China Compare to Australia
Abstract Consumer behaviour is important for any marketer. Cross cultural analysis provides crucial information as to what can be successful exported to international markets. In relation segmentation in China Australians need understand culture, subculture and cross-cultural affiliation.
Another important factor when considering marketing opportunities is Maslow’s Hierarchy of needs. It is ever present that there are economic and cultural differences within China. Due to increased globalization and increased Westernisation of China cultures are beginning to blend.
Understanding these two theories is imperative for exporters trying to expand into the diverse and complex Chinese market. Introduction: Cross-Cultural Analysis The Australia -China Free Trade Agreement (ACFTA) is offering the opportunities for Australian exporters to a gain more sustainable competitive advantages in the second largest economy in the world. Chinese domestic economic growth, liberalisation, and recent membership to the World Trade Organisation have given opportunities for Australian exporters and firms to expand in China (ACCI, 2004).
Therefore, cross – cultural analysis has become an important tool for Australian marketers in analysing to what extent consumers of the two different nations differ. As a result, marketers will be able to study and understand in-depth the foreign market which to whom they will market their products to, since cultural acknowledgement will have a significant impact to every aspects of marketing particularly in segmenting the market and understanding the consumers’ behaviors. People from different countries have different culture that shaped their characteristics and behaviors in their purchasing activity.
Chinese Culture vs. Australian Culture (Segmentation: Culture, subculture and cross-cultural affiliation) Consumer behaviour is the most essential aspect of marketing, which outlines what consumers’ need, and what influences their buying behaviour. Therefore, it is vital to discuss the cultural, social, personal and physiological characteristic of the Chinese consumers in order for Australian marketers to understand Chinese consumer behaviours in order to successfully penetrate into the Chinese market. There are several ifferent studies conducted by experts which accentuate that the immature Chinese market’s behaviour is similar to Australian culture who are price and brand sensitive, and are now constantly moving towards mature market, who view the well known foreign brands with superior quality and service as leverage to their social status (Yi-You, 2004). This movement is the result of the Chinese culture that underpins the importance of social status and a robust economy that boosts consumer confidence in spending (Giele, 2009). For instance, the sales figure for luxury cars in China has surprisingly increased within 2005-2010.
According to the customs figures China has imported more than 100,000 luxury cars in recent years, approximately valued at $4. 84 billion (China Business, 2006). This example underlines the growing Chinese economy that significantly affected by consumers’ spending bahaviour. It is obvious that Australia is similar in a sense where we live in a culture that underpins importance of social status; however this does not mean Australians will go out and buy a luxury car for the sake of promoting their economical situation.
Australian consumers tend to use a cost-benefit analysis, that is, will the benefits of the vehicle outweigh its price, if yes sales will tend to increase, if no sales will drop (Reh, 2009). Therefore while there is a small similarity in demographic segment opportunities (socio-economical status), the buyer behaviour decision still differs. Luxury Cars Thus, it is crucial for Australian marketers to choose the best entry and pricing strategies to gain the potential market’s loyalty and trust.
In relation to the car industry, Australian subsidiaries such as Holden and Ford can penetrate the market with their high end vehicles the Calais, Caprice, Senator and Mondeo and ultimately make Chinese consumers aware of the quality and luxury that such brands underpin (Financial Times, 2009). In doing so exporters need to set themselves aside from competitors including Mercedes, BMW, AUDI and even neighbouring brand Lexus and show consumers the unique opportunity of investing in an Australian Luxury Vehicle. Chinese Superstition Furthermore, distinct Chinese culture is also playing an important role in shaping consumer’s behaviour.
Chinese people believe in “Feng Shui”, it is the strongest cultural impact on consumers in the decision-making process. This Differs from Australian culture who has a different perspective on such superstitious belief, in most cases Australian consumers would mock a marketing strategy with such a belief. Thus where the buying decisions of the Chinese is dependent on this cultural principle, the Australian consumers care more about product quality, price, perceived benefits and service of the product, as opposed to what the product represents (Giele, 2009). Chinese believe that Feng Shui will bring them luck and peace.
Therefore, Chinese consumers will consult “Feng Shui” experts before making the purchasing decision. For example, Chinese people interpreted number four (? pinyin si) as bad luck since it is nearly homophonous to the word “death” (? pinyin si). Therefore people in China do not like anything that involving number four (Lubin, 2010). In saying this when marketing Australian exporters should market in relation to positive Feng Shui beliefs in China. For example when marketing Australian wine which is rapidly increasing in popularity in the Chinese market, a marketer should avoid any aged wine with the number four.
