Cultural values and personal selling

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International Marketing Review 15,4 246 Received August 1997 Revised December 1997 Accepted April 1998

Cultural values and personal selling A comparison of Australian and Hong Kong retailers’ promotion preferences Kim Shyan Fam Department of Marketing, Otago University, Dunedin, New Zealand and

Bill Merrilees Department of Management, University of Newcastle, Australia Introduction Are there national differences in promotion perceptions? As it presently stands, the theory does not explain national differences in the preference for a particular promotion tool. The purpose of this paper is to examine whether differences in national culture make some countries more likely than others to favour a particular promotion tool. This paper argues that a nation’s preference for a particular promotion tool is influenced by the degree of cultural orientation as measured by Hofstede’s (1980) collectivism index. A high score on collectivism index increases a nation’s preference for inter-personal communication tools like personal selling. This study tests this assumption with industry level data from Australia and Hong Kong. Literature review An examination of the marketing literature reveals that there are sizeable numbers of studies on cross-national advertising and promotion activities including many in the retailing industry. There is also a consensus view among these researchers that a universal approach to advertising is difficult because cultural and national differences exist between nations (Douglas and Wind, 1987; Whitelock and Chung 1989). According to Lantos (1987), differences in national culture could influence advertising practices. This observation was supported by a number of cross-national advertising studies. For instance, Stewart and Campbell (1988) explore the advertising approaches employed by Chinese advertisers as compared with those used in Hong Kong. They found that China shows fewer mood and image type television advertisements than does Hong Kong. Belk and Bryce (1985) found that US advertisements are twice International Marketing Review, Vol. 15 No. 4, 1998, pp. 246-256, © MCB University Press, 0265-1335

The authors would like to thank Professor Hans Kasper of Limburg University for his useful comments on this paper.

as likely to emphasise the performance of the product than do Japanese advertisements. Additional support for Lantos’ (1987) observation was forwarded by Miracle et al. (1992). In a comparative study of advertising creative executions between Korea and US television commercials Miracle et al. observed that television commercials in Korea tend to identify the company name in every commercial relative to the USA. Similarly, the authors found that Korean commercials tend to devote more time to showing sales messages than the physical product or brand on the television screen. Miracle et al. (1992) attributed these dissimilarities to differences in national cultural variables, that is, Korea being a high context society, with the USA being a low context society. The issues of nationality have a certain relationship with a person’s attitude towards various media. Lilien and Weinstein (1984) found that large advertisers in the USA tend to use more impersonal media than their European counterparts. The authors attributed the dissimilarity to differences in style of advertising use in Europe. For instance, the European advertisers tend to adjust their advertising budgets more radically according to number of users than product plans and fraction of sales, a model commonly used by American advertisers. Differences in media preferences were also found among small retailers. According to Brady et al. (1989), small British clothing and shoe retailers are more inclined to use window displays than are the USA retailers. Kinsey (1987) claims that small Scottish firms are less inclined to use promotion relative to their English counterparts. There are also a number of studies which examined why there are differences in advertisers’ perceptions of various promotion tools and promotion budget allocation decisions. In this paper, perceptions refer to the advertisers’ direct and indirect experience with a specific promotion tool in relation to communicating about the firms, the products and services they offer. Several factors with were identified as influencers of advertisers’ promotion perceptions. These factors include media attributes (Otnes and Faber, 1989), target audience capability (Nowak et al., 1993), cost-effectiveness of the media (Jackson et al., 1979), nature of business (Greenley and Shipley, 1992), demographic profile of marketers (Corfman and Lehmann, 1994; Van Auken et al., 1994), and the strategic approach of the firms (Fam and Merrilees, 1996). Other than promotion perceptions, there were studies which examined why some advertisers allocate more funds to certain promotion tools over others. A number of reasons were provided and they include factors such as target audience characteristics (Kotler, 1994; Rossiter and Percy, 1987), product and market characteristics (Farris and Buzzell, 1979; Kotler, 1994; Lilien and Little, 1976; Rossiter and Percy, 1987), organisation characteristics (Low and Mohr, 1992; Piercy, 1987), and marketing environment characteristics (Belch and Belch, 1995; Buzzell et al., 1990; Strang, 1980). Thus far, the literature referred to has reported particular determinants of marketers’ perceptions of promotion tools and budget allocation decisions. However, very few studies have explicitly examined whether differences in national culture make some countries more likely than others to favour a

