Indonesia, as an archipelago, is characterized by significant disparities in its regional demographic perspectives (Caldwell 1997: 59-67). Indonesia’s population statistics are difficult to estimate. The country’s Central Statistics Bureau (BPS)

http://www.bps.go.id (12 July 2005)

Concerning demographics, there is a wide diversity across Indonesian regions in the fertility rate, mortality rate, life expectancy, and population mobility (both internal and international) (see for example: BPS 2004: 50-51, 103-105, 108-109). There is a striking paradox in population trends: on the one hand, there has been a rapid decline in fertility for over two decades in Indonesia (Indonesia is one of the few developing countries where the Total Fertility Rate (TFR) is below the reproductive level of 2.1 children per woman)

Pakistan, for instance, has a TFR of about 5 children per woman. In India, Iran and Nigeria the TFR is above the reproductive level of 2.1 children per woman. The ten countries which will contribute most to world population growth over the next 30 years are India, China, Pakistan, Nigeria, Ethiopia, Indonesia, Unites States of America, Bangladesh, Zaire, and Iran – in that order. http://www.iiasa.ac.at/Research/LUC/Papers/gkh1/chap1.htm (12 August 2005)

Two major migration patterns have become discernible. The first involves the growing flow of people into urban areas, particularly Jakarta, which has resulted in an overall increase in the proportion of the population living in cities (BPS 2005: 50). Temporary, or circular, migration between rural and urban areas in connection with employment has also been common (see for example: Duncan 2005: 47-50; Findeisen 2005: 54-56). The second pattern is of people leaving Java for the outer islands. The central government has facilitated much of this movement (called transmigration - “transmigrasi”) by sponsoring a program of resettling landless Javanese in sparsely populated areas (Vickers 2005: 193; Grabowsky 1999: 63). Urbanization in Indonesia as in the rest of Southeast Asia has been influenced by changing national economies and “the rate of urbanization in Southeast Asia has been growing at a phenomenal rate”, according to Ho (2002: 1). Southeast Asia receives investment inflows, which largely benefit the metropolitan regions that will continue to experience rapid population growth in these areas (Grabowsky 1999: 63-65). The reasons for this are the following. First, drawing on the work of Jones (1991, 1993), the share of primary industry in total output has declined, replaced by a rising manufacturing share that tends to have an urban bias. Second, as a result of globalization of the economic system, the presence of indigenous industry has been supplemented by the inflow of foreign direct investments in search of lower cost production sites and emerging markets. Such inflows increased in the 1980s and 1990s, initially from the U.S., Europe and Japan, and more recently from East Asia (Wie 2002: 203-210). The third reason is a perception of better job opportunities, along with access to urban amenities in health and education, which are the main ingredients for rural-urban migration. As mentioned, industrial development has brought large-scale migration to urban areas – 42 percent of the population lived in cities in 2000, compared with 30.9 percent in 1990 and 22.3 percent in 1980.

The Indonesian national motto “Bhinneka tunggal ika” (Unity in diversity), makes reference to the extraordinary diversity of the Indonesian population: there are more than 1,000 different ethnic/sub-ethnic groups (Suryadinata, Arifin, Ananta 2003: 6) and 250 distinct languages, and most of the major world religions are practiced there, in addition to a wide range of indigenous ones. Within this diversity there are certain groupings and concentrations; thus, most of the people are of Malay ancestry, speak languages that have an Austronesian (Malayo-Polynesian) base, and profess Islam (Villiers 2001: 25). The largest of the subgroups comprise of the Javanese, whose language is also the most dominant (Suryadinata, Arifin, Ananta 2003: 13).

According to the 2000 census, the population prorates in the following way: Javanese (41,7 percent), Sundanese (15,4 percent) Malay (3,4 percent), Madurese (3,3 percent), Batak (3,0 percent), Minangkabau (2,7 percent), Betawi (2,5 percent), Buginese (2,5 percent), Bantenese (2,1 percent), Banjarese (1,7 percent), Balinese (1,5 percent), Sasak (1,3 percent), Makassarese (1,0 percent), Cirebon (0,9 percent), and Chinese (0,9 percent) (ibid: 8-9). All other groups display a proportion significantly less than 1 percent of the total population of which Suryadinata, Arifin, Ananta (2003: 7-9) present more than 80 (ethnic groups less than one percent of total population) and document the multi-ethnic composition of the Indonesian society with their figures. This ethnic plurality varies from one province to another (ibid: 14). With the end to the Soeharto rule in 1998 there was also an end to strict social engineering and no public discussion of sectarianism (differences in ethnicity, race and religion were forbidden in the media) (Vickers 2005: 214). This led to the fact that the “pot of difference boiled over” (Vickers 2001: 214) and to feelings which shored up extremist sentiments against different ethnic groups, mainly Sino-Indonesians (subject of jealousy and competition) who are predominantly Christian. Thus, anti-Chinese sentiment blended with wider Christian-Muslim conflicts (see for example: Hefner 2000: 167-213).

Indonesia has more languages than any other country in the Asia-Pacific region, with the exception of the island of Papua New Guinea (Sneddon 2003: 196). Most of the languages spoken in Indonesia have an Austronesian base. The major exceptions are those of Papua and some of the Moluccas, where Papuan languages are used. The Austronesian family is broken into 18 major groups within which languages are closely related though distinctly different. It has much in common with other Malay dialects that have long served as regional lingua francae (Sneddon 2003: 22). The official language of Indonesia is Bahasa Indonesia (“Indonesian language“), a form of Malay, spoken in the Riau-Jambi area of eastern Sumatra, which belongs to the family of Austronesian languages (Nothofer 1999: 74-75). The name for the family, Austronesian, is made up of Greek formatives meaning “southern islands”. Since it is a relatively simple and widely used language that was not associated with one of the dominant ethnic groups, “Bahasa Indonesia” has been accepted without serious question and has served as a strong force of national unification although most Indonesians speak a (local) regional language (“bahasa daerah”) as their first tongue. Only 7 percent of Indonesians speak the Indonesian language as their first language, 90 percent speak one of 350 regional Austronesian languages, and 3 percent speak Mandarin or other Chinese dialects. Bahasa Indonesia is almost universally taught in schools and is spoken by nearly every Indonesian. Reference should be made to the fact that the use of the Indonesian language promises status, as Sneddon (2003: 210) notes:

“Indonesian is typically used for prestigious activities, and in using Indonesian people acquire prestige, or at least see themselves as doing so.” (Sneddon 2003: 210)

In addition, Indonesian is associated with education and modernity and is the language of Jakarta, where people viewed as powerful, wealthy and attractive, reside. Speaking like such people helps one acquire some of their prestige (Sneddon 2002: 210) and therefore it can be seen as a device for gaining prestige. The term “bahasa gado-gado” (“mixed-up language” - gado-gado being a mixed vegetable dish) is used derisively by Indonesians. The use of English is supposed to add status to the speaker as English is associated with modernity and education.

The Austronesian regional languages along with the majority of languages in Indonesia are Javanese (75 million speakers in North west Java, central Java and on Madura), Sundanese (27 million speakers in west Java) and Madurese (9 million speakers in east Java and on Madura) (Sneddon 2003: 198). As the largest regional language in Indonesia, Javanese is in no danger of extinction (Sneddon 2003: 210). Between the 1980 and 1990 census, the number of Javanese speakers rose by almost nine million (Sneddon 2003: 210). Owing to the ethnic heterogeneity in the individual provinces of Indonesia, and the resulting multilingualism, advertising should be avoided in regional languages.

Before the arrival of the Abrahamic faiths of Christianity and Islam in the Malay Archipelago, the popular beliefs in the region had been thoroughly influenced by Indic religious philosophy through Hinduism and Buddhism (Kulke 1999: 98-111). Both Java and Sumatra were subject to considerable cultural influence from the Indian subcontinent during the first and second millennia of the Common Era (Swearer 2002:119-123; Hiltebeitel 2002: 3-40). Hinduism as well as Buddhism, which share a common historical background and whose membership may even overlap at times, were widely propagated in the Malay archipelago. The influence of India (an “Indianization” of Southeast Asia is referred to) has determined the historical structure of the region to date (Kulke 1999: 98; Gomez 2002: 45). The Indianization occurred gradually and varied in several areas in terms of intensity and duration (Villiers 2001: 44; Gomez 2002: 45; Swearer 2002: 119-123). Nowhere was the indigenous culture completely destroyed, instead they were enriched in most areas (Villiers 2001: 44). Ancient popular indigenous and magical tenets were never completely overtaken by Hinduism, Buddhism or Islam; “adat” or customary law has never been superseded by Hindu or Islamic laws. Instead, they merged (Villiers 2001: 76). Just as with Islam later, Indianization and with it, Hinduism and Buddhism spread through trade (Villiers 2001: 44; Gomez 2002: 45). Hindu ideas followed the traders and merchants’ routes into the Southeast Asian courts. Religious concepts and rituals, Sanskrit, highly developed art forms (for example in Ramayana, epic Hindu literature [expressed in shadow play puppet shows, “wayang“], Mahabharata, Harivamsa and the Puranas) and social and political systems were not only brought by traders, but also through the Brahmanic people (Villiers 2001: 76-77; Hiltebeitel 2002: 5-10), who supported local lords in erecting a monarchical state form (power legitimization) (Villiers 2001: 83; Kulke 1999: 105). In the sixth and seventh centuries, many maritime kingdoms arose in Sumatra and Java, which controlled the waters in the Straits of Malacca and flourished with the increasing sea trade between China and India and beyond (Villiers 2001: 90).

The appearance of these powerful monarchies, whose heads (kings) were, in the tradition of the Indian constitution, the epitome of earthly gods, (Villiers 2001: 84) had far-reaching implications, which are apparent for example in huge collective projects such as the erection of imposing temples, or evident in the watering and drainage systems (Kulke 1999: 105). Besides the blending of Hindu and Buddhist traditions (for example the Hindu monarchs were considered the embodiment of Vishnu or Shiva and the Buddhists, as the manifestation of Buddha), the Indian caste system was, owing to contact with the indigenous cultures in all of Southeast Asia, not only adapted in a dramatically modified manner in the area of today’s Indonesia.

This recurring phenomenon of emerging modifications in social, political and religious spheres at the conjuncture of indigenous and foreign elements, is described in literature as “selective adaptation”, and can be considered today as a modus procedendi of Southeast Asian cultures. After the appearance of the earliest influences of Indianization, the Buddhist Empire came into being in the 7^th century in Sumatra. From the 13^th century onwards, the last great Hindu empire, Majapahit, which extended to become one of the first empires on an inter-regional scale, ruled from eastern Java (Kulke 1999: 105).

Although Java was to a large extent converted to Islam during the 15th century and afterwards, substantial elements of Hindu (and pre-Hindu) customs and beliefs persisted among ordinary Javanese. “Agama Hindu Dharma” is the formal name for Hinduism in Indonesia. It is practiced by 93% of the population of Bali, but also in Sumatra, Java (especially by the Tenggerese people on the east), and Kalimantan. About 3% of Indonesian population is officially Hindu. However, as mentioned, Indonesian beliefs are too complex to classify as belonging to a single world religion. Across the archipelago the Hindu legacy, along with the older mystic traditions, still influences popular beliefs. The caste system, although present in form, was never rigidly applied. The epics “Mahabharata” (Great Battle of the Descendants of Bharata) and “Ramayana” (The Travels of Rama), became enduring traditions among most Indonesians, expressed in shadow puppet play (“wayang”) and dance performances (Taylor 2003: 21).

The Indonesian government has recognized Hinduism as one of the country's five officially sanctioned, monotheistic religions. Partly as a result, followers of various tribal and animist religions have identified themselves as Hindu in order to avoid harassment or pressure to convert to Islam or Christianity. Furthermore, Indonesian nationalists have laid great stress on the achievements of the Majapahit Empire, which helped attract certain Indonesians to Hinduism. These factors have led to a certain resurgence of Hinduism outside of its Balinese stronghold. The distribution of Hindus throughout Indonesia shows that they reside in all provinces but mostly in Bali where 75 percent of the Hindu population lives (Suryadinata, Arifin, Ananta 2003: 120). Central Kalimantan was the second largest Hindu province in 2000 and East Java, the third largest. The Buddhist population is the smallest among the official religions (Suryadinata, Arifin, Ananta 2003: 123). The geographical distribution of this group has changed a lot over time. The majority of Buddhists used to live in Java, where in 1971 55 percent of all Buddhists still lived (Suryadinata, Arifin, Ananta 2003: 128). However, by 2000 this figure had dropped to 37 percent. Today North Sumatra and Jakarta are provinces with the largest number of Buddhists, and west Kalimantan is the province with the most rapid increase (14 percent annually) in the Buddhist population (Suryadinata, Arifin, Ananta 2003: 128).

