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The Cultural Marketing Trap

By Tom Coyner

Korea Times

August 23, 2006

 

The experienced expat international marketing manager may have worked in someplace resembling Korea.  As a trained professional, he or she thus looks for signs by which to classify problems and opportunities. These signals can give the marketer clues as to whether the company's products are properly positioned. Yet, encountering the Korean marketplace can be confusing. For example, if the marketing manager concludes the sales force is doing its job well and yet the sales results are disappointing, is it simply a matter of product positioning – or is there some other, hidden factor?  Could the problem be a cultural difference?

 

There may be a cultural "gotcha," but too often foreign marketing professionals have prematurely jumped to that conclusion. It seems that a "cultural wand" is being waved about whenever there is a need to explain why sales are not up to standard. Foreign managers can be sorely tempted to pigeonhole the cause of their problems as "Korean culture" when there may be a lack – or misapplication - of marketing diligence.

 

If you wish to ruthlessly interrogate the cultural alibi, simply ask anyone to specifically define what is the cultural pattern and how does it affect the marketing strategy. Then let both your brain and gut determine whether the explanation makes sense. More often than not, you are not going to be satisfied.

 

This is not to say there is no cultural impact – of course, there is. However, the cultural issue tends to be overblown by both business professionals and academics, when actually there has been a lack of fundamental marketing analysis.

 

At the same time, "doing one's homework" does not mean doing the same market analysis one might have done in Los Angeles or London.  It may be a good starting point to let go of MBA jargon, such as product life cycle, market penetration, etc., and consider what factors truly define success criteria in Korea.  For example, "positioning" may presuppose that the Korean consumer will evaluate products or brands according to single dimensions, when in fact there may be multiple dimensions. And, quite possibly, dimensions such as performance or convenience, which are important to North Carolina consumers, may be of little relevance to buyers in Busan.

 

Product life cycles may be much shorter in Korea since the country is still, in many ways, a rapidly developing society. While Korea is no longer a "developing country," there are many facets of the market that are rapidly catch up with advanced economies – and even expanding faster than all other nations when it comes to broadband Internet applications and services. A "mature market" or "mature product" phase seems to last only a few months before it declines in the face of the next worthy competitor.

 

"Market share" may be similar in definition to other nations' markets, but in Korea it can be critical to differentiate between foreign products' market share and total market share, as in the case of luxury automobiles. Given that strong prejudices -- and even social penalties - can influence consumers' selection of a foreign good or service, it may not be appropriate to apply a "one size fits all" market share analysis.

 

All the traditionally important marketing analysis matrices may also need to be recalibrated to effectively measure the Korean market. To cut to the quick, analyses and assumptions need to be tested before basing your marketing and promotion resources upon them.  Yes, this may take more up-front time and money, but the long-term cost savings can be significant.

 

Coming to Grips with the Cultural Component

 

Though there is the danger of declaring culture as being the primary issue without doing adequate marketing spadework, culture remains a legitimate factor. While marketing may be reactive and adjusting, if one can get most - or at least some - of the critical factors right at the beginning, one is more likely to achieve one's targets.

 

In Korea, there are different approaches for different companies. One model is to start with the expectation that people react according to their environment. That is translated into marketing as a mix of promotion, distribution, prices, etc. But just how this model responds depends on the target group's general tendency in a given market.  If all factors are fairly equal in weight over the targeted demographic, then one may say that the model is not out of sync with any deviating cultural factor.

 

A market as ethnically and financially diverse as the US can form a pretty flat, evenly distributed population when graphed, given a balancing portfolio of a very large number of consumers that constitute huge averages. For example, Harley-Davidson sells motorcycles to both the Hells Angels and retired citizen cycling clubs in the U.S. The two market segments may have different and even conflicting consumer factor sensitivities, but the two segments can be averaged out to summarize the American motorcycle market. In that sense, one may say that overall the U.S. motorcycle market could be expected to be fairly stable given the wide diversity of consumers.

 

When dealing with smaller, ethnically homogeneous populations, however, one can expect less diversity in tastes and acceptance of products. Furthermore, consumers tend to be more sensitive to how other consumers may respond to a product or service. As a result, we often see the "herd mentality" - be it with cheap consumer products or multi-million dollar capital expenditures. Once the lead purchasers take on a new direction, it is quite likely the rest of the herd will follow.

 

Another aspect of this herd mentality is what some foreign wags refer to as "keeping up with the Kims." If a product's or service's consumption is associated with the "right" kind of consumer or social stratum, there is a very strong urge by the rest of the market to follow, with consumers regularly spending beyond what other societies may consider to be prudent.

 

Consequently, sales trends or fads are not limited to low cost or even consumer products. These fast appearing and disappearing shifts are characteristic of Korea's tight-knit society.

 

While "word of mouth" advertising is most highly valued anywhere, it is extremely powerful in Korea's close-knit society of large, extended families and affinity groups, where extensive personal networking is a matter of basic survival. The impact of branding on this vibrant network has yielded some surprising developments for foreign marketing professionals.

 

For example, Korean consumers in the lower economic levels often have a better knowledge of high end luxury brands than their American counterparts. At the same time, the sophistication of those consumers who can easily afford luxury brands is often decidedly less than that of their Western peers. The result is a Korean market that continues to be flooded with counterfeit products. Consumers apparently make little effort to differentiate between the luxurious quality found with genuine goods and the simple social status of a luxury product's brand mark – counterfeit or real.

 

The marketer must often contend with the horizontal factor of a homogeneous population that consumes in a relatively herd-like fashion – and with the vertical factor of wide brand awareness across economic classes.

 

Particularly when it comes to established products (as opposed to new products), one may try to identify some kind of consumption function. To determine whether a cultural factor is present, one first needs to determine the non-cultural factors. Foreign marketers too often ignore or disregard basic factors, such as distribution, and rush to blame poor sales on "culture." After analyzing all relevant, conventional factors, such as pricing, product, promotion, etc., if any other non-marketing factor still remains, then one may identify it as possibly being "cultural." Upon isolating that non-traditional marketing factor, it may again be wise to try to define and explain it in a purely cultural context.  If you can't satisfactorily do so, there is a good chance you have missed something in your prior, conventional marketing analysis.

 

The importance of this exercise is this: simply "recalibrating" your market analysis tools may not be enough.  You may still come up wanting. In such a case, you need to ask if you have done enough to adjust your analytical tools for the market.  If the answer is "yes," then consider if you have done an adequate analysis in one or more non-cultural factors.  Only after answering "yes" once more should you focus on a cultural factor.

 

Tom Coyner is a long-term resident in Korea and runs consulting firm, Soft Landing Korea. Coyner can be reached on softlandingkorea.com.

 

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