That is for example Shiraz from 2004, 1994, 1984. This has been reflected in the dramatic fall in sales, during 2004, and marketers were bewildered as to why it occurred (Lubin, 2010). Marketers should in fact promote wine from years that have the number eight included, as this is a symbol of prosperity and happiness. In saying this in the year 2008 Australian wine exporters could not keep up with demand from Chinese consumers, an increase in 32% from the previous year (Winefacts, 2009).
Thus in order for Australians to penetrate the market they should do so harmoniously with the Feng Shui principle in order to succeed. Exporting alcoholic beverage to the Chinese Segment Culture is one of the most important factors and basic causes that influence consumer behaviour. It involves the attitudes, beliefs and knowledge which determine consumer’s buyer behaviour (Schiffman et al. 2008). For example, when there are a small number of consumers, it is easy for them to try and feel product variations and quality then the producer must meet the expectation.
If these expectations are not met, consumers would never repurchase that product. However, if there are a large number of consumers, a brand name must be established in order to reach new consumers, and it will develop with continued purchase by the consumer. In this process, marketer must adjust the product depending on different segmentations like culture. Take beer for instance, when a new brand of beer is introduced into a beer drinking country like Australia, fresh beer is always kept chilled, and Consumers do not want to order beer without being cool.
It also needs to be kept away from the sunlight to maintain its taste, which is different from Chinese. In China, beer does not need to be kept in freezer and always exposed to the sunlight. Moreover, there is a difference of beer taste between Australian consumers and Chinese consumers. If the company exports the Australian beer directly to China, Chinese consumers will not accept it because Australian beer tastes too strong for the Chinese consumer (Mona Chung , 2007). Similarly, Chinese white spirit cannot fit Australian consumers because it is too hot for them.
Nowadays, China’s taste for wine provides a great market opportunity to Western Australia. Chinese consumers are growing interest for nice Australia wine. Agriculture and Food Minister, Mr. Redman said “Premium wine industry is gaining the attention of consumers in China, but to date there has not been a Chinese language book with information on WA wineries for this market”. Because Chinese consumers are getting thirst for Australia wine, Redman had launched a book in mandarin in Shanghai about Australian wine which includes 100 local top wineries in order to satisfy Chinese consumer expectation.
Australia is one of top suppliers of wine to China. The wine exported annually to China has increased by 20% over the past 2 years (Josette Dunn, 2010). Redman predicts that the number of wine imported to China would grow to 1. 26 billion in 2013. Also , according to the research , total Australian wine exports to China grew 37% annually from 1999-2000 to 2004-2005 and increased at a rate of 84% annually from 2004-2005 to 2009-2010 . Moreover , wine intelligence shows the market in China which import wine could grow to between 70 and 80 million cases by 2025 (2010).
In saying this, it is obvious that when segmenting to the Chinese market, marketers must take into account the diverse cultural beliefs of Chinese consumers, but also take into account the close similarities between buyer behaviours of the two nations. Hierarchy of needs Maslow’s hierarchy of needs (appendix 1) has been cited in numerous texts both in psychology and marketing. In the marketing context the hierarchy is useful in interpreting how different products and services satisfy different needs. The hierarchy is based on intuitive notion that certain needs must satisfied, at least partially, before reaching the next level.
The most basic need of the hierarchy is physiological, examples are food, water and breathing. The next level is safety and security needs which covers shelter, protection and stability. These first two levels are necessary for human survival. The next three levels consist of psychological needs. These respectively are:- social needs such as affection, belonging and friendship; ego needs which includes prestige, status and self-respect and final self-actualisation which is the idea of self fulfilment or finding meaning with one’s life. Differences between culture China is generally considered a Collectivist culture.
Collectivism is based on unity of the group, where people are encouraged to conform to society and do what is best for the community as a whole (Britannica, 2010). This means individuals are more easily persuaded by friends and family as there is a strong desire to fit in. Contrastingly, Australian and other Western Cultures are seen individualist societies where more emphasis is placed on each person being unique. This is why marketing is focused on making individuals stand out rather than blend in with the rest of the crowd (see appendix 2 & 3 for examples).
In the Chinese commercial (appendix 2) it can be seen that collective culture and history still plays a major role in Chinese culture. The ad clearly targets the social need as Pepsi is seen to be drunk by the group and the new student must crush the can to be accepted into this culture. This allows him to become part of the dynasty and conform to the norm. This is juxtaposed to American commercial (appendix 3) where the individual is the focus of ad. It appeals to the ego and self actualisation needs as by drinking Pepsi you can achieve your ambition and be separated from the rest of the crowd.