Islam arrived in Southeast Asia and in doing so, Indonesia too in the same way that India’s religions did, i.e. via trading (Bellwood 1997: 139; Reid 1993a: 151-152; Johns 2002: 169). Even though at the outset there were no conversion attempts, from the end of the 13^th century onwards the first Muslim states had begun to emerge and in the late 16^th century the majority of today’s Indonesia and the Malaysian peninsula had converted to Islam (Damais 1990: 353-415; Woodward 1989: 53; Reid 1993b: 132). In Malacca, converted Javanese traders and soldiers brought Islam to Java in the 15^th century (Villiers 2001: 270). The penetration of Java through Islam took place in very different ways (Headley 2004: 210-212). First, it was disseminated from harbour to harbour, along the coast, and then it penetrated the mainland (Ricklefs 1974: 2; Dale 1980: 27; Johns 2002: 178-180). However, Islam did not extinguish pre-Islamic beliefs, rather the multitudinousness of landscapes of religions increased (For a systematic and original history of Islam in Java, see the excellent work of Headley [2004] “Durga’s Mosque - Cosmology, Conversion and Community in Central Javanese Islam”).

With the syncretism of new religions with Indian culture, the Javanese proved to be very experienced and thus “wayang” (Geertz 1964: 261-267), “gamelan” (ibid: 278-280) and “keris” were maintained irrespective of whether or not they were in accord with Islamic belief. “Wayang” (shadow play) in particular was passed down to the new apprentices, in order to create a new way of spreading Islam among the people (Johns 2002: 185-186; Headley 2004: 409-413). Even if Islam frowned upon the worship of Javanese deities, “wali” (holy men), they were nonetheless worshipped and their graves became pilgrimage destinations (Taylor 2003: 71). In the majority of Java, the conversion to Islam made very little change necessary to handed down customs and rituals in real terms (Woodward 1989: 1-4). Devout orthodox religion only reached the trading classes and partly the courts. It took until the 19^th century for Islam to become a widespread and popular religion (Johns 2002: 178-179; Villiers 2001: 272). In Java in particular, a substantial number of Muslims follow a non-orthodox, Hindu-influenced form of Islam known as “abangan” (Geertz 1964: 309-338), while across the archipelago the Hindu legacy, along with the older mystic traditions, influence popular beliefs (Geertz 1964: 121-130, 227-260). Woodward (1989: 17) remarks in this respect:

“Java is exceptional in the Islamic world not because it has retained pre-Islamic ideas but because of the indigenous and artful ways in which such a large body of Hindu and Buddhist tradition has been so thoroughly islamisized.” (Woodward 1989: 17)

To a significant degree, the striking variations in the practice and interpretation of Islam (in a much less austere form than that practiced in the Middle East) reflect its complex history (Federspiel 2001: 5). As a result, many Indonesian "Muslims" are non-practicing, follow Indonesia's indigenous (animist) traditions (a fact that the government vehemently denies), or are entirely secular. Introduced piecemeal by various traders and wandering mystics from India, Islam probably came to these regions in the form of mystical Sufi tradition. Sufism easily gained local acceptance and became synthesized with local customs. Unlike coastal Sumatra, where Islam was adopted by the elite and masses alike, partly as a way to counter the economic and political power of the Hindu-Buddhist kingdoms, in the interior of Java the elite only gradually accepted Islam, and then only as a formal legal and religious context for Javanese spiritual culture (Geertz 1964: 121-139, 215-225, 227-260, 309-338). These historical processes gave rise to enduring tensions between orthodox Muslims and more syncretistic, locally based religions (tensions that are still visible today). On Java, for instance, this tension is expressed in a contrast between the traditionalist “santri” and “abangan”, an indigenous blend of native and Hindu-Buddhist beliefs with Islamic practices sometimes also called “Javanism”, “kejawen”, “agama Jawa”, or “kebatinan” (Schumann 1999: 440). On Java “santri” is not only referred to a person who is consciously and exclusively Muslim, but also describes persons who remove themselves from the secular world to concentrate on devotional activities in Islamic schools called “pesantren”, literally the place of the “santri”. In contrast to the Mecca-oriented philosophy of most “santri”, the current of “kebatinan”, which is an amalgam of indigenous, Hindu-Buddhist, and Islamic (especially Sufi) beliefs can be found. This loosely organized current of thought and practice, was legitimized in the 1945 constitution and, in 1973, when it was recognized as one of the “agama” (religions). President Soeharto counted himself as one of its adherents. “Kebatinan" is generally characterized as mystical, and some varieties are concerned with spiritual self-control. Although there are many varieties circulating, “kebatinan” often implies pantheistic worship because it encourages sacrifices and devotions to local and ancestral spirits (Headley 2004: 255-258). These spirits are believed to inhabit natural objects, human beings, artefacts, and gravesites of important “wali” (Muslim saints). Illness and other misfortunes are traced to such spirits, and if sacrifices or pilgrimages fail to placate angry deities, the advice of a “dukun” or healer is sought.

Another important tension dividing Indonesian Muslims is the conflict between traditionalism and modernism (Barton 2001: 244-255). The nature of these differences is complex, confusing, and a matter of considerable debate, but traditionalists generally reject the modernists' interest in absorbing educational and organizational principles from the West. Specifically, traditionalists are suspicious of modernists' support of the urban “madrasa”, a reformist school that included the teaching of secular topics. The modernists' goal of taking Islam out of the “pesantren” and taking it to the people is opposed by the traditionalists because it threatens to undermine the authority of the “kyai” (religious leaders). Traditionalists also try, unsuccessfully, to add a clause to the first tenet of the Pancasila state ideology requiring that, in effect, all Muslims adhere to the “sharia”. On the other hand, modernists accuse traditionalists of escapist unrealism in the face of change; some even hint that “santri” harbours greater loyalty towards the “ummah” (congregation of believers) of Islam than to the secular Indonesian state.

Most Muslims in Indonesia are Sunni, although some follow other branches of Islam, including the Shiite, who number approximately 100,000 nationwide. One can say that the deepening of Islam in Indonesia might be regarded as still taking place, deepening with each succeeding generation. In following this viewpoint it can be asserted that over the past four hundred years Muslims in the region slowly altered their perceptions of Islam, since the heterodox religious trends of the early period have slowed momentum, and more standard Sunni Islamic practices and patterns have slowly gained in importance (Federspiel 2001: 5). In general, the mainstream Muslim community belongs to two of the above-explained orientations: the "modernists," who closely adhere to scriptural orthodox theology while embracing modern learning and modern concepts; and predominantly Javanese "traditionalists," who are often followers of charismatic religious scholars and organized around Islamic boarding schools.

Despite its overwhelming Muslim majority, the country is not an Islamic state. Over the past 50 years, many Islamic groups have sought sporadically to establish an Islamic state, but the country's mainstream Muslim community, including influential social organizations such as Muhammadiyah (on the Muhammadiyah, see for example: Johns 2002: 175-177) and Nahdatul Ulama (NU), reject the idea. Proponents of an Islamic state argued unsuccessfully in 1945 and throughout the parliamentary democracy period of the 1950s for the inclusion of language (the "Jakarta Charter") in the Constitution's preamble making it obligatory for Muslims to follow sharia. During the Soeharto regime, the Government prohibited all advocacy of an Islamic state. With the loosening of restrictions on freedom of speech and religion that followed the fall of Soeharto in 1998, proponents of the "Jakarta Charter" resumed advocacy efforts. The re-Islamization of Indonesia, evident since the beginning of the 1990’s, will be further elaborated on in Part D of this work (for example, see also: Hefner 2000: 128-166). Proposals to amend the constitution to include sharia were however rejected (for example see: Salim and Azra [2003]: 1-16; Azra 2004: 133-149; Hooker 2003: 33-47; Hooker 2004: 199-220; Mawardi 2003: 125-147). As indicated, Islam is the dominant religion in Indonesia with more than 177 million followers (Suryadinata, Arifin and Ananta 2003: 106). The concentration of Muslims in each province ranges widely from over 97 percent to less than 10 percent in 2000. The highest concentration of Muslims was found in Gorontalo (98 percent) and the lowest, in East Nusa Tenggara (8 percent). There are 15 provinces in Indonesia with a concentration of the Muslim population of more than 90 percent. The five biggest are West Java, Central Java, Yogyakarta, East Java and Banten. Particularly, West Kalimantan, Central Kalimantan and East Kalimantan have seen increases of more than 10 percent in Muslim population between 1971 and 2000 (Suryadinata, Arifin, Ananta 2003: 112).

From the 16^th century on, the Christian faith reached the region first as Catholicism and then as Protestantism. This often occurred in connection with economic and political expansion of western powers (Wendt 1999: 454; Reid 1993: 132-133). A typical characteristic of the Southeast Asian population, and with it, of Indonesia’s population, is to integrate and assimilate foreign cultural elements into the tapestry of its own traditions (Bellwood 1997: 5). This characteristic did not stop at Christianity either and gave Christianity its own local character over time. The Catholics on the Indonesian archipelago proselytized by the Portuguese were converted to Protestantism by the “Vereenigde Oostindische Compagnie” (VOC - United East India Company) and a protestant community formed in Batavia. However, the Dutch traders were disinterested in the actual mission (Wendt 1999: 462). Only in the 19^th century were protestant missionaries able to spread Christianity on a larger scale. Christianity was spread mostly among the minorities, for example, the Batak in central Sumatra, where Christianity continues to be strongly rooted today (Suryadinata, Arifin, Ananta 2003: 114). The highest concentration of Christians in 2000 (87 percent) is found in East Nusa Tenggara, followed by Papua (75 percent) and North Sulawesi (69 percent).

As stated beforehand, the Indonesian archipelago stretches for more than 3,000 miles east to west and is the largest island complex in the world (BPS 2004: 3-4). The sea surrounding Indonesia has inevitably influenced Indonesian history (Ptak 1998: 21-38; Furnivall 1944: 20-53; Ptak 1999: 89-106; Bellwood 1997: 137; Hall 1985: 26-47, 232-260; Reid 1993: 1-19; Chaudhuri 1985: 9-33; Reid 1996: 15-50; Ray 1994: 48-86; Tuck 1998: 144-336; Chauduri 1965: 3-18; Coedès 1968: 19-21; Boxer 1985: VI 3-17; Bulbeck et al. 1998: 17-178; Kearney 2004: 1-10, 57-76; Rony and Wiarda 1977: 36-44; Arasaratnam 1995: III, 42-53, IV 480-490; Wheeler 1965: 122-175; Villiers 2001: 15-16). Monsoon winds blowing north and south of the equator have facilitated communication and commerce within the archipelago and with the rest of maritime Asia (Parnwell 1999: 29). Reid (1993: 1) notes: “Commerce has always been vital to Southeast Asia.” Easy overseas communication did not, however, result in the formation of territorially large kingdoms (Hall 1985: 78-102). The many estuaries of Sumatra and Borneo, facing the inland seas, possessed an abundance of nutritious seafood that facilitated a settled mode of life, and the contacts between the people of one estuary and their neighbours were more important to them than those they could make with overseas lands (Coedès 1967: 1-33). Indonesian maritime history is the story of the efforts of local groups, endowed with more or less comparable resources, to protect their separate identities. Records of foreign trade, however, begin only in the early centuries AD. A study of the Roman historian Pliny the Elder’s “Natural History” suggests that, in the 1^st century AD, Indonesian outriggers were engaged in trade with the east coast of Africa (Indonesian settlements may have existed at that time in Madagascar, an island with distinctively Indonesian cultural traits) (Höllmann 1999: 34). Regular voyages between Indonesia and China did not begin before the 5^th century AD (Villiers 1999: 89-97; Villiers 2001: 78-82). Chinese literature in the 5^th and 6^th centuries refers to western Indonesian tree produce (Taylor 2003: 23). During this time, small estuary kingdoms were beginning to prosper as international entrepôts (Andaya and Andaya 1982: 20-31; Hall 1968: 41-64; Hall 1985: 78-102; Wolters 1967). Under the influences of Hinduism and Buddhism, several kingdoms formed on the islands of Sumatra and Java from the 7^th until the 14^th century. During this time economic growth created by trade affected the regions of both the Malaccan Strait and the Java Sea (Houben 2002: 37-39)

The cultural effects of these commercial exchanges, usually described as “Hinduization”, or “Indianization” have been discussed for many years (Coedès 1967: 50-70; Marr and Milner 1986: 3-22; Mabbet 1977: 1-13, 143-161). It is now held that Hinduism was brought to Indonesia not only by traders, but also by Brahmans, who attempted to accustom the population to feudal structures by means of clever tactics, i.e. through shadow plays (“wayang“) in Java recounting Indian epics (with their multitude of queens and princesses), and besides, saw that their rulers were worshipped like gods in their palaces which were to represent the “centre of the universe” (Dahm 2002: 1; Headley 2004: 10-18). Sanskrit inscriptions, attributed to the 5^th and 6^th centuries, have been found in Kalimantan, a considerable distance form the international trade route and also in western Java (Villiers 2001: 94). They reveal that Indian literati, or their Indonesian disciples, were honoured in some royal courts (Taylor 2003: 27-59). The rulers were prominent “rakas”, heads of groups of villages in areas where irrigation and other needs had brought inter-village relationships and supra-village authority into being, and inscriptions indicate that some rulers were seeking to extend their influence (Kulke 1990: 172; Hall 1985: 111). Eastern Javanese inscriptions throw little light on happenings before the 10^th century, but the evidence from south-central Java, and especially the Kedu Plain in the 8^th and 9^th centuries, is more abundant (Villiers 2001: 46-63). This period in central Java is associated with the Sailendra princes who were of Indonesian origin and not, as once suspected, from mainland Southeast Asia (Taylor 2003: 36-39). The last indianized kingdom in eastern Java was Majapahit which ruled much of the southern Malay Peninsula, Borneo, Sumatra, Bali, and the Philippines from about 1293 to around 1500 (Hall 1985: 232-260; Hall 1968: 79-93; Steinberg 1987: 83-90). Its greatest ruler was “Hayam Wuruk”, whose reign from 1350 to 1389 marked the empire's peak (Villers 2001: 112). Dates for the end of the Majapahit Empire range from 1478 to 1520 when Majapahit found itself unable to control the rising power of the Sultanate of Malacca (Villiers 2001: 265). Due to the unification of power and territorial supremacy over vast areas of the Indonesian archipelago, Indonesian nationalists of the 1920s and 1930s made use of the historical memory of the Majapahit Empire as evidence that the peoples of the archipelago had once been united under a single government, and so could be again, in modern Indonesia (Case 2002: 210).

