Effect of Cultural Difference on IKEA's International Marketing

1.  Introduction.

With globalization steadily gaining momentum, international marketing has become a key aspect for businesses in order for them to operate successfully.

Culture has various definitions. However, the simple definition is: culture is the collective programming of the mind that distinguishes the member of one group or category of people from another (Hofstede, 2011). International marketing has become more complex since it not only requires knowledge of foreign markets but also understanding of different culture in the countries. The simple definition of international marketing is marketing activities that cross-national borders (Browaeys and Prince, 2015)

 Firms need to adapt to a different culture in order to satisfy peoples desires and be successful in all the countries they operate. (Browaeys and Prince, 2015)

IKEA is one of the many well-established multinational firms in today’s date, this is a Swedish company that was founded in 1943 by Ingvar Kamprad. (Ikea.com, 2019) it started as a mail order catalogue that used to sell house use good like matchboxes.

 They are currently the world’s largest furniture retailer, known for their Scandinavian style sold at a relatively low cost. Majority of the furniture produced is ready to assemble by the consumer. The company carries a range of 12,000 products, consisting of furniture and home accessories, they also have cafeterias in their stores. As of November 2018, IKEA operates in 52 counties with almost 430 stores across them. (Ikea.com, 2019)

In this article, the first part discusses the cultural differences in an organization, followed by a discussion on international marketing, cultural differences affecting international marketing, what my chosen business IKEA, can learn from the knowledge and finally, a conclusion on the overall article.

2.  Cultural differences and how it affects international marketing

The difference in people’s thoughts, beliefs and attitudes strongly influences the international marketing of business when choosing appropriate strategies or adopting a marketing mix, this means that knowledge of culture is curtail, especially when coming up with suitable policies for a target Market in another country (Javalgi and Russell, 2015), he also stated that cultural differences have a great impact on the work values. He also said that managers must understand that a product is likely to succeed or fail depending on how marketing decisions work hand in hand with the country’s culture. For example, In the case of IKEA, the furniture sold in the United Kingdom is relatively different from what is desired in China.    

Hofstede’s dimensions of culture act as a framework that makes it easy for firms to understand the difference between the national culture in different countries that they wish to operate in. The dimensions include individualism vs collectivism, masculinity vs femininity, uncertainty avoidance, power distance, indulgence vs restraint and long-term orientation. (Javalgi and Russell, 2015).

(Javalgi and Russell, 2015) went ahead and explained each of them,

• In uncertainty avoidance, people believe that they have to maintain loyally towards employers and if the uncertainty avoidance levels are low, workers do not feel that way.
• Masculine vs feminine: men are believed to be more materialistic and useful while women are looked down to as employees. (Hofstede, 2011) IKEA encountered a problem related to this dimension in Saudi Arabia, they had to remove all ladies from their catalogues because the consumers and government were not pleased with that method. (Dailymail.co.uk, 2019)
•  The person that believes in collectivism puts the society ahead of himself/herself while individualism he/she personal interests are more valued over any other.
•   Power distance is the level to which powerful people in the society accept equality and share power.
•   Long term orientation is related to which place is of more value in the long run.

However, during my research, I realized that Hofstede’s dimensions did not pay attention to the different cultures that exist in different nations, countries that have values, multiple languages, and tribes. To support my claims (Newton, 2015) criticized the dimensions for cultural homogeneity, assuming the domestic population as a homogenous whole.

International marketing does not solely depend on the target market, but it also depends on market orientation. There are 5 major types: customer, product, strategic marketing, social marketing, and sales. (Browaeys and Prince, 2015)

sale orientation is where companies sell a good in the host country as well as many other countries with similar characteristics however, many are changing to social marketing. In this case, there is not only knowledge on how the product is bought, but also how it is deposed of or how it can be changed in order to suit the different cultures of consumers (Browaeys and Prince, 2015). There are arguments that we are currently living in the “ethics era” in which consumers well informed and more educated hence leading to changes in marketers’ expectation. (Armstrong and Sweeney, 1994)

 In addition, there is increased competition from new entrants especially in emerging markets and this has made it difficult for businesses to operate abroad. (Javalgi and Russell, 2015)

Cultural differences affecting international markets include;

• Language barrier becomes a main problem during the marketing process since the translation from one language to another becomes difficult. Many translations also have double meanings that get consumers offended sometimes. (Browaeys and Prince, 2015)
•   Many research techniques these days work with targeted consumers openly expressing feelings and giving reliable information. However, many people across different parts are reluctant to talk freely and prefer being asked questions on more practical issues. (Browaeys and Prince, 2015)
•   There is a lot of insecurity among deferent groups of people, they are uncertain on how the information being provided will be used and this increases lack of participation in research activities. (Browaeys and Prince, 2015)
•  The sensitivity of questioning is another challenge. While marketing in areas with different culture, the local population might not be comfortable with revealing some information to the marketers. (Browaeys and Prince, 2015)
• The difference in religion can sometimes cause misunderstandings.