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particular promotion tool, namely personal selling. This seems to be a major gap in the promotion research literature. It is against this background that the present study is addressed. An empirical test Our critical assumption is that countries with a higher score on the collectivism index are more likely to favour the personal selling promotion tool than will countries with a lower score. We shall build on this assumption by firstly examining the characteristics of personal selling, and secondly explain why Hofstede’s (1980) collectivism scale represents a greater societal tendency toward interpersonal communications. Personal selling promotion tool and relationship marketing Personal selling involves direct personal communications between a consumer and a salesperson, with the latter conveying the product or service benefits to the former. Salespersons are increasingly being perceived as an important contributor to a firm’s business success. Boone and Kurtz (1992) claim that salespersons are an important promotion tool in communicating store image and persuading consumers to buy. According to Hawes et al. (1993), consumers are increasingly turning to salespersons as a source of information and reliability. This dependency trend is more so if the consumers are shopping for relatively expensive products as there is considerable evidence that personal selling is being used by medium and high price retail firms to service their customers (Fam, 1997). Salespersons can be used to convince the consumers that the more expensive products possess attributes which justify their premium prices. In return, the consumers can look to the salespersons as a source of information and reliability. Overall, personal selling is an important promotion tool in that it can lead to a better relationship between the buyer and the seller. Hence, personal selling fits neatly into the present trend in the field of relationship marketing, where amongst others, its use was intended to retain customers and prevent them from switching to another retailer. Hofstede’s collectivism index In the past, culture has been investigated as a structural variable and metaphor (Jaworski, 1988). Recently, the culture of organisation has been linked to marketing performance (Cherian and Deshphande, 1985; Deshphande and Parasuraman, 1984), and cultural values to a nation’s economic performance (Franke et al., 1991; Hofstede, 1980) and retailers’ choice of promotion tools (Fam and Merrilees, 1996). Although there are many approaches to measure national culture, we chose Hofstede’s (1980) work-related values approach as it is relatively the most popular and stable approach to describe national culture. Hofstede (1980) forwarded four cultural dimensions including: individualism versus collectivism, large versus small power distance, strong versus weak uncertainty

avoidance, and masculinity versus femininity. A brief description of the four work-related cultural dimensions are as follows: The individualist versus/collectivism dimension is concerned with the relationship between an individual and other members of a society. Individualism refers to a loose social framework where members are concerned with themselves and their immediate families. In contrast, a collectivist society indicates a preference for a “tightly knit social framework in which individuals can expect their relatives, clan or other group to look after them for unquestioning loyalty”. The large versus small power distance dimension is concerned with the extent to which the members of a society accept inequality of power in institutions and organisations. In a large power distance society, people tend to accept unequal distribution of power without any demand for justification. In a small power distance society, people demand justification for power inequalities and are not prepared to accept inequalities readily. The strong versus weak uncertainty avoidance dimension relates to the degree of anxiety about uncertainty and ambiguity. Strong uncertainty avoidance indicates an intolerance by members of the society towards uncertainty and ambiguity. This type of society attempts to manage the future. Weak uncertainty avoidance indicates a more relaxed and tolerant attitude by members of the society towards the future. The masculinity versus femininity dimension is concerned with the division of roles between the sexes in a society. Masculinity stands for a societal preference for competition, while femininity represents a tendency to place relationships with people above money, to help others, to care for the weak and to preserve quality of life.