The fall of the Majapahit empire was linked to the Islamization of today’s Indonesia, since the fall of Sumatra’s harbours and the rapid rise of Malacca during the 15^th century had important repercussions not only for the spread of Islam but also for the entire equilibrium of powers in Southeast Asia (Ricklefs 1993: 3-13; Schumann 1999: 434-440; see also Pigeaud 1976). Foreign Muslims had traded in Indonesia and China for many centuries and a Muslim tombstone in eastern Java bears a date corresponding to 1082 (Villiers 2001: 258-262). But substantial evidence of Islam in Indonesia begins only in northern Sumatra at the end of the 13^th century (Villiers 2001: 270-273). By the 13^th century, in the absence of a strong and stable entrepôt in western Indonesia, foreign traders were drawn to harbours on the northern Sumatran shores. The establishment of the first Muslim centres in Indonesia was probably due to commercial circumstances. It was obvious that the coastal states of northern Sumatra and the Malaysian peninsula were the first to be submitted to Islamic influence, since one of the most significant trading routes in Southeast Asian ran through the Strait of Malacca (Villiers 2001: 260). By the 15^th century the beachheads of Islam in Indonesia had multiplied with the emergence of several harbour kingdoms (ruled by local Muslim princes) and by 1526, the majority of Javanese rulers had converted to Islam (Villiers 2001: 282). The rise of Muslim Malacca led to the previously mentioned changes in Java (Villiers 2001: 265-270), as well as to the fall of Malacca to the Portuguese in 1511, often taken as a turning point in Indonesian history.

Over the next century Portuguese efforts were to be directed to securing control of the trade in the Spice Islands (Taylor 2003: 131-132). The Portuguese conquests were accompanied everywhere by missionary work, but this had limited success not only because of Portuguese brutality to the indigenous people (Villiers 2001: 276-280). After almost a century of Portuguese dominance, the Dutch conquered as colonial rulers. In 1602 the Dutch East India Company (Vereenigde Oostindische Compagnie [VOC]) received its charter and began to establish its own commercial monopoly (liquidated in 1799) (van Goor 1999: 149-155; Taylor 2003: 149). The company, the first multinational company so to speak, laid the foundation of the Dutch commercial empire and became the paramount power of the archipelago (on the history of the VOC, see for example: Beelen [2002]). The gradual commercial expansion of European powers from the 15^th to the 18^th century is generally called an “Age of Commerce” (Reid 1990, 1993, 1995, 2000). The Dutch did not arrive with religious demands for conversion or in order to expand their territory: they were first and foremost interested in trade (Villiers 2001: 285-288). They became, however, involved in inner Javanese conflicts from which they emerged triumphant (van Goor 1999: 153, 155, 158).

Netherlands’ India was one of the first Dutch colonies and with the help of its raw materials, the colonial power became affluent. Batavia (founded on the ruins of Jayakarta in 1619), what is known today as Jakarta, quickly became a powerful metropolis (van Goor 1999: 153). In 1830 the Dutch government revised its colonial policy thoroughly, in which they introduced among other things, the “cultivation system” (“cultuurstelsel”), which was to make Java a profitable colony (Dahm 1999: 173-174; Steinberg 1987: 156-158). This system was based on the demand that the whole country was to be considered property of the colonial ruler, and farmers in return for using the land, had to use a fifth of the land for the cultivation of produce deemed suitable for export by the government (Steinberg 1987: 157). The results of this system were different, and it even led to famine and social stagnation, which led to the abolition of the system in 1870 (van Goor 1999: 159-160). From 1908 onwards, the Netherlands extended their realm of power from Java to the whole Indonesian archipelago. Only the province Aceh in the north of Sumatra, managed to resist, but was eventually conquered, too, after a 30-year war (Dahm 1999: 168; van Goor 1999: 159). The Dutch gradually consolidated their hold on the area over two centuries, eventually uniting the archipelago in around 1900 (Steinberg 1987: 292-311). The territorial extent of the Republic of Indonesia is today defined principally by the boundaries of the former Dutch colonial empire in Southeast Asia. The territories now comprising the country had never constituted a single political entity before the establishment of Dutch colonial rule, and their pre-colonial history was marked by the rise and fall of a number of important empires and kingdoms (Taylor 2003: 1-4).

It was only in the 19^th century, that Indonesian societies which had experienced considerable pressure from Europeans were submerged by Western influences (Dahm 1999: 173; van Goor 1999: 165). Colonial developments led to changes in Indonesian society. The growing cities became the home of a new urban way of life and stimulated social change (Steinberg 1987: 301-302). A new elite emerged under the influence of the expanding Western impact. So did a new class of unskilled and semiskilled workers who found employment as domestic servants or as labourers in the light industries that began to develop. These transformations led to the growth of a confident indigenous middle class, which was unwilling to stand for any sign of racist discrimination or inequality from a foreign ruler (Steinberg 1987: 301-302). The beginning of the protest is signalized by two movements which have to be described as proto-nationalistic. On the one hand, the “ratu-adil“-movements (the population hoped for the appearance of a messianic “ratu adil” [fair ruler] who would restore the golden age promised in the Indian concept of the cyclical nature of life). On the other hand, there were the “tarekat” (Islamic brotherhoods), initiatives serving Islamic interests (Dahm 1999: 174-175). This Indonesian nationalism in the 20^th century must also be distinguished from earlier movements of protests: the “Padri War”, the “Java War”, and the many smaller examples of sporadic agrarian unrest had been pre-nationalistic movements, the products of local grievances. By contrast, the nationalism of the early 20^th century was the product of the new imperialism and was part of wider currents of unrest affecting many parts of Africa and Asia (Dahm 1999: 168-202). In Indonesia nationalism was concerned not merely with resistance to Dutch rule but with new perceptions of nationhood, embracing ethnic diversity of the archipelago and looking to the restructuring of traditional patterns of authority in order to enable the creation of Indonesia as a modern state (Vickers 2005: 73-79). By the end of World War I, there were thus a variety of organizations in existence. One of those organizations was the “General Study Club”, founded in 1926 in Bandung, with Sukarno, the later first president of Indonesia as its secretary. He established the “Partai Nasional Indonesia” (PNI) (National Party of Indonesia) in 1927 (Dahm 1999: 184) and made an effort to create a national movement. Upon the end of Japan’s wartime occupation, independence was proclaimed by Sukarno in 1945. The Dutch formally transferred sovereignty in 1949, after a period of armed struggle (Dahm 1999: 229).

Criticizing Western liberal democracy as unsuited to Indonesian circumstances, Sukarno (a standard work on Sukarno is: Dahm [1966]) called for a political system of “democracy with guidance” based on indigenous procedures (Vickers 2005: 144-150). Wessel (2005: 8) reflects on the social repercussions of this decision as follows: “The establishment of Guided Democracy destroyed any remaining hopes of democratic development …” The Indonesian way of deciding important questions by way of deliberation (“musyawarah”) designed to achieve a consensus (“mufakat”) was the procedure at the village level and became the model for the nation, which was tantamount to an integrative state philosophy (Dahm 1999: 231), as was the state philosophy identified by the five pillars of “Pancasila”. In it, each citizen is recognized as having the following rights: (1) monotheism, (2) belief in national unity, (3) principle of humanity, (4) democracy, and (5) social justice (Vickers 2005: 117). Javanese deep-rooted striving for harmony is apparent in the five principles of “Pancasila” (Dahm 1999: 231). Sukarno’s policy was renowned for its chaos and betrayal, and neither the party-based parliamentary system prior to 1959 nor the era of “guided democracy” managed to bring stability to the country (Vickers 2005: 133-138). The increasing randomness of Sukarno’s regime triggered an ostensibly communist attempted coup d’état. This attempted coup failed because of a counter-attack by the army in the course of which, between 100,000 and one million people were killed, especially actual or supposed adherents of Indonesia’s communist party, “Partai Komunis Indonesia“ (PKI) and Chinese (see for example: Leven and Roberts [1999]). This is considered to be one of recent history’s largest politically motivated genocides (a standard work on this catastrophic aftermath is: Cribb [1990]). The causes have been unsatisfactorily researched to date, and as a consequence, it is not possible to establish the exact death toll. In 1996, Sukarno was forced to hand over power to Soeharto, a member of the military.

Soeharto’s initial success was partly based on people’s expectations, which had remained unfulfilled by Sukarno’s policies. Soeharto (on Soeharto, see for example: Vatikiotis 1993: 1-31) was elected for six further five-year terms, and, supported by the military, imposed a repressive regime (Vickers 2005: 197-209). There was no freedom of the press or of expression (Vatikiotis 1998: 107-108). A small number of Soeharto’s family and friends amassed vast wealth, primarily through the exploitation of Indonesia’s abundant natural resources (Vatikiotis 1998: 50-52). He imposed authoritarian rule while allowing technocrats to run the economy with considerable success (Case 2002: 36-38). Soeharto’s social and political system’s slogan was “Economics first, politics later“. The period was nevertheless characterized by rapid economic expansion, particularly after 1970, and this probably helped to legitimize the regime in the eyes of the people (Vatikiotis 1998: 32-59). Achieving a democracy, as established in the constitution, was relegated to second place. Furthermore the military (ABRI) attained an important position in parliament while the position of the parties was severely limited. Soeharto’s policy of allowing army involvement in all levels of government down to village level fostered corruption. His “transmigration” programs (which moved large number of landless farmers from Java to other parts of the country) fanned ethnic conflicts. In the middle of the 1980s, all social organizations and political parties (Law on Mass Organizations) had to recognize the “Pancasila” as ”asas tungaal”, as their only principle. This led to a neutralization of political parties and to a de-politization of society.

From a structural viewpoint, the economic policy under Soeharto led to increasing prosperity and economic progress, which in turn led to intense urbanization, especially in Java (in 1990 a third of the population lived in the cities) (Spreitzhofer 2003: 52). The extension of bureaucracy and increase in power of the state was associated by the population with the increasing prosperity created by the state. During the time of “Orde Baru” (New Order), Javanese culture with its paternalism and its hierarchical social structures were useful tools to obviate demands for democracy and human rights (Vickers 2005: 183). Bureaucrats’ attitude to the people was often described as neo-feudal. The New Order was also accused of social intransigence, i.e. Javanese cultural elements such as the patron-client-ties, dominated (Vatikiotis 1998: 111-112). Nonetheless as early as the end of the 1980s, social division was evident in society; this could be traced back to enormous differences between members of society. It led to initial protests which were increasingly silently tolerated by the military from the 1980s onwards. This demanded political change especially after Soeharto’s fifth re-election in 1988. Even individuals within the political system like Murdiono demanded that de-regulation of the economy have its counterpart in politics. With this, Murdiono supported the idea that increasing complexity in economy required political de-centralization (Vatikiotis 1998: 115).

