1.4. Reference groups impact on consumer behavior and international growth strategy

Another important aspect is social interaction and its part the individual’s reference groups – the set of people to whom an individual looks for guidance in values and attitudes. Reference groups have a huge impact on people’s consumption behavior patterns. There are 3 kinds of reference groups:

• Membership groups to which people belong;

• Anticipatory group of which one would like to be a part;

• Dissociative groups with which individuals do not want to be associated (3).

Knowledge on reference group patterns could provide input in formulating product positioning strategies and advertizing.

According to this theory Wal-Mart created Sam’s Club. For a great number of cultures it is really important to be involved in some group (later this topic will be discussed much in relation of «Collictivism»). For example in Mexico Sam’s Club is really popular because it is not only a shop, but place where you can meet your neighbors and friend, members of your group. These shops became an integral part of citizen’s lives. Some of them come to Wal-Mart with wish to become a part of this «family». It is the biggest achievement of Wal-Mart managers. They did not stop in making their chain popular, but now it influences on culture of «captured» countries as well.

Within every culture there is a sense what is good and beautiful and what not. Such considerations are matters of aesthetics. International marketing managers should understand the importance of visual aesthetics embodied in the color, shape and package of their product or label.

For example, Wal-Mart label was ideal for China. Its red color was perceived by Chinese consumers like a symbol of luck and happiness. In other countries, prior European, Wal-Mart also used the same label, but changed it to white (color of purity, honesty and peace).

Thereby, it is obvious that modern international marketing claims a really hard research pre-work, which should help company to adapt its strategy to cultural qualities, influencing consumer behavior. Wal-Mart history is an excellent example of trial-and-error method. Outstanding results in Latin America and China, mixed in UK, Canada and Japan, total fail in Germany. Further will be chosen a number of theories, explained how they were used by Wal-Mart and what results it made.

2. Managerial Implications

Next will be described some theories, which were somehow or other used by Wal-Mart. How they work and what they cause is presented later.

2.1. A-B-C-D Paradigm

One important theory which should be considered is the A-B-C-D Paradigm, outlined by P.S. Raju (5). Within a given culture, consumption process can be described by using 4 stages:

• Access - Can consumer obtain your product or service?

Economic and physical access;

• Buying behavior - How is the decision to buy made by consumers?

Perceptions, brand equity, price-quality, brand/store loyalty, general attitudes toward marketing, analysis of consumer psyche, impact of social norms, orientations;

• Consumption characteristics - What factors impact consumptions patterns?

Product versus service consumption in culture, cultural orientation, reference group influences, urban versus rural sector consumption patterns;

• Disposal - What are the impacts of product disposal?

Resale, recycling, remanufacturing considerations.

Let’s analyze the reasons of Wal-Mart fault in Germany according to this paradigm. German market was the first one that Wal-Mart entered. It was reasonable, because it is big enough and is rapidly developing. Moreover, managers made an awful mistake they did not estimate the cultural differences between German and US consumers. First of all, question of access. As for money German consumers were ready to buy Wal-Mart products, but physically. German consumers do not used to go shopping to buy food only once per week like Americans. They are to visit local store chains. They prefer to purchase fresh yoghurts, milk, cheese and bread every day. They do not buy all food for the whole week, just a required minimum. Instead of this all Wal-Mart stores were placed out of cities and in depressed and poor areas. Germans used to appreciate their comfort that is why they did not go shopping so far. And if they really want to buy a lot of stuff they went to METRO or Real, placed better and much convenient. It was the first cultural error of Wal-Mart – no access, because of formed consumer behavior.

Next step - buying behavior. For German consumers discounts are passion. But Wal-Mart made the wrong answer: «We are already the cheapest, everybody knows that. Why should we make discounts?». You should respect countries consumer traditions. Germans are fans of sales, give it to them and make profit. But Wal-Mart had its own way and fall. One more thing in this aspect is brand loyalty. Consumers in Germany are very loyal to their lovely brands. They buy their own produced stuff, collect coupons and so on. Wal-Mart was not ready to change attachment to ALDI and Lidl.

Another factor - consumption characteristics. Germans set negative against Wal-Mart because of ethnocentrism belief. In Germany people are proud of their production and business. They were very suspicious about American products and preferred to support domestic store chains. Moreover, if everybody from your reference group buys food in German store, you will join the majority as well.

The last stage is disposal process. Germans really care about environment and pollution. Every German manufacturer knows that he should be more «green» and it will be his advantage in market share competition. Germans were concerned if Americans products are BIO and they did not know anything about their recovery process. Wal-Mart did not take this cultural fact in account as well.

Obviously, we see how cultural differences influenced the way of consumer behavior on Germany. Furthermore, how important was to analyze all stages of this paradigm for Wal-Mart, what they did not and lost a lot of investments. Who knows, maybe if they kept these differences in mind, Wal-Mart would succeed.