considerablefuture growth opportunities in developing countries (Dahringer et al., 1991).

The consumer goods industry in most developing countries is also characterized by poor

product quality and mediocre marketing. However, the potential demand for consumer goods is

vast despite the lower personal incomes in these countries. With per capital consumption

expenditures of only $199 per year as compared with $12,290 for a US consumer (Kanwar,
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