Prudent economic management enabled Indonesia to record consistently high rates of economic growth (well in excess of the expansion of the population) for more than two decades (Wie 2002: 203-215; Wie 2001: 163-169). This growth, which averaged more than six percent a year between 1970 and 1996, was achieved despite a number of external shocks, including sharp movements in oil prices and in international exchange rates, which affected the terms of trade and the value of the country’s external debt. From a low-income country in the mid-1960s, Indonesia transformed itself into a middle-income country, with an estimated income per head of almost US$1,150 in 1996 (Bird 2001: 45-66). A breakdown of the economy’s growth performance by sector shows that industry was the principal engine of growth (Hall 2000: 155-174; Wie 2002: 199, Figure 7.1). Manufacturing expanded more rapidly than the economy as a whole (Wie 2002: 199, Figure 7.1). The need to ensure matching growth in infrastructure stimulated a sharp acceleration in the rate of growth of the utility and construction sectors. The electricity, gas and water component of GDP expanded by an average of around 14 percent a year between 1986 and 1996, while the construction sector expanded by more than ten percent in the same period (van der Eng 2001: 181-199; Strauss, Beegle, Dwiyanto, Herawati, Pattinasarany, Satriwan, Sikoki, Sukamdi and Witoelar 2004: 1-5). Social change accelerated under the New Order (Cribb 2001: 231-233; Gerke 2000: 135-158; Robison 1996: 79-104; Heryanto 1999: 159-187; Antlöv 1999: 188-207). Along with the decline in the position of traditional aristocracies went the growth of a new bureaucracy, the rise of the army both in politics, administration and in commercial activity, the establishment of Indonesian business calls, and the presence of Chinese business interests, the latter sometimes in association with civilian or military indigenous Indonesian entrepreneurs (Hall 2000: 95-98). These developments suggested that a new (albeit extremely diverse) middle class was emerging, defined in part by economic function, by access to political power, and by a lifestyle of conspicuous consumption (Gerke 1999: 135-158; Robison 1996: 79-104; Heryanto 1999: 159-187; Antlöv 1999: 188-207).

Opposition to the regime started to become more vocal in the mid-1990s (the parliamentary election campaign in May 1997 was exceptionally violent) and was given added momentum by the severe economic crisis that gripped Indonesia in late 1997 (Sadli 1999: 16-27). Soeharto fell from power after widespread rioting in 1998 and has so far escaped efforts to bring him to justice for decades of dictatorship (see for example: Forrester and May 1998: 1-23; Manning and van Diermen 2000: 1-14; Budiman 1999: 41-58; Aspinall 1999: 212-238).

After Soeharto’s resignation in May 1998, Habibie, whose hold on power was never secure (Crouch 1999: 127-148), became president. One of his few notable achievements was the holding of a democratic election, Indonesia’s first for 34 years (Masters 1999: 9-14; Mietzner 2000: 39-57). Despite the numerical strength of the Indonesian Democratic Party-Struggle (PDI-P), the People’s Consultative Assembly (MPR) appointed Abdurrahman Wahid, a moderate Muslim cleric and leader to the National Awakening Party (PKB), as president. Mr Wahid was formally impeached by the MPR on the grounds of incompetence and Ms Megawati

Megawati Soekarnoputri is the daughter of Soekarno, the first president of Indonesia, and has been active in politics since 1987. She assumed leadership of the Indonesian Democratic Party (PDI) in December 1993. Her party won the 1999 parliamentary election, but she was outmanoeuvred in the October presidential election and forced to accept the vice-presidency. However, in July 2001 she assumed the presidency following the impeachment of Mr Wahid. She lost the 2004 elections largely because of the perception that she had failed in her pledge to rid the country of corruption, cronyism and nepotism (commonly referred to as KKN).

The political change eventually should create a fairer and more predictable investment environment. Newly established independent auditors and, eventually, greater central bank independence should make policy implementation and governance more efficient (Gunningham, speech, March 2004)

Conference: “Regulation, Deregulation and Re-regulation in Globalizing Asia”, National University of Singapore, The Public Policy Programme, 22nd until 24th March 2004.

When confidence in the economic structure of some Asian economies sharply deteriorated, the Rupiah’s value plunged in early 1998 (Aspinall, van Klinken, Feith 1999: 1-18; Wie 2002: 235-237). The Asian crisis had begun and Asia fell victim to globalization (see for example: Der Spiegel, 19 Oct 1998: 76-80; Die Welt, 25 Oct 1999: 14; Die Welt, 22 Sep 1999: 21; Financial Times Deutschland, 01 Aug 2002: 26; Financial Times Deutschland, 23 Jun 2000: 34; Frankfurter Allgemeine Zeitung, 15 Dec 1997: 32; Frankfurter Allgemeine Zeitung, 22 Dec 1997: 24).

In the meantime, journalistic and scientific publications on the Asia Financial Crisis are unmanageable. A good source on the internet is: hhtp://www.stern.nyu.edu/~nroubini/asia/AsiaHomepage.html. In general Arndt and Hill offer a fantastic resume of the events. Arndt and Hill (1999), Southeast Asia’s Economic Crisis. Origins, Lessons and the Way Forward. To be highlighted, too, are: Henderson (1998), Asia Falling: Making Sense of the Asian Currency Crisis and its Aftermath. Ibid. (2000) Asian Dawn. Recovery, Reform and Investing in the New Asia. Kenward, L. R. (2002), From the Trenches – The First Year of the Indonesian Crisis of 1997/98 as Seen from the World Bank’s Office in Jakarta. Jakarta, Centre for Strategic and International Studies. Radelet, S. C. Wing, T. W. (2000), “Indonesia: A Troubled Beginning”, in: Jeffrey D. Sachs and Klaus Schwab (eds.), The Asian Financial Crisis – Lessons for a Resilient Asia (Cambridge: The MIT Press): 165-184.

Speculative attacks on various Asian currencies which were perceived as overvalued were directly responsible for the crisis. The more profound causes were seminal in creating a bubble economy in which negative current accounts and an increasing short term foreign indebtedness deterred investors (Wie 2002: 237-240). These had fuelled up the market euphoria with money diverted from Latin America to Asia after the 1995/95 Mexican crisis (during the first term of 1996 credits worth more than US$34.7 billion poured into the region) (Tagesanzeiger, 06 Jan 1997: 23).

Ten weeks after the impact of the Thai devaluation was beginning to be felt in Indonesia, the government of Indonesia invited the International Monetary Fund (IMF)

http://www.imf.org/external/ns/search.aspx?NewQuery=Indonesia+%2B+1998&Site+Search.x=0&Site+Search.y=0 (12 August 2005)

By then Soeharto’s days were numbered (Aspinall 1998: 130-153). Riots began to break out and demonstrations demanding him to step down were on the rise (see for example: Forrester and May 1998 for the fall of Soeharto and events surrounding the crisis). The announcement on May 4^th of a 71 percent increase in fuel prices and a 20 percent increase in electricity prices provoked social unrest. It culminated in two-day rioting (which especially targeted the Chinese minority) that left parts of Jakarta devastated. As efforts to shore up his power were unsuccessful, President Soeharto stepped down on May 21^st (Manning and van Diermen 2000: 1-14; Lee 1999: 12-40). The effects of the financial and economic crisis were severe (Ananta 2002: 1-27; Perdana and Gaduh 2003: 209-225). Inflation reached 77 percent in 1998. In 1998, real GDP contracted by an estimated 14.7 percent. The economy bottomed out in mid-1999, and real GDP growth for the year was an anaemic 0.3 percent. The Rupiah, which had been in the Rp2,400/US$1 range in 1997 reached Rp17,000/US$1 at the height of the 1998 violence and returned to the Rp8,000-10,000/US$1 range since then with significant volatility (Sadli 2000: 16-27). Although a severe drought in 1997-1998 forced Indonesia to import record amounts of rice, overall imports dropped precipitously in the early stage of the crisis in response to unfavourable exchange rates, reduced domestic demand and absence of new investment. Although reliable unemployment data is not available, formal sector employment contracted significantly (Nooteboom and Kutanegara 2002: 5-6; Marks 2004: 158). The sharp drop in output following the crisis also damaged corporate balance sheets and affected turnover and profitability. After growing at around seven percent per year in the two decades preceding the crisis, Indonesia’s output contracted 15 percent over the year to the June quarter of 1998. Expenditure shrank, with contraction most marked in private investment, as undercapitalized banks virtually ceased credit to corporations. Falling investment and diminishing confidence reduced consumption, further damaging investment and employment prospects. As in most severely affected crisis economies, the lower exchange rate did not immediately benefit exports (Pardede 1999: 3-39). However, activities based on natural resources largely withstood the crisis.

In particular, minerals and energy relied less on banking and financing and external creditors, and their costs benefited from the lower exchange rate. In 1997 and early 1998 agriculture suffered from El Nino induced drought, but later recovered.

While the social impact of the crisis is expected to continue beyond the crisis, the general indicators suggest that the crisis has brought the social condition back to the situation in the early 1990s (Feridhanusetyawan 1999a: 2-11). While it remains controversial, the level of poverty in 1998 was again comparable to that in 1990 (Feridhanusetyawan 1999b: 41). The 1997 financial crisis interrupted two decades of impressive economic growth, which lifted Indonesia’s per capita income from US$310 in 1976 to US$1,144 in 1996 (Department of Foreign Affairs and Trade East Asia Analytical Unit 2000:1). Strong growth also produced major structural changes in the Indonesian economy, and made real gains in raising living standards and reducing poverty. Per capita GDP rose sharply but by 1999 had slipped back 40 percent to US$ 694 due to the 70 percent depreciation of the Rupiah since 1997 and falling GDP in 1998. Purchasing power parity, PPP, estimates of per capita per GDP fell by a smaller but still substantial 24 percent, from I$ 3,700 to I$2,800.

International dollars ( I$) measure average per capita income of a country in terms of its purchasing power in the US economy; that is, in 1999 the average Indonesian received income sufficient to buy US$ 2,800 worth of goods and services at US prices. Because nominal exchange rates do not always reflect international differences in relative prices, PPP rates are used to allow a standard comparison of real price levels between countries and hence allow better comparisons of average income levels between economies.

Early assessments on the social impact of the crisis predicted that the improvement in social welfare for the last three decades was washed out during the first year of the crisis in Indonesia (on the social impact of the crisis, see, for example: Feridhanusetyawan 1999; Perdana and Gadu 2003; Breman and Wiradi 2002 present the social impact of the crisis based on anthropological fieldwork in two villages in West Java). The labour market has been remarkably flexible in adjusting the crisis so that the increase in unemployment has been small, supported by high labour turnover and sharp real wage decline (Marks 2004: 158). The flexible labour market also provided a buffer to shrinking output, employment and profits, with the agricultural sector absorbing a large share of workers dismissed from the urban economy. Rural employment growth increased from 0.6 percent before the crisis to 2.3 percent after it. Growth in urban employment slowed down significantly. Many urban workers also moved into the informal sector, where employment grew by around 7 percent during 1997-98, to 65.4 percent of total employment. Real income has declined, but people have maintained their consumption. Despite the generally negative impact of the crisis on employment and consumption, some parts of the community adapted to the crisis (known as “krismon” [krisis moneter]) better than others (Nooteboom and Kutanegara 2002: 3-32). Living standards fell sharply between 1996 and 1998, with the number of people living below the poverty line increasing by around 65 percent, from around 11 to 18 percent of the total population, depending on the survey (Strauss, Beegle, Dwiyanto, Herawati, Pattinasarany, Satriawan, Sikoki, Sukamdi and Witoelar 2004: 1-5, 70-82). However, this was still well below the poverty rate of 40 percent recorded in the 1970s.

After contracting sharply in 1998, Indonesia’s economy returned to positive growth in 2000 led by stimulatory macroeconomic policy, a low exchange rate, stable prices, lower interest rates and stronger private consumption (Basri 2004: 39-60).

Indonesia’s post-crisis is marked by drastic change of a multidimensional nature, not only economic change (Basri 2004: 39-60; Basri, speech December 2004, Jakarta [MarkPlus: Indonesia in 2004]). The political, economic and institutional changes Indonesia is facing are monumental in historic terms. Reform is gradual and a result of compromises (Jones 2004: 23-38). Indonesia’s economic growth rate is still the lowest among that of the five crisis affected countries

Indonesia, Malaysia, Philippines, Thailand, and the Republic of Korea.

Although, Indonesia has finally achieved macroeconomic stability (seven years after having suffered from unprecedented economic turbulence), there is little evidence that increasing macroeconomic stability and reduced vulnerability is translating into higher growth. Though Indonesia continued to have the advantages of a large labour force, abundant natural resources and modern infrastructure, private investment in new projects largely ceased during the crisis (Bird 2004: 93-107). Despite being the only Asian member of OPEC, Indonesia’s fuel production has declined significantly over the years, owing to aging oil fields and lack of investment in new equipment. As a result, despite being an exporter of crude oil, Indonesia is now a net importer of oil and had previously subsidized fuel prices to keep prices low. Furthermore, although Indonesia has a market-based economy the government still plays a significant role, it owns more than 164 state-owned enterprises and administers prices on several goods, including fuel, rice and electricity (Basri 2004: 39-60). A fact, which besides the monopoly position of some domestic companies and the legal uncertainty of investments, deters foreign investors from channelling funds into the country.