Thus the distinct marketing differences between the Collective Chinese culture and individualistic Australian culture can be seen. China is the world’s fastest growing economy and as such there has been a huge influx of Multi-national corporations. This has started to have an influence on China’s urban areas as they are becoming individualistic due to Western products. The change can also be attributed to the one child policy. This has made the new generation of Chinese far more self-centred and have become more indulgent in themselves as costs to run a family have lowered dramatically.
This has allowed this generation far greater influence over their families decision making (Mari, 2008). Though Australia is seen as a uniform society where there is little poverty and relatively small gap between rich and poor in China however there is very distinct divide between urban and rural populations. The annual per capita income of urban Chinese was roughly three times as high as their rural counterparts and the Engel coefficient was 37% for urban and 46% for rural (Mari, 2008). Even more demonstrative is that Chinese urban and rural consumer spend only 3. and 2. 13% of their total income respectively on entertainment. This is compared to Australia where our total GDP per capita is $38,911 (World economic outlook database, 2010) and the average household spends a $150 a week on both groceries and entertainment. This equates to 22% of GDP per capita. It is obvious Australian culture focuses on high levels rather than the lower need on the hierarchy (ABS, 2006). The effect of Culture on the Hierarchy The differences in purchasing behaviour for urban and rural Chinese can be explained by Maslow’s needs hierarchy.
People living in rural China live in a far more traditional society (Collective) and their consumption of goods is used to satisfy the social need to give a sense of belonging. Though the majority of their earnings is to satisfy their physiological, safety and security needs. The bicycle is an example of the social differences of culture in China. The bicycle is the main mode of transport as cars are still too expensive to afford for rural commuters. The bicycle is fulfilling their safety and security need as it allows people to get to work and thus provide for their family.
Contrastingly, bicycles and bike riding in Australia is seen as a subculture mainly for leisure. Consumers who purchase bikes are doing so for their ego and self actualisation needs as they are simultaneously helping to lower pollution and increasing their physical appearance (At, 2006) Chinese; moving up Maslow’s Hierarchy Due to the cultural differences, there are high demands in luxurious branded items such as Louis Vuitton. This demand has increased due to higher incomes which has led consumers to access the higher levels of Maslow’s hierarchy.
Chinese people are now purchasing luxury items for the prestige and social status which is associated with the high end brand. Loius Vuittton introduced itself into China as must have brand in order to conform to popular culture (Bloomberg Businessweek, 2007) Therefore, marketers of this brand have successfully expanded into this emerging market as it is evident that Chinese consumers tend to buy the same brand as others which is represented in their buying culture (Yau, 2007). However, Australians are less concerned about conforming to society so once a brand becomes popular consumers tend to try and create a new fashion trend.
When Loius Vuitton markets to Australia it has constantly change its products as to not become a ‘fad’ or lose interest allowing customers to remain brand loyal. Australian Exporting opportunities It appears there are opportunities for Australians to export into China. As more and more urban areas are becoming Westernised more international companies are trying to gain entrance into the Chinese market. Hence as China’s economy continues to grow so will the income of its population giving them more discretion on purchases as they move up Maslow’s needs hierarchy.
To effectively market to these consumers at present an Australian exporter would use direct marketing and word of mouth to make use of Collectivist culture of China. Exporting education is the most worthwhile export. Marketers can accentuate the self actualisation and ego needs of the Chinese people and show them that by attending an Australian University they are likely to have a better education, giving them more employment opportunities, ultimately a better way of life thus satisfying these higher level needs.
Moreover, Australian exporters can highlight to Chinese businesses the growing importance of speaking English, which they can gain under an Australian education. This will give them a far greater ability to expand outside of Asia. To make this easier Australian Universities can situate a campus within China in order to grant easier access to Australian education. This maintains the social needs of Chinese students but could fulfil their ego and self actualisation by learning English from a prestigious institution.
Recently the world expo in Beijing gave Australian exporters a chance to promote Australian education and give a good insight into the benefits of studying in Australia (Xiuyun, 2009). Conclusion It is evident there exists great potential for Australians to expand in the Chinese market but in order to do this they must understand socio-cultural segmentation and why different segments embody different needs on Maslow’s hierarchy. It is also important to understand the similarities between the two nations as China is becoming more Westernised, therefore insight into Western and Chinese culture is collectively important.
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