Of the four dimensions, collectivism is emphasised in this study. This a priori argument is expanded below, but essentially is based on the soft/supportive nature of both collectivism and personal selling. None of the other three of Hofstede’s (1980) cultural variables have characteristics that bear any affinity, even relevance to personal selling. Collectivism refers to a tightly knit social framework where members are expected to care and share their earnings with their relatives and in-groups (Hofstede, 1980). Collectivists are encouraged to work as a team and strive for team recognition. In other words, team spirit and sense of belonging are highly prized by members of a collectivist society. Within the marketing management context, collectivism could mean that marketers believe in working closely with their target markets. These marketers are also more likely to want to cultivate a friendly relationship with members of the community as they believe their existence is dependent on the community and vice-versa. Personal selling is therefore an important communication tool for these marketers in order to belong to the in-group. As an interpersonal communication tool, collectivist marketers can utilise this tool to their advantage. For example, through appropriate training and compensation, salespersons can be motivated to care and pay more attentions to each consumer’s shopping needs and wants resulting in better relationships with the consumers. Therefore, relationship marketing and personal relations will fit well in collectivist societies.

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Hypothesis Based on the above assumption, we hypothesised that: countries with a higher score on collectivism index are more likely to favour personal selling promotion tool than will countries with a lower score. Research method Survey instrument and data collection The postal questionnaire consisted of items relating to cultural values and perceptions of personal selling. Each statement was measured with a sevenpoint Likert scale (1 = strongly disagree/very unimportant to 7 = strongly agree/very important). For Hong Kong, a bi-lingual (English/Chinese) questionnaire was used. The translation was in accordance with the method as suggested by Brislin et al. (1973). Data were collected through a postal survey from the retail managers of clothing and shoe stores located in eight Australian state capital cities and Hong Kong. This study made no presumption that any or all retail stores are comparable in market positioning, retail format, pricing and the like. However, after the data was collected it was confirmed that the two samples had firms similarly distributed across market positioning and size measured by number of employees. The sampling frame was the Yellow Pages list of pertinent clothing and shoe retail stores. Two mailings, three weeks apart were sent. In each mailing, a cover letter, a questionnaire and a reply paid envelope were directed to the retail store managers. The overall useable response rate for Australia was 40.2 per cent or 512 responses. For Hong Kong, the response rate was 16 per cent or 169 responses. This response rate is typical for such studies in Hong Kong where business people tend not to respond because of perceived secrecy of firm data (Keown, 1987). A non-response bias test confirmed that there were no significant differences between responses from the first and second wave of mailings. Data analysis Three items were used to gauge the collectivism dimension. These items were drawn from cultural studies undertaken by Kirbride and Chaw (1987), and Kelley et al. (1986). The three items (Table I) include: (1) “I prefer to work together and share rewards more than to strive for individual recognition”; (2) “I believe in sharing responsibilities, helping each other and learning from each other”; and (3) “I believe in mutual trust and respect”. These three items produced good inter-item reliabilities for both Australia (Cronbach’s alpha = 0.70) and Hong Kong (Cronbach’s alpha = 0.74). For Australia, the three items have factor loadings ranged from 0.637 through 0.860, and for Hong Kong, the loadings ranged from 0.735 through 0.832. Personal

Australia Sample mean SD

Total sample Q1 Q2 Q3 Overall collectivism

Hong Kong Sample mean SD

n = 512 5.51 6.13 6.56 6.02

1.51 1.12 0.82 0.98

5.32 5.94 6.05 5.75

n = 169 1.50 1.12 1.16 1.04

F-score * 0.05 ** 0.01

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8.79**

Notes: Likert scale 1 = very unimportant, 7 = very important Q1 = I prefer to work together and share rewards more than to strive for individual recognition Q2 = believe in sharing responsibilities, helping each other, learning from each other Q3 = I believe in mutual trust and respect