In late 2005 Indonesia faced a “mini-crisis” due to rising oil prices and imports. The currency reached Rp12,000/US$1 before stabilizing. The government was forced to cut its massive fuel subsidies, which were to cost US$14 billion for 2005, in October. This led to a more than doubling in the price of consumer fuels, resulting in double-digit inflation. However, this situation did not lead to social unrest as it was expected. As of early 2006, Indonesia’s economic outlook is more positive. Economic growth accelerated to 5.1 percent in 2004 and reached 5.6 percent in 2005 and real per capita income has reached pre-crisis levels. Growth is driven primarily by domestic consumption, which accounts for roughly three-fourths of Indonesia’s gross domestic product and the Jakarta Stock Exchange (JSX) was one of the best performing market in Southeast Asia in 2004, up some 42 percent. Problems that continue to put a drag on growth include low foreign investment levels, bureaucratic red tape, and widespread corruption (Fritzen, speech, March 2004; Westcott, speech, March 2004).

Conference: “Regulation, Deregulation and Re-regulation in Globalizing Asia”, National University of Singapore, The Public Policy Programme, 22nd until 24th March 2004.

Future growth can be expected in several key areas in Indonesia. Due to growing demand for automobiles domestically and interest of manufacturers to use Indonesia as a hub for car production and export, Indonesia is being rediscovered (DM, interview December 2004). Growing expectations of the Indonesian consumer beyond the Toyota Kijang Models has led car companies to adapt to demands.

Bfai (Bundesagentur für Außenwirtschaft) (2004), Zukunftsmarkt Asien-Chancen einer aufstrebenden Region, p. 14, Köln, Germany

Unfortunately, Indonesia, traditionally an exporter of oil and gas, does not benefit from the rise in global oil prices as it consumes nearly all its oil whose supply it utilizes in less than technical up to date and economical ways. A consistently stated reason (given in interviews for this work) why Indonesia still receives comparable low foreign direct investments is that nominal (not real) wages (versus actual earnings) have increased significantly since the end of the Soeharto regime and that this lead to high labour costs (per hour) and unit labour costs which make manufacturing in Indonesia even for Indonesian companies rather unattractive.

Puma, for example, moved manufacturing from Indonesia to India where labor unit costs are not lower than in Indonesia, but where predictability of legal decisions and legal security for the company in case of copy-right infringements are offered (DM, interview November 2004).

These contemporary findings and the preceding explanations on cultural forms (that range from those of the old Malay, through the traditional Javanese and Balinese forms, which are heavily influenced by the Hindu stories of the Mahabharata and Ramayana, to cultural forms that have evolved from this complex heritage) exhibit Indonesia’s rich diversity that one is confronted with. This multifaceted cultural starting position and its impact on consumer behaviour in Indonesia will be the subject matter of Part C. In Part B the theoretical starting points of this work will be presented.

In order to scrutinize the apparent trend toward the often criticized homogenization of markets, three aspects of globalization processes must be distinguished. The first aspect is the globalization of demand, that is the apparent convergence of consumer behaviour and marketing environments worldwide (market drivers). The second aspect is the globalization of supply and competition, with the progressive shift from domestic industries operating in national markets protected by non-tariff barriers, to global industries (competitive drivers).

http://media.wiley.com/product_data/excerpt/24/07879653/0787965324.pdf (23 April 2005)

The validity of the assumption concerning cost and competitive drivers seems to be justified. However, the presence and effect of market drivers is doubtful in the event of non-existent global homogenization of consumers and of their needs and wishes. Furthermore it is important to recognize that it is not only economic forces which shape global business. Particularly in the past several years, many political events have affected the nature of global competition (political drivers) (Kotabe and Helsen 2004: 3-8). The demise of the Soviet Union, deregulation and privatization of state-owned industries, also in Indonesia (AFX 2005a; Prasetiantono 2004: 141-157) changed market environments around the world.

Obviously these trends have been dependent on several factors such as the continued lowering of trade thresholds for example General Agreement on Tariffs and Trade (GATT) and recently the European Union and ASEAN Free Trade Area (AFTA) (Johansson: 12-16; Meier and Roehr 2004: 6 -7; Backhaus, Büschken and Voeth 2005: 3-12). In a freely competing world market, many organizations are forced to enter the international competitive arena in order to create synergies and lower costs by economies of scale (Johansson 2000: 15). The figure below (B-1) depicts the four drivers of globalization.

Figure B-1 Globalization Drivers

The reasons (which can be differentiated chronologically) behind competition and cost drivers have typically been based on internal business economic strategies (Kotabe and Helsen 2004: 297-325). The first phase, in the 1960s and 70s, was initiated by multinationals which delegated much of their authority to their local generating companies in order to be as close to the market as possible. The country managers, being lords of local fiefdoms, exploited their authority by emphasizing that decentralization was the most relevant strategy in order to be able to react properly to their unique local market circumstances (Jeannet and Hennessey 2001: 686-688; Cateora and Graham 2005: 337; Backhaus, Büschken and Voeth 2005: 23-26). Also, MNCs which grew fast worldwide in the 1960s and 1970s did so by granting a large degree of decision-making autonomy to their subsidiaries in their home markets (Deresky 2006: 293-294). Subsidiaries were asked to replace the corporate values and organizational practices of the parent company and were also encouraged to adjust completely to the local market (Usunier and Lee 2005: 229). Later on, subsidiary managers used the message of the uniqueness of their market to defend specific, nationally designed marketing policies. Hence, they defended their autonomy even at the expense of sometimes rather fallacious arguments (MJ, informal discussion, February 2005).

Then in the 1980s, under the doctrines of McKinsey and the like, a big centralization move was initiated (von Simson 1992: 28).

http://harvardbusinessonline.hbsp.harvard.edu/hbrsa/en/hbrsaLogin.jhtml;jsessionid=DGAB2C15YK5SCAKRGWCB5VQBKE0YIIPS;$urlparam$kNRXE2ULYRiR52NiwJYH5SF?ID=90412&path=arc&pubDate=July%201990&_requestid=74321 (21 August 2005)

The following figure juxtaposes time, organization and management strategies typical of that time. In the 1960s and 1970s the then-expanding large corporations espoused the view that local markets had to be conducted locally (decentralization). These strategies were removed owing to the factors already mentioned, in favour of views that posed centralization of decision-making at the centre of company organization (centralization). Notwithstanding, these strategies did not always lead to the expected results. In recent years, after a long period of standardization, companies have started to give slightly more weight to localization, especially with regard to advertising and branding (Usunier and Lee 2005: 230). It is precisely the most successful companies that, according to Fortune, (“The World’s Most Admired Companies”), are, today, those which have struck a balance between centralization and decentralization.

Fortune Europe Edition, 13 March 2006

Figure B-2 Strategies and timeline

Before the appearance of Buzzell’s (1968) classic article, “Can you standardize multinational marketing?”, natural entry barriers related to culture were seen as very high, requiring adaptation to national markets and offsetting the potential advantages of scale economies.

http://harvardbusinessonline.hbsp.harvard.edu/hbrsa/en/hbrsaLogin.jhtml;$urlparam$kNRXE2ULYRiR52NiwJYH5SF?ID=83308&path=arc&pubDate=May%201983&_requestid=75511 (23 August 2005)

In the context of the centralization and standardization strategy, the fundamental dilemma of globalizing is apparent. On the one hand, globalization is stimulated by production processes that are consistent throughout the organization to save costs; on the other hand, one finds the obvious responses from sales and marketing people to adapt their products and services to the needs of local consumers. This dilemma has not vanished, despite the fact that three remarkable global developments have occurred since the 1980s. Firstly, a further increase of global integration, especially in the late 1990s, occurred across cultural and company borders with the merger and acquisition wave (Kotabe and Helsen 2004: 285). Secondly, and also in the 1990s, there was a fundamental increase in the mobility of people. Thirdly, there has also been a fundamental breakthrough of both mass media (aimed at particular groups, like MTV and CNN) and the internet. Obviously, this has affected the internationalization of marketing. However, it remains reasonable to believe that these three developments will not lead to converging consumer tastes and in the long run to the emergence of a global consumer. This has not been the case to date and there are no signs of this kind of consumer even existing. While artificial entry barriers are disappearing, global markets remain more apparent than real when one looks at consumption patterns. Globalization is driven much more by increased global competition and simultaneous global restructuring processes (Kotabe and Helsen 2004: 3-8) than by consumers. Additionally, patterns of consumption are simply difficult to globalize without any adaptation (Kotabe and Helsen 2004: 131-174).

There is no evidence to claim that the globalization of marketing goes hand in hand with corresponding processes of global consumer behaviour and consumption patterns of convergence, even homogenization. One must be reserved about drawing the conclusion that, in the course of time, a global consumer will emerge as a result of globalization processes. Global markets evolve more through globalization on the supply side than on the demand side (which is much less willing to stifle its own unique needs and wants). According to Clark (1987) the customer will never want to be a universal punter at the mercy of a global producer.

Ever since Levitt’s (1983) article on “The Globalization of Markets”, academics and practitioners have debated whether international markets are becoming homogenous, and if the international marketing paradigm ought to change from highlighting national differences to exploring international similarities.

http://harvardbusinessonline.hbsp.harvard.edu/hbrsa/en/hbrsaLogin.jhtml;$urlparam$kNRXE2ULYRiR52NiwJYH5SF?ID=83308&path=arc&pubDate=May%201983&_requestid=78308 (13 August 2005);

Conversely, in the market for industrial goods (business-to-business) competition is global for a whole series of activities, and products in this sector tend to be of a global nature, such as in high-technology (aerospace, aviation, and telecommunications), industrial goods (machinery) and raw materials (basic products). However, it is less so in the case of the consumer goods being focused on here, and even less so in the case of services (credit cards, advisory services, and so on).

Yet others assert that the existence of global markets is “a myth”. They point to the many contradictory trends around the world suggesting stark differences in national markets, and hence the need for adaptation and customization of international marketing based on individual country differences (Quelch and Hoff 1986; Douglas and Wind 1987). Despite these arguments and counter-arguments, it is now widely known that consumers have not globalized and companies are adopting increasingly local approaches in order to reach their global strategy goals. Even in the luxury goods market, products usually thought to be truly global and acquired by a globally similar elite customer base (Kyojiro 2004: 32-48), Chang and Liao (2004) have shown for Louis Vuitton the enormous differences in brand image, buying and usage patterns of luxury goods in Taiwan, Hong Kong and Japan, three, at least geographically, close markets.

Marketing professionals are becoming increasingly aware of the need to take account of culture when working in diverse markets (Usunier and Lee 2005; Johansson 2000: 57). To their dismay, established theories break down and are insufficient when organizations are faced with new global markets with different cultural orientations. The following example will outline the theoretical debate explained, by means of highlighting the dilemma of global strategies of the Swedish furniture concern, IKEA.

IKEA, with operations in Southeast Asia in Singapore and Malaysia, is often cited as an example of a company with a successful marketing strategy given the globalization of world markets. However, IKEA had to learn that consumption patterns and way of life regarding household equipment, furniture and related items remain significantly different, according to the consumers’ cultural backgrounds. This can be witnessed by comparing IKEA customers in Germany with their counterparts in Singapore and Malaysia, where customers perceive IKEA as a prestigious European brand and prefer not to assemble the furniture themselves as wished for by IKEA (informal discussion with IKEA staff, Singapore 2004). IKEA, acknowledging its perception as a European status brand, offers all electric goods with European sockets in order to enhance its up-market image by appearing distinctly European (although these electric goods are manufactured outside Europe). This illustrates the paradox of globalization, based on the rather harmonious coexistence of global and local patterns. Thus, IKEA succeeds globally in local ways, while maintaining a strong Swedish brand image and branding its items of furniture with names that sound strongly Nordic. Finally it is apparent that IKEA’s standards and processes are universalized but there is room for local adaptation as desired by consumers. This strategy has been named “contingency strategy” in this thesis and will be fully elaborated on later. Contingency strategy here means when local adaptation is possible but not absolutely necessary. However, customization to local peculiarities promises more success (Demus 2006: 48-49).

Finally it should be reiterated that the encounter between companies that are increasingly globally operating, and consumers who remain largely local in their attitudes and preferences is the central paradox of the globalization of markets and displays the general line of disagreement. In view of the reality of the situation it appears contradictory that companies still seem to maintain such a strong paradigm for action emphasis on globalization since consumption patterns are clearly not globalizing, and adjusting to global competition is reconcilable with tailoring products and marketing strategies to national markets. Several reasons are cited for this view discussed at company-level. First, many companies believe that standardization will result in higher performance (Zou and Cavusgil 2002). The standardization of promotions and product is perceived to affect both aspects of performance (Kotler, Ang, Leong and Tan 2003: 391). However, empirical findings show that a firm’s performance is indifferent to standardization versus adaptation, being dependent on the match between strategy and context (Fortune 2006: 33-46)

Fortune, Europe Edition, 13 March 2006

“… the way global decisions are conceptualized, refined, internally communicated, and, finally implemented in the company’s international network have a great deal to do with their performance.” (Kashani 1989: 92)

Local managers naturally tend to emphasize local consumption patterns and marketing environments. Regardless of these motives, the following facts are to be observed. The headquarters of successful global companies are flexible rather than authoritarian in dealing with their subsidiaries’ assumed arguments (Demo 2006: 48-49). Artificial entry barriers related to duties and standards are now being progressively replaced by natural entry barriers related to scale and experience. For international marketing, culture-related experience is all the more important since the natural entry barriers relating to consumer behaviour and marketing environments will diminish gradually and only in the long term. Culture-related differences, for instance, will remain. Therefore, global marketing strategies must be implemented cautiously, especially in culture-bound industries: local knowledge has to be generated either by research, organizational learning and human resource management or by acquiring local companies. Globalization belongs to the realm of organizational discourse rather than to actual international marketing. Rather than a hard global marketing strategy, it is possible to adopt a semi-global i.e., an intercultural marketing strategy which has basically the same goals but is more respectful of local culture and attempts to serve purely local segments. Against this background, the question arises as to what is understood by the concept of international marketing.