Ethics is a very curtail branch of philosophy that deals with values and morals. In a business context, marketing ethics or marketing morality relate to issues such as product safety, bribery, deceptive advertising and many more. (Javalgi and Russell, 2015) in international marketing ethics, people normally tend to assume that ethics from one county to another are similar however, one cannot assume that they are similar in both countries (Javalgi and Russell, 2015). The difference in ethics plays a great role in how managers handle international marketing in different nations.

Foreign. (Javalgi and Russell, 2015).

Due to a difference in culture, countries have different marketing laws that apply to all companies seeking to operate in the market (Usunier and Lee, 2013). these laws can be categorized under product, price, promotion, and distribution. Firms need to know the laws and how they are enforced. Courts have been known to favour national firms over international firms (Usunier and Lee, 2013)

3. Learning IKEA can take from the review.

IKEA is a multinational organisation that is dealing across countries with different culture. From the review, I have discovered that international marketing works hand in hand with cross cultural management according to (Browaeys and Prince, 2015). I have also discovered that Hofstede’s dimensions don’t consider many other factors when analysing a foreign market and therefore, they shouldn’t solely depend on that theory for accurate results. I also gained knowledge on many cross-cultural differences that affect as business when entering another country. To IKEA, I would suggest performing intense market research and figuring out a way to manage cultural differences since (Armstrong and Sweeney, 1994) stated that we live in an ‘ethics era’ where customers have a lot of knowledge about the service/product. According to me, they should also take the legal system seriously and perform research on it in order to avoid any conflict with the government. Because according to (Usunier and Lee, 2013), the court is tougher on foreign firms and this can affect both brand image and revenue of the company. IKEA sells goods at really reasonable price (ref) however, there can be local competitors who already know what the market wants. This can actually make it hard for IKEA to get market share since they have competitive advantage as well as an idea of how the culture works. Another thing IKEA can learn is, use more locals in the marketing process since they are well familiar with the country’s culture plus it can avoid majority of the cultural difference issues stated by (Browaeys and Prince, 2015), such as; language barrier, insecurity and many more.

4. Conclusion.

The discussion has looked at what cultural difference is and how it can affect international marketing of a firm, specifically IKEA. It helped me understand that not all international expansion can be easy and profitable. There is many steps and a lot of cultural management to do. IKEA must respect people’s personal beliefs, religion, culture and attitude in order to succeed in any given country. There are many statements in the review I agree with such as, (Usunier and Lee, 2013) stating that firms entering a market must know how lays are enforced,  one cannot assume that all nations have similar culture and characteristics, stated by (Javalgi and Russell, 2015), I also support the idea of firms changing to social marketing orientation since products can be modified according to the consumers desires. However, I agree with some statements such as, local firms are favoured more. This is because the government benefits from incoming foreign businesses, in terms of Tax revenue, investment, exchange rate and many others. All in all, the above discussion suggests a strong bond between cultural differences and international marketing, firms must work all differences in their favour in order to make profits in a foreign country.

Reference:

• Javalgi, R. and Russell, L. (2015). International Marketing Ethics: A Literature Review and Research Agenda. Journal of Business Ethics, 148(4), pp.703-720.
• Ikea.com. (2019). History – IKEA. [online] Available at: https://www.ikea.com/ms/en_AU/about_ikea/the_ikea_way/history/ [Accessed 1 May 2019].
• Hofstede, G. (2011). Dimensionalizing Cultures: The Hofstede Model in Context. Online Readings in Psychology and Culture, 2(1).
• Newton, J. (2015). https://digitalcommons.ciis.edu/cgi/viewcontent.cgi?article=1079&context=ijts-transpersonalstudies. International Journal of Transpersonal Studies, 34(1-2), pp.172-186.
• Usunier, J. and Lee, J. (2013). Marketing across cultures. Harlow, England: Pearson.
• Google Books. (2019). International Marketing. [online] Available at: https://books.google.co.uk/books?hl=en&lr=&id=0Z2-2_Q2kuAC&oi=fnd&pg=PA13&ots=4fy7UY6smm&sig=KJGNgwoaI4FgoPu5n1SEy9mHp04&redir_esc=y#v=onepage&q&f=false [Accessed 3 May 2019].
• Armstrong, R. and Sweeney, J. (1994). Industry type, culture, mode of entry and perceptions of international marketing ethics problems: A cross-cultural comparison. Journal of Business Ethics, 13(10), pp.775-785.
• Browaeys, M. and Prince, r. (2015). understand cross-cultural management. 3rd ed.
• Mail Online. (2019). How Ikea adapts its catalogues to suit different cultures. [online] Available at: https://www.dailymail.co.uk/travel/travel_news/article-4738618/How-Ikea-adapts-catalogues-different-countries.html [Accessed 7 May 2019].