selling was measured by a single item on how retail managers perceived the relative importance of knowledgeable and helpful salespersons in relation to their business. Results As evident in Table I, Australia is relatively more collectivist than Hong Kong. This is true of the overall measure of collectivism as well as for each of the three sub-components. These results are significant at the one per cent level. It is interesting to note that Australia is becoming more collectivist as opposed to individualist as claimed by Hofstede (1980). Changes in work-related values over time, and different market sectors are possible reasons for the variation. A third reason can be attributed to changes in economic environment in the past twenty five years between the two countries. According to Hofstede (1984), countries which are less economically developed score closer to the collectivist end of the scale, while the more economically developed countries score closer to the individualist end of the scale. This scenario was true for Hong Kong and Australia in the early seventies where the former was less economically developed than the latter. However, with more than 25 years of developments, Hong Kong has since surpassed Australia in terms of gross national products growth (Asiaweek, 1997). It should also be mentioned that Hong Kong has become more individualist because of impact with international cultures. The retailers’ perceptions of personal selling are shown in Table II. Using ANOVA, we found statistical evidence of cross-national differences in the clothing and shoe retailers’ perceptions of personal selling. The retailers in Australia show a higher preference for personal selling than those in Hong Kong. This finding supports our central hypothesis that countries with a higher score on collectivism index are more likely to favour the personal selling promotion tool than are countries with a lower score.

Table I. National differences in work-related cultural values

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Our confirmation of the relationship between collectivism and perceptions of personal selling applies at the aggregate level comprising the entire samples of clothing and shoe retailers in both Australia and Hong Kong. To test whether this was a true result or simply due to aggregation bias we conducted disaggregated tests at the level of strategic group. The definition and statistical derivation of the statistical groups is described in Fam and Merrilees (1997). Three strategic groups were ascertained and broadly corresponded to low, medium and high price groups. Our analysis was repeated separately for each strategic group. The same pattern of results was ascertained for each group, namely that Australian retailers were rating higher on both collectivism and perceptions of personal selling than their Hong Kong counterparts. This disaggregation analysis suggests that our main result is a true one and not due to chance aggregation errors. Research implications The first major research implication of the study is the need for researchers to make sure that they are comparing like with like. The measures of collectivism used in this study are comparable between the two countries and reflect the contemporary, that is, early 1995 nature of each culture. The ranking of these measures in the 1995 surveys are different to the 1970 Hofstede’s measures, with Australia becoming more collectivist and Hong Kong less. Apart from urging other studies to use contemporary data, there is clearly scope for new research to explore why cultural disposition may be changing in countries, possibly converging or tending to converge between certain eastern and western countries. The second major research implication is our finding that there are major statistical differences in perceptions of personal selling promotion tool between the two countries. If nothing else this suggests that unfettered global marketing strategies are unlikely to work because the inter-country differences in promotion practice need to be taken into account. There are all sorts of legal, social and cultural reasons why some media are favoured in one country compared to another. As such, some forms of localisation of promotion and marketing programme is called for (Fam and Merrilees, 1997, p. 12). For instance, direct mail is less commonly used in Hong Kong than in Australia. Australia n = 512 Sample mean SD

Table II. Retailers’ perceptions of personal selling promotion tool

Total sample of perceptions of personal selling

6.73

0.73

Hong Kong n = 169 Sample mean SD

6.39

Note: Likert scale 1 = very unimportant, 7 = very important

0.94

F score * 0.05 ** 0.01

24.22**

This is due in part to the predominance of high rise residential buildings in Hong Kong which make certain forms of direct mail cumbersome and ineffective. Another important reason for Hong Kong retailers to place less emphasis on direct mail is the desire by many Asian consumers to touch and feel the merchandise before buying it. Such desire has been conditioned by the long standing tradition of shopping in the “wet” and “night markets”. The third major research implication is that cultural disposition does influence inter-country perceptions of promotion tools. This was shown through our main hypothesis which links collectivist predisposition to a greater emphasis on personal selling as a promotion tool. Collectivist cultures are likely, a priori, to put more emphasis on a caring, sharing interaction with customers and this would manifest itself in perceptions of higher levels of personal selling. This behaviour was demonstrated in the statistical test. The cultural test is stronger because it is a comparison of well-specified (collectivist) measures of culture between two countries. However, it can be noted that a similar relationship between collectivism and personal selling was also discerned within each country. The challenge for future research is to replicate our key finding for other countries so that an even more diverse range of cultures is included. Moreover, future research could explore whether other indices of culture (such as masculinity or even non-Hofstede’s measures of culture such as values, high/low cultural context, concepts of time, and thinking patterns to name a few) are associated with other promotion tools. Managerial implications The first and foremost managerial implication is the need to modify global marketing strategies to take into account international differences in promotion practices. For example, Hong Kong retailers moving into Australia may need to give more attention to personal selling than they gave in Hong Kong. If instead Hong Kong retailers merely transplant their promotion practices from Hong Kong to Australia, they may find that they are perceived to be under-delivering on personal selling. Another study showed that the same Hong Kong retailers would be advised to give more attention to direct mail compared to their own country practice (Fam and Merrilees, 1997 p. 12). If the link between collectivist culture and personal selling is accepted, then Hong Kong retailers should also adapt their promotion practices when entering other countries with high collectivism, such as Malaysia and Indonesia. Indeed casual observation of a number of Hong Kong retailers who have entered Malaysia indicates that they are not very strong on personal selling. Arguably, these Hong Kong retailers may have made the mistake of simply transplanting, that is not adapting, their personal selling methods. A second managerial implication is that of human resource management. Primarily we have been concerned in this paper with identifying differences in collectivist culture with a view to following its impact on promotion practices. But the very way we have defined collectivist culture provides insight into work-related cultures and practices, that is, human resource management.