The thesis follows the underlying philosophy that successful companies should standardize marketing programs wherever possible, and customize wherever necessary (strategy of differentiated standardization or contingency strategy). Conversely, global marketing strives to attain worldwide coordination, rationalization and integration of all marketing activities including target market selection, packaging, promotion and sales programmes (Douglas and Craig 1989). Although many companies, such as Procter & Gamble, are transforming themselves to become global companies by rationalizing their brand and product portfolio and developing integrated global marketing by altering their company structures, they still see the importance of local approaches and products. And this trend is apparently implemented increasingly in emerging markets, such as Indonesia. Thus, in the case of Indonesia, international marketing is seldom reincarnated into integrated global marketing since consumers are the focus and they are simply not global. As one can see, although international marketing is closely tied to the globalization of trade and markets, the existence of global marketing is questionable, as is the existence of a global consumer. Regional integration, the emergence of the triad power, technological advances and free-market policies have led to global sourcing and global competition for companies, but have not resulted in a global consumer as argued by Sheth (1992).

No previous generation has had so many options for constructing lifestyles as today. In a world where the consumer has ever more opportunities for choosing and constructing lifestyles, the validity of the axiomatic economic models, whereby the purchaser makes what appears to be consistent and logical buying decisions (homo oeconomicus), is breaking down. Purchasing decisions are extremely culturally bound and no longer correlate to the traditional theory of consumer choice which encompasses four elements about the buyer and the market outlined by Anglo-Saxon economists. Why consumers purchase a certain product cannot solely be traced back to (1) the buyer’s marginal disposable income, (2) the price at which the goods or services can be purchased, (3) the tastes and preferences of the consumer and (4) the belief that consumers behave rationally and do the best for themselves. They have to be replaced by models which explain how and why a new generation of buyers, with different and frequently changing tastes and preferences (visible layers of the structuralist model of culture), think and act. The number of these lifestyle choices has increased dramatically. Furthermore, increasing wealth and prosperity allows the consumers to choose from this variety of lifestyles and respective goods. New production techniques provide the possibility of offering certain products for even the smallest niche markets (micro segments), while (due to worldwide interconnectedness) goods and wares are available worldwide, whose markets till now were extremely limited geographically. As a consequence, reality today is more complex as international trade becomes more and more part of daily life. Although for certain products, such as transportation vehicles (as outlined in the figure below [B-3]), demand can be linked to certain income levels, for most other products these general development stage trends have outlived their usefulness. For example, one would link the private use of mobile phones in the 1990s with the stage of a fully industrialized economy whereas today in Indonesia the majority of people are avid users of mobile phones irrespective of income (IS, interview October 2004; RD, interview December 2004).

Figure B-3 Development stages of motorization

According to this model, world citizens who achieved a per capita income of US$1,000 PPP, used mass transport vehicles such as busses and bicycles in particular; from US$3,000 PPP upwards, people used more motorbikes and tricycles, such as the so-called “tuk-tuk” in Thailand or “bemo” in Indonesia. A US$5,000 PPP and upwards per capita income, means people increasingly use vehicles with an open loading surface such as pick-ups. The purchasing threshold for passenger cars was circa US$7,000 PPP. With knowledge of the correlation between development stages of motorization and per capita income, certain growth figures of GDP can be translated into future sales potential with the aid of various prognosis techniques. Higher income increments enable faster consumption of more valuable technologically developed goods. The prognoses are complicated by uncertainty since the probability of the appearance of future environmental conditions is unknown. In addition to this, the purchase of certain goods is culturally dependent as is the use of income in general. Thus the assumption is widespread that when a country’s per capita income is less than US$10,000 PPP, much of the income is spent on food and other necessity items, and very little disposable income remains. However, once per capita income reaches US$20,000 PPP, the disposable portion of income increases dramatically because the part of the income spent on necessities does not rise nearly as fast as income increases. As a result, people around the world with per capita income of US$20,000 PPP and above have considerable purchasing power. This assumption is easily comprehensible but, however, the following continuation of thought is not. It is assumed that with this level of purchasing power (US$20,000 PPP), people, regardless of their nationality, tend to enjoy similar educational levels, academic and cultural backgrounds, and access to information (see, for example: Kotabe and Helsen 2004: 9). This, however, does not lead to worldwide comparable consumer behaviour, or to the emergence of a global consumer. Even the assumption that the same income would lead to a unification of cultural backgrounds, which represents a mandatory prerequisite for the emergence of such a consumer is as absurd and detached from reality, as the following statement:

“As these cultural and social dimensions begin to resemble each other in many countries, people’s desire for material possessions, ways of spending leisure time, and aspirations for the future become increasingly similar.” (Kotabe and Helsen 2004: 8).

Although the convergence of consumer needs at the macro level may be true, i.e. from a certain per capita income and upwards, more cars are purchased, it does not necessarily mean that individual consumers will adopt all the products from around the world which are associated with a certain income level. Furthermore, products and their importance are interpreted differently. What is more, the same goods may be purchased but for completely different reasons, as was demonstrated in the case of Indonesia. In fact, globalization would tend to emphasize this fact since the range of goods available in every field has dramatically increased. Globalization does not suffocate local cultures, but rather liberates them. In other words, thanks to market globalization, not only have people become more receptive to new things, but people also have a much wider, more divergent set of goods and services to choose from to shape their own individual preferences and lifestyles. In other words, the divergence of consumer needs is taking place at the same time and forms the basis of a glocal consumer culture.

Marketing as a discipline of study and as a profession developed in the United States; most of the techniques utilized in marketing were originally created and employed there (Onkvisit and Shaw 1985: 5). The American Marketing Association defines marketing as “… the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals”.

(http://www.marketingpower.com/mg-dictionary-view1862.php? (12 May 2005)

What marketing has to achieve is the creation of wealth through the relationships between people and what they value (Carvens and Piercy 2004: 5). Marketing as a discipline had and still has less significance when goods are scarce and demand exceeds supply (Kotler, Ang, Leong and Tan 2003: 105-107) and developed as competitive markets shifted in the buyers’ favour. Peter Drucker (1973: 64-65) explains the aim of marketing is to make selling superfluous. He adds:

“There will always, one can assume, be need for some selling. […] The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer base who is ready to buy. All that should be needed then is to make the product or service available.” (Drucker 1973: 64-65)

Consequences of this idea are that marketing must know and understand customers so well that the product or service suits them and sells itself. However, in many cases marketing strategies fail on home markets, not to mention on foreign and culturally diverse ones, where the propensity for failure has never been greater (Trompenaars and Woolliams 2004: 3). Onkvisit and Shaw (1985: 5) remark that it is rather surprising that firms which generally go to great lengths to study their American customers in order to find the best way to communicate with them, have generally not exhibited the same kind of diligence and attention when they venture abroad.

The following figure summarizes a simplistic marketing system [sistem pemasaran]. The system comprises a collection of sellers (for example an industry) and a collection of buyers to the market. Sellers and buyers are connected by four flows whereby the sellers send goods, services and communications (ads, direct mail, etc.) to the market and in return receive money and information (attitudes, sales data). The inner loop shows an exchange of money for goods and services; the outer loop shows an exchange of information.

Figure B-4 A Simple Marketing System

A key task of the marketer is to recognize the ever-changing nature of needs and wants [keinginan] (for example, the requirements of Indonesian consumers [konsumen] altered during the financial crisis in such a way that due to financial constraints buying items in small quantities - for example, individual sachets of shampoo - was deemed necessary) (IS, interview October 2004; AS, interview November 2004). Increasingly, the goal of marketing has been expanded from sensing, serving, and satisfying individual customers to taking into consideration the long-term interests of society (corporate social responsibility - CSR). Kotler describes this as: “… to determine the needs, wants and interests of target markets … in a way that preserves and enhances the consumer’s and the society’s well-being (1997: 27). Some companies have already adopted this wider outlook in Indonesia, such as Unilever’s “Clean Brantas River project”.

http://www.unilever.com/Images/2003%20Cleaning%20up%20the%20Brantas%20River%20in%213 5526.pdf (14 April 2005)

The marketing manager’s task is to plan and execute programs that will ensure a long-term competitive advantage for the company. The task has two integral parts: determining of specific target markets [pasar-pasar sasaran], and secondly marketing management [manajemen pemasaran], which consists of manipulating marketing mix [kombinasi pemasaran]elements to best satisfy the needs of individual target markets. Characteristics of intended target markets are of critical importance to the marketer and can be summarized by the so-called eight Os: occupants, objects, occasions, objectives, outlets, organization, operations, and opposition (Kotler 1994: 174-175).

Characteristics of target markets

Occupants are targets of the marketing effort. The marketer must determine which customers to approach and also define them according to numerous dimensions, such as demographics (age, sex, nationality), geography (country, region, city), psychographics (attitudes, interests, and opinions), or product-related variables (usage rate and brand [merek] loyalty). Objects are the things being bought at present to satisfy a particular need, such as services, physical objects, ideas, organizations, places and persons. Objectives are the motivations behind the purchase or adoption of the marketed concept. Many customers look for hidden value in the product they purchase, which may be expressed. Occasions are the circumstances in which occupants can buy objects. Outlets are places where customers expect to be able to procure objects or to be exposed to messages about them. Organization describes how the buying or acceptance of an idea takes place. Organization expands the analysis beyond the individual consumer to the decision-making unit (DMU). The DMU varies in terms of size and its nature from relatively small and informal groups like a family, to large groups (more than ten people), to formal buying committees. DMUs in Indonesia, as in other Southeast Asian countries, seem to be larger in size as, for example, the extended family can be involved in buying decisions (Schütte and Ciarlante 1998: 50-51). Operations represent the behaviour of the organization buying products and services. Opposition refers to the competition to be faced in the marketplace. Analyzing the eight Os, and bearing in mind other uncontrollable factors in the environment, the marketer must select the markets at which efforts will be concentrated.

The marketing mix

Analysis of the characteristics of the target market enables the specification of the marketing mix, or the four Ps [empat P]: product [produk], price [penetapan harga], place [penempatan], and promotion [promosi] (Perreault and McCarthy 2002; Cravens and Piercy 2004: 38-39). Kotler, Armstrong, Saunders and Wong (1996: 96) define the marketing mix as follows:

“We define the marketing mix as the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to influence the demand for its product. The main possibilities gather into four groups of variables known as the ‘four Ps’: product, price, place and promotion.” (Kotler, Armstrong, Saunders and Wong 1996: 96)

Each consists of a sub-mix of variables, and policy decisions must be made on each. Product policy is concerned with all the elements that make up a product or service. All possible tangible characteristics (such as the core product and packaging) and intangible characteristics (such as branding and warranties) are included. Many products are a combination of a concrete product and the accompanying service. Communication policy uses promotional tools to interact with customers, middlemen, and the public at large. The communications element consists of these tools: advertising, sales, promotion, personal selling, and publicity. Because the purpose of all communications is to persuade, this is the most visible and sensitive of the marketing mix elements. Pricing policy determines the cost of the product to the customer. Price is the only revenue-generating element of the marketing mix. Distribution policy covers the place variable of the marketing mix and has two components: channel and logistics management. Channel management is concerned with the entire process of setting up and operating the contractual organization, consisting of various types of middlemen (such as wholesalers, agents, retailers, and facilitators), while logistics management is focused on providing product availability at appropriate times and places in the marketing channel. Place is the most long term of all the marketing mix elements, and the most difficult to change in the short term. The following figure shows the particular marketing tools under each “P”.

Figure B-5 The four Ps: the marketing mix

Marketing process stages

The actual process of marketing consists of four stages: analysis, planning, implementation, and control (Lambin 2000: 424-451). Analysis begins with collecting data on the eight Os and using various quantitative and qualitative techniques from marketing research. Data sources will vary from secondary to primary, internal to external (to the company), and informal to formal. The data is used to determine company opportunities by screening the environment checked against the company’s resources to judge their viability. Planning refers to the blueprint generated to react to and exploit the opportunities in the marketplace. The planning state involves both long-term strategies and short-term tactics. A marketing plan developed for a particular market includes a situation analysis, objectives and goals to be met, strategies and tactics, and cost and profit estimates. Additionally it includes the formation of an organizational structure or adjustments in the existing one congruent with the execution of the plan. Implementation is the actual carrying out of the planned activity. If the plans drawn reflect market conditions, and if they are based on realistic assessments of the company’s suitability to the market, then implementation will be a success. Concurrently, control mechanisms must be put into effect to monitor environmental forces, competitors, channel participants, and customer receptiveness.

