1. Practical Application of Theory

1.1. Culture’s role in international consumer behavior

First of all it is important to figure out what we should consider as «culture» in the context of international marketing. According to W.J. Keegan culture can be defined as «way of living, built up by a group of human beings that are transmitted from one generation to another» (3).

If we analyze this definition on the topic of marketing and consumer behavior it means that every member of society has a lot of different attitudes, beliefs, values, perceptions, which he holds. But at the same time usually he cannot explain why. The answer is one – it is accepted in his circle. Our culture is formed by family, friends, neighbors, school, government and other social institutions. Our culture dictates us what we want to buy, what is good or, for example, fashionable. So cultural characteristics makes us to behave one way, they determine what products we buy (expensive/cheap/ with sales, bio/GMO, healthy/ fast food), in what places (local shops/ huge malls/ brand shops/ supermarkets), from what manufacturers (native producer/ foreign), in what package (small/ huge), how often we go shopping and how many stuff we purchase.

Usually culture settings in neighbor countries are closer. That is why most companies, who are international now, made their first steps there. This way also behaved Wal-Mart. Wal-Mart decided to concentrate heavily on establishing a presence in the Americas: Canada, Mexico, Brazil and Argentina. Canada is near the USA, these countries citizens’ values and styles of buying are rather similar. Moreover, Canada had a business environment closest to US. It was the easiest entry destination. It was no problems with language, specific preferences or aesthetics.

In case of Wal-Mart it was very risky to start their internalization from European countries. Company was afraid of facing cultural differences, which they cannot anticipate, and high level of competitiveness for market share. Moreover, another problem was that it would be really difficult to change citizen’s way of purchasing. For example, in France and Germany consumers prefer to go shopping several times per week. They would like to buy fresh products, in small amounts and in local chain stores. Once a week or even rarer they go to a big out-of-town supermarket, but it is also a question of habits. Europeans are not heavily opened to new things and innovations. Why should we go to Wal-Mart instead of Metro? Why should we change our way of life? A problem how to convince Europeans and adapt to their style of consumer behavior was the biggest one, stopping Wal-Mart of entry to this market.

As for Asian market it is too different culturally as well. Wal-Mart marketing managers were afraid to loose their money, because of misunderstanding. It would have taken considerable financial and managerial resources to establish a presence in Asia. Only some years later Wal-Mart became ready to try entry to Chinese market. China’s cultural, linguistic and geographical distance from the USA presented relatively high entry barriers. That is why company started their business in Asian by making partnership with domestic retailers. Wal-Mart just sold their low-price products to them, distribution was their problem. Only after that, having some experience, company finally made a joint venture with Asian organization and opened 3 stores in Hong Kong.

Obviously, Wal-Mart managers made a right choice to enter culturally and geographically closest regions. On the stage of growth and becoming international company avoided material losses. Work in America’s countries gave Wal-Mart experience in making international business taking into account cultural differences and their influence on consumer behavior. So Wal-Mart growth strategy was totally acquitted at the moment.