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Collectivist cultures have a different preferred modus operandi, including a preference to work together and share rewards more than to strive for individual recognition; sharing responsibilities, helping each other and learning from each other; and a greater belief in mutual trust and respect (compare Table I). These beliefs suggest different methods of recruiting, selecting, training and rewarding staff in retail establishments in Australia compared to Hong Kong. For example, a Hong Kong retailer entering Australia might need to consider a greater role for group bonus schemes, especially if they currently rely on individual reward schemes in Hong Kong. A third managerial implication is a warning that new market entry to a country should not be based on outdated measures of cultural dimensions. The 1970 Hofstede’s measures are still the most widely referred to information source and these often appear in current international business and international marketing texts. Some countries change dramatically in a fiveyear period, and this paper reports major changes for Hong Kong over a 15-year period. If managers base their decisions on outdated measures of culture, they could make some serious errors. Therefore we recommend that retailers or firms from other industries who are planning to set up international subsidiaries should have up to date intelligence of the cultural and social environment. Ideally this intelligence would include recent field trips to the relevant countries to gain first hand knowledge. References Asiaweek (1997), “Economic growth”, Asiaweek, 14 March, p. 45. Belch, G.E. and Belch, M.A. (1995), Introduction to Advertising and Promotion: An Integrated Marketing Communications Perspective, 3rd ed., Richard D. Irwin, Chicago, IL. Belk, R.W. and Bryce, W. (1985), “Advertising themes and cultural values: a comparison of US and Japanese advertising”, Proceedings of the Inaugural Meeting of Southeast Asia Region Academy of International Business, pp. 11-20. Boone, L.E. and Kurtz, D.L. (1992), Contemporary Marketing, 7th ed., The Dryden Press, Fort Worth, TX. Brady, D.L., Mills, I. and Mendenhall, K.D. (1989), “A binational analysis of marketing programmes used by small retailers in Great Britain and the US”, International Journal of Retailing, Vol. 4 No. 5, pp. 27-39. Brislin, R., Lonner, W.J. and Thorndike, R.M. (1973), Cross Cultural Research Methods, Wiley, New York, NY. Buzzell, R.D., Quelch, J.A. and Salmon, W.J. (1990), “The costly bargain trade promotion”, Harvard Business Review, March/April, pp. 141-49. Cherian, J. and Deshpande, R. (1985), “The impact of organizational culture on the adoption of industrial innovations”, in Lusch, R.F. et al. (Eds), AMA Educators’ Proceedings, Series 51, Chicago American Marketing Association, Chicago, IL, pp. 30-4. Corfman, K.P. and Lehmann, D.R. (1994), “The prisoner’s dilemma and the role of information in setting advertising budgets”, Journal of Advertising, Vol. 23 No. 2, June, pp. 35-48. Deshpande, R. and Parasuraman, A. (1984), “Organizational culture and marketing effectiveness”, in Anderson, P.F. and Ryan, M.J. (Eds), Scientific Method in Marketing, Chicago American Marketing Association, Chicago, IL, pp. 137-40.

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