Figure B-6 Marketing analysis, planning, implementation and control

These marketing process basics (eight Os, four Ps and marketing process) do not vary, regardless of the type of market one is planning to enter or to continue operating within. They have been called the technical universals of marketing (Czinkota and Ronkainen 2004: 20). The different environments in which the marketing manager must operate will give varying emphases to the variables and will cause the values of the variables to change. The awareness of different environments brings us to the international perspective of marketing.

The business environment is changing and firms cannot afford to ignore international markets. The increasing dependency of nations around the world on each other’s goods and services has raised awareness among companies of the need for an international outlook in their approach to business and marketing. Compared to international trade and export marketing, international marketing is a more recent phenomenon (Johansson 2001: 4-8). It has grown since World War II and presumably was a consequence of the demise of colonialism and the recreation of numerous independent nations (Sheth and Parvatiyar 2001: 18). However, the phenomenon is not entirely new. Products have been traded across borders throughout recorded civilization, extending back beyond the Silk Road that once connected East with West from Xian to Rome on land and the recently excavated sea trade route between the Roman Empire and India which existed 2000 years ago (Ptak 1999: 112-140). What is relatively new about the phenomenon, apparent in large U.S. companies in the 1950s and 1960s and in European and Japanese companies in the 1970s and 1980s, is the large number of companies with interrelated production [produksi] and sales operations located around the world (Kotabe and Helsen 2004: 1). This geographical expansion of corporations takes us to the definition of international marketing. The classic understanding of the concept and content of international marketing is reflected in the definitions given in literature. The following classifications stem from American and European literature.

In general, definitions in international marketing literature are characterized by an emphasis on crossing national borders and run parallel to traditional definitions of marketing. This hazy distinction, a mere extrapolation of familiar concepts from the national to the international sphere, would mean that no in-depth treatment of international marketing is really indispensable. However, the difference between international and domestic marketing does not lie in the above-presented theoretical concepts of marketing but in the environment within which marketing strategies and plans must be implemented (Cateora and Graham 2005: 10).

International marketing is that segment of business concerned with the planning, promotion, distribution, pricing of the goods and services desired by intermediate and ultimate consumers internationally (Albaum et al. 1998; Onkvisit and Shaw 1993; Mühlbacher et al. 1999).

The definition of international marketing is different from marketing only in the fact that goods and services are marketed across political borders. Kahler and Kramer (1977), too, and Bradley (1991) regard crossing national borders as the central characteristic of international marketing, without an immediate link to the market and consumers. According to Meffert and Bolz (1994: 23) international marketing is the analysis, planning, execution, coordination and control of market related activities of a company operating in more than one country.

Strategies in international marketing

By and large, literature presents two distinct trends in marketing outside domestic home markets, i.e. international marketing, implemented as (1) multinational or multi-domestic marketing, and (2) global marketing (Jeannet and Hennessey 2001: 4-6, 10-11; Kotabe and Helsen 2004: 16-17; Johansson 2000: 8-12).

A multinational approach is characteristic of polycentric firms, that is, companies with an intensive consideration of country-specific conditions. Contrary to that strategy, the global marketing companies treat the world, including their home market, as one market (Cateora and Graham 2005: 20). Market segmentation [segmentasi] decisions are no longer focused on national borders, as is the case in international marketing. Instead, market segments are defined by income levels, usage patterns, or other factors that often span countries and regions or even the entire globe (Johansson 2000: 10). Effective use of segmentation, that is, the recognition that groups within markets differ sufficiently to warrant individual marketing mixes, allows global marketers to take advantage of the benefits of standardization while addressing the unique needs and expectations of a specific target group (Czinkota and Ronkainen 2004: 409-410). The objective is to arrive at a grouping or groupings that are substantial enough to merit the segmentation effort. One of the segments pursued by global marketers is the middle-class family. However, as stated already earlier in the discussion about a global teen market, the homogeneity of such segments is questionable globally as well as locally in times of the so-called hybrid consumer. Often this global marketing is catalyzed by a company’s crossing the threshold of more than half its sales revenues coming from abroad. The entire organization (organizational structure, sources of finance, production, marketing, and so forth) begins to take on a global perspective (Cateora and Graham 2005: 20; Johansson 2000: 10; Kotabe and Helsen 2004: 16-17). A company guided by the idea that markets are global and therefore one which standardizes marketing across national boundaries, is referred to as a global company or a company with a global marketing outlook. The global marketing concept views an entire set of country markets as a unity, identifying groups of prospective buyers with similar needs as a global market segment and developing a marketing plan that strives for standardization (Caterora and Graham 2005: 23).

Conversely, multinational marketing of a company starts, as shown, when activities of a company cross borders, and it recognizes the importance of differences in overseas markets. A company guided by this concept has a strong sense that country markets are vastly different and require almost independent marketing programmes [program pemasaran]. Multinational marketing is often used as just another word for international marketing. Similarity between country markets and the home market plays only a minor role, in comparison to the situation with ethnocentric firms. While for ethnocentric firms, the transfer of familiar and successful concepts from the home market to new country markets plays a central role (global marketing), polycentric firms see adaptation to national preferences as being key to success (multinational marketing) (Backhaus, Büschken and Voeth 2004: 108). Based on the idea that the concept of a global consumer and his attributes is a myth that thwarts the reality of globalization (i.e. that globalization processes do not lead to cultural homogenization), this study now concentrates on multi-domestic marketing and not on global marketing whereas multinational or multi-domestic marketing is treated as international marketing and therefore is understood in opposition to global marketing.

The following elements or factors are particularly important for the concept of international marketing (see, for example: Czinkota and Ronkainen 2004: 2-29). The uniqueness of international marketing comes from the range of unfamiliar problems which increase uncertainty and which are described in literature as the uncontrollable and controllable factors, elements (Jeannet and Hennessey 2001: 40-164) or just as the environmental data (Johansson 2000: 97-102) of marketing decisions. Neglecting these factors can lead to results detrimental to the company and its operations. The elements of the marketing environment of international markets tend to be divided into “controllable elements” and “uncontrollable elements” in American literature (Cateora 1993: 10). Each foreign country in which a company operates, adds a unique own set of uncontrollable factors (Cateora 1993: 9). Environments mould the wants, needs and emotional world of foreign customers and must therefore be regarded as the determining factors in setting strategies, goals and marketing instruments (Kulhavy 1989: 74). Generally speaking, the marketer cannot control or influence uncontrollable factors, but instead must adjust or adapt to them. Johansson (2000: 96) notes: “… researching country markets’ potential and the risks involved in entry is more critical than ever”. The uncontrollable factors of a foreign market are political and legal forces, the economic environment, infrastructure and technology, geography, distribution and cultural forces (Johansson 2000: 97-108; Cateora and Graham 2005: 10; Rugimbaba and Nwankwo 2003: 183-208; Quack 1995: 35-63; Griffin and Pustay 2003: 56-119; Proff 2004: 37-41) as seen in the following figure (B-7).

Figure B-7 Elements or Factors of International Marketing

The above figure illustrates the total environment of international marketing at a definite time, i.e. environmental factors, whether controllable, semi-controllable or uncontrollable, can change in due course as presented in most books, and which is, however, merely a myth. The inner shaded area depicts the controllable factors that constitute the marketer’s decision area, the second circle shows semi-controllable factors where uncontrollable cultural factors of a foreign market come into play, and the outer area represents the factors of the foreign environment for each foreign market in which the company does business and can, and usually does, present separate problems involving these factors. Thus the more foreign markets a company operates in, the greater the possible variety of foreign environmental factors with which to contend. Frequently, a solution to a problem in country market A is not applicable to a problem in country market B. Finally, a marketing programme has to be designed for optimal adjustment to the uncertainty of the uncontrollable factors, whereas the inner shaded part represents the area under the control of the marketing manager.

Controllable factors

Controllable factors can be altered according to market conditions, corporate objectives and consumer demands [permintaan], needs and tastes. The outer area surrounding the marketing decision factors represents the levels of uncertainty created by the foreign environment. The marketing mix needs to be adapted according to these environmental factors. Controllable factors of marketing decisions lie within the company and are the four factors of the marketing mix: product, price, promotion and place (Bruhn 2001: 31-32). Even though these marketing principles and concepts are universally applicable, the environment within which a strategy is implemented varies from country to country.

It is widely accepted that the first element of the marketing mix, product, is the most critical of the 4Ps, as it defines the business in which a company is involved and therefore dictates the nature of pricing, promotion and distribution strategies to be applied in selling it in the relevant, here international, marketing environment. A product can be defined as a set of attributes that provides the purchaser with actual benefits (Kotler, Armstrong, Saunders and Wong 1997: 69-102). There are three layers of product attributes that lend themselves to a greater or lesser extent to standardization: (1) physical attributes, (2) service attributes and (3) symbolic attributes. Around a core product offering that is standardized worldwide, most global companies such as Coca-Cola or McDonald’s customize when needed. Theodosiou and Leonidou (2003) found that quality, design and features were the most standardized product-related elements, while product lines, branding and packaging were at least partially adapted for foreign markets. The marketplace dictates the extent of modification, whether physical or psychological, and therefore by the same tokens the issues of adaptation and standardization (Elliot and Acharya 2003: 108).

According to Usunier and Lee (2005: 165, 248-255), the real issue is not a dichotomous choice, i.e. whether to adapt or to standardize completely. Usunier and Lee (2005: 249) argue that the performance of products has been found to be a combination of both adaptation and standardization strategies which one could describe as “glocal” to use the terminology of the earlier chapter on globalization. Product customization may also result in market differentiation, thus creating a competitive advantage vis-à-vis actual competitors, raising entry barriers for potential competitors (Usunier and Lee 2005: 248). Theodosiou and Leonidou (2003: 167) report that: “… international marketing strategy (whether standardized or adapted) will lead to superior performance only to the extent that it properly matches the unique set of circumstances that the firm is confronted by within a particular overseas market”.

Pricing can be one of the more powerful weapons in a firm’s competitive arsenal, since it is directly linked to corporate sales and profits. Pricing serves three interrelated objectives: (1) profits, (2) sales, and (3) market interactions. Price is a tactical tool in local markets and a strategic tool in the face of global competition (Usunier and Lee 2005: 324). Developing an appropriate international pricing strategy is therefore a vital but highly complex managerial discussion (Callow and Lerman 2003: 117). Indeed, managers judge international pricing to be among the most crucial decisions in their business practice (Backhaus, Büschken and Voeth 2005: 297; 301-302). Academic research in international pricing has focused on four main areas: (1) microeconomic issues (for example, price elasticity of demand), (2) export pricing issues (for example, price escalation), (3) internal pricing issues (for example, transfer pricing) and (4) consumer-oriented issues (for example, consumer preference prices) (Callow and Lerman 2003: 117). Problems which are seen in relation to international pricing are, particularly, those described in the next practical example as grey market phenomenon.

http://www.antigreymarket.com (18 April 2005); http://willmann.bwl.uni-kiel.de/~gerald/awsem/wang.pdf (12 August 2005)

Grey markets, or parallel importation, refer to authentic and legitimately manufactured trademark items that are produced and purchased abroad but imported or diverted to a country by bypassing designated channels (Ronkainen and van der Gucht 1987: 13). Grey marketed products vary from inexpensive consumer goods to expensive capital goods (Economist 1996: 65; Economist 1997: 61; Economist 1999: 72). The phenomenon in Indonesia is not restricted to imports but also takes place in export. That means, products which have a lower price in Indonesia are exported to other parts of the world and sold there for market prices. Indonesia has witnessed grey markets because of the low value of the Rupiah. Hong Kong and Singaporean wholesalers often found it cheaper to go to Indonesia to buy products and then resell them in their respective countries.

Stabilo BOSS is a good example of a typical grey market product in that it carries a well-known trademark. Unauthorized importers buy Stabilo BOSS products in Indonesia at advantageous prices and then sell them to consumers in other parts of Asia. More and more companies are fighting back, for example, by advertising warnings to consumers against buying grey market products on the grounds that these products may be obsolete or worn-out models and that consumers might have problems with their warranties. Various conditions allow unauthorized resellers to exist. The most important are price segmentation and exchange rate fluctuations. Competitive conditions may require the international marketer to sell essentially the same product at different prices in different markets or to different customers (Cespedes et. al 1988: 75-82). The existence of the grey market is an example of the economic practice called arbitrage. In economics, arbitrage is the practice of taking advantage of a state of imbalance between two (or possibly more) markets: a combination of matching deals is struck that exploit the imbalance, the profit being the difference between the market prices. A person who engages in arbitrage is called an arbitrageur. Some products face significant parallel importation due to significant price differentials. In some cases these were reasons for the termination of a channel relationship when agreements were not honored by one party or because of lack of performance. These must be spelled out carefully because local courts are often favourably disposed toward local businesses. In some countries, termination may not even be possible (Czinkota and Ronkainen 2004: 362).

Of the various internal and external elements that shape a company’s pricing strategy, culture has received perhaps the least attention. Usunier and Lee (2005: 316) conclude: “At first sight, price appears to be anything but cultural.” And so price is often assumed to be an intrinsically objective element of exchange and an issue reserved for rational economic factors. There is a tendency to assume that pricing is primarily an economic issue that, in conjunction with quality, helps create value, and therefore culture is not a major determinant of pricing strategies (HS, lecture October 2004). Price is a more subjective element and it is a signal that conveys meaning. As such, it is perceived in quite different ways across cultures and among individuals.

Although the 4P component of place is a controllable element in the international marketing environment, it is closely related to infrastructure, distribution and technology, all of which are uncontrollable factors in international marketing. Promotion is the element of the marketing mix which helps to push the product through to the customer: (1) the distribution channels, (2) sales promotion, and (3) the sales force (Usunier and Lee 2005: 341-363). Place, that is distribution, is the element of the marketing mix which is most deeply rooted in culture, because it is closely related to everyday life and human relationships (Usunier and Lee 2005: 348). De Mooij and Hofstede (2002) suggest in that respect that cultural dimensions point to groups of countries likely to differ in their propensity to certain retail function. For instance, they suggest that one of the consequences of long-term orientation is being sparing with resources. This leads to a preference for picking merchandise up and may lead to lower acceptability of e-commerce. However, although the connection between long-term orientation and resourcefulness tends to be rational, the conclusion seems less so, as e-commerce and e-shopping behaviours are linked to internet access and secure payment methods.

For Indonesia, and Southeast Asia in general, the following observation tends to be more noteworthy. It seems that ties to culture and self-identification are so strong that this creates a barrier to newer distribution methods. Local consumers seem to remain faithful to their traditional distribution outlets for specific segments of consumption, precisely because of their traditional character (TD, interview December 2004). In Indonesia and Singapore it was observed that perishable goods such as fish, fresh fruit and vegetables and meat are still purchased through traditional stores. This led new market entrants, such as Carrefour, to modify their strategy and alter their product presentation in such a way that it represents the image of freshness sought after by consumers (own observation, October 2004).

This is reflected by the case study (Fionna 2003) on Airpork

http://www.airpork.com.sg/welcome-to-airpork.htm (2 January 2006)

, chilled Australian pork that is air-freighted to Singapore, after it banned pig farming and pig imports from neighbouring countries due to the spread of viruses.

The case study was presented by Jill Klein during INSEAD’s executive education programme “marketing of consumer goods in Asia“, Singapore, October 2004. It can be accessed via: http://www.insead.edu/inspire/issue_19/page2.htm (2 January 2006)

However, consumers continue to show a strong preference for pigs slaughtered on wet markets in Singapore in spite of the government’s health requirements (1-3) according to which wet markets had been planned to be closed down (ibid 2003: 4). Dubbed “a story born out of disaster”, the Airpork brand proved to be a huge success. Consumers were convinced, with the help of the Singaporean Health Promotion Board, that chilled and freshly-slaughtered air-freighted pork, named “Xian Bao” which means “Fresh Treasure”, was superior to fresh pork (Fionna 2003: 5). However, and this has not aroused the interest of the case author, Singaporeans buy their Airpork on wet markets and show how deeply distribution is entrenched with culture.

The basic tenets of the marketing communication process are the same regardless of the cultural context. However, marketing communication in different cultures requires an understanding of the differences in the cultures and how such differences might impact on the marketing communications process. Usunier and Lee (2005: 409) argue that: “Advertising, which is based on language and communication, is the most culture-bound element of the marketing mix.” Since advertising is largely based on language and images, it is influenced by culture. Cross-national differences continue to exist, for the simple reason that different languages have not yet ceased to exist. Moreover, language, whether verbal or pictorial, is the strongest link between advertisers and their potential audiences in marketing communications. Language is the key dimension of culture and it is through communication, especially spoken or written language and non-verbal language, that cultural contact occurs. Tacit issues such as colour association, sense of appropriate distance, symbols, time and status cues, gestures and body language make up the unspoken or non-verbal part of language. These cues impact on the marketing communication process, and they must be factored into marketing communications decisions (Daniels et al. 2002: 94-96). Advertising, which is a large part of marketing communications, is a field that is constantly changing. On the one hand it is closely dependent on the cultural and linguistic attitudes of the local target population. On the other hand, in so far as social representations are not fixed, advertising is a privileged method of cultural borrowing. It mirrors changing social behaviour (Usunier and Lee 2005: 411). However, regardless of culture, the basic tenets of the communication process remain the same. The marketer’s message must be encoded, conveyed via the appropriate channel and decoded by the customer (Darley and Luethge 2003: 147).

Indeed, although major mistakes often occur in the marketing mix because the firm and its managers do not have an adequate understanding of the business environment, this fact seems not to have led to an automatic increase in international marketing research (described as a semi-controllable element of international marketing in Figure: Elements or factors of international marketing). The American Marketing Association (AMA) defines marketing research as:

“…the function that links the consumer, customer, and the public to the marketer through information – information used to identify and define marketing opportunities and problems; to generate, refine, and evaluate marketing actions; to monitor marketing performance; and to improve understanding of marketing as a process.” (http://MarketingPower.com, 19 May 2005)

This very broad statement highlights the fact that research is the link between marketer and market, without which marketing cannot function. This fact is also reflected in the orientation of articles published in key research journals (Czinkota and Ronkainen 2004: 186; Malhorta et al. 1999: 160-183). The tools and techniques of international marketing research are said by some to be exactly the same as those of domestic market research, and only the environment differs (Cravens and Piercy 2004: 144-151; Kotler et. al 1996: 244-246).

This is why marketing textbooks usually present research as a controllable element. However, the environment is precisely what determines how well the tools, techniques, and concepts apply to international markets (Kotler et. al 1996: 244; Jain 1990: 334-339) and this is why it is presented contrary to established theory as a semi-controllable element. Although the objectives of marketing research may be the same, the execution of international research may differ substantially from the process of domestic research. Kotler (1996: 244) notes: “Consumers in different countries also vary in their attitudes toward marketing research.” In Indonesia people may feel too embarrassed to talk with researchers about their choice of certain products or Indonesians in rural areas are not able to respond because of high functional illiteracy rates. Furthermore middle-class people in developing countries often make false claims in order to appear well-off (Kotler et. al 1996: 244; IW, interview November 2004; SL, interview October 2004; HS, lecture October 2004). Thus, major challenges in international marketing research are the complexity of research design due to environmental factors, the lack and inaccuracy of secondary data, time and cost requirements to collect primary data and the difficulty in establishing comparability across multi-country studies (Kotabe and Helsen 2004: 176-177). As a result, entirely new tools and techniques may need to be developed (Czinkota and Ronkainen 2004: 188).

Political and legal forces, economic climate, competition and of course cultural forces, as well as infrastructure and technology, are the environment in which the company markets its products and/or services and the factors which have a direct effect on the success of a foreign venture. In addition to uncontrollable factors such as legal and political as well as economic factors, a significant source of uncertainty is the uncontrollable element of culture. Obviously, some uncontrollable factors, such as political and legal forces do not only apply in foreign environments but also in domestic market environments, for example when a home market government restricts the export of certain goods or imposes exports to certain countries in general (Czinkota and Ronkainen 2004: 236). However, in most cases uncontrollable factors must be dealt with intensively outside home markets as companies undoubtedly feel more comfortable in forecasting the business climate and adjusting business decisions to legal and political forces in their home country (Cateora and Graham 2005: 178-208).

Political factors

Dynamic upheavals, as one has seen in Indonesia since 1998, illustrate problems of dramatic change in political, legal, social and economic climate (Lee 1999: 12-40; Ricklefs 2001:387-421; Wie 2002: 194-243; Manning and van Diermen 2000: 1-11; Simanjuntak 58-76; Booth 2000: 145-162; Strauss et al. 2004: 1-5). In this transitional phase, confusion prevails as to what rules are applicable, still in force and by whom they are interpreted (IW, interview November 2004; SL, interview October 2004; DT interview December 2004). This is why for many firms the standard first question about a country concerns political risks, the danger that political upheaval will change the nation’s economic rules and regulations overnight (Johansson 2000: 97). Companies fear unpredictable change even as they seek profit from the opportunities change creates, such as newly privatized industries in Indonesia. If the risk is deemed unacceptable, as was the case in Indonesia in the eyes of many investors, the investment project is discontinued in favour of FDI elsewhere. Kobrin presents four levels of political risk factors which range from general instability (revolution, external aggression) to expropriation (nationalization, contract revocation) (Kobrin 1979: 67-80). However uncomplicated this classification may appear, political risk assessment (PRA) is a broad and diffuse concept that sits at the intersection of politics, economics, sociology, and finance (Harvard Business School 1997: 1). Two distinct modes of analysis, quantitative and qualitative, have been developed to assess this risk.

Quantitative analysis is primarily the terrain of think tanks and academic groups, whereas qualitative analysis remains the purview of country experts. Quantitative analyses of political risk assume essentially that political events manifest themselves in a discernable pattern. The increase in local strategies, that is a higher involvement in foreign markets, again makes PRA an indispensable foundation of successful MNCs, as for local strategies the dimensions of political risk (government, society, security, economy) need to be minimized. This is particularly true for emerging markets, such as Indonesia, which generate greater shares of global supply and demand today (Bremmer 2004: 2). There are three principal reasons for this.

First, international markets are more interconnected than ever before (Dicken 2003: 32-81). For example, in 1997 capital flight from Southeast Asia roiled markets around the world (Draguhn 1999; Berger 2000; Resinek 2000; Hozumi and Wohlmuth 2003; Hunter 1999; Goldstein 1998; Henderson 1998). Second, the off shoring trend is growing. Businesses shift operations to countries where labour is cheap, but the labour is cheap for a reason. In countries such as Indonesia, living conditions for the working class can be harsh, and there is greater threat of unrest than in developed countries with their large, relatively prosperous middle class. Third, the world is increasingly dependent on energy from states troubled by considerable political risk. The dimensions of PRA explain that governments affect almost every aspect of business life in a country (Kotabe and Helsen 2004: 133). The major problem is the lack of political stability and continuity, and this portends a high level of uncertainty in the business climate. The number of political parties also influences the level of political stability. Indonesia, with its multiple-party system without any clear majority, offers an extreme situation, as the consistency of government policies may be compromised as a result. Besides the national political system, foreign businesses have to pay attention to the local government structure, too. Some governments are very weak and hardly have any control at the local level (Brodjonegoro 2004:125-140). For example, Indonesia, whose government used to be very centralized, has steadily been releasing power to local communities (see for example: Bach 2003; Bünte 2003). This means that foreign businesses now have to deal with local government and political systems in each of its 32 provinces (Jakarta Post 2002a).

Political risk analysts, too, study the percentage of children who regularly attend school, how police and military salaries compare with criminal opportunities, and how much access to medical care is available in towns of 10,000 to 50,000 people (Bremmer 2004: 6). They look at such statistics as the unemployment rate for people between the ages of 18 and 39 and determine how many of them are in prison. And, of course, they add economic variables to the mix: per capita income, balance of payments, and national debt. Taken together with the legal system (the next environmental factor to be discussed) this information reveals much about a country’s underlying sources of strength and vulnerability. The topic area of PRA also includes another environmental factor, namely the legal system. PRA literature argues that instead of trying to measure the independence of a nation’s judiciary, for example, analysts can determine whether judges in a particular country are paid a living wage, whether funded programs exist to inform them about new legislation, and whether and how often they are targeted for assassination.

Legal factors

Legal systems and the laws they create differ dramatically in countries around the world and business faces a myriad of legal issues every day. Questions relating to such issues as pricing policies and production practices must be clearly answered in order to avoid litigation and punishment. In countries with banks which follow Islamic law, it is illegal to charge interest. In Indonesia, for example, credit card companies such as Visa and MasterCard receive collateral assets - such as jewellery which they can sell - from card users instead of charging interest (IS, interview October 2004). The protection of intellectual property rights is a special problem of the legal forces in international marketing. Failure to protect intellectual property rights adequately in the world marketplace can lead to the loss of legal rights in potentially profitable markets (Cateora and Graham 2005: 191). Many companies have found their assets appropriated and profitably exploited in Indonesia without licence or reimbursement (SL, interview October 2004). Of course, legal issues face a business whether it operates at home or in a foreign country. However, the issues abroad are often amplified by the “alien status” of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. The alien status of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians or legal authorities, or both. This often seems to be the case in Indonesia (FAZ 2005d: 7). Political activists can rally support by advocating the expulsion of foreign companies, often with explicit or tacit approval of authorities.

Furthermore, in a domestic situation, political details and the ramifications of political and legal events are often more transparent than in some foreign countries. This is true for Indonesia, where market forces continue to be monopolistic and local tycoons interfere by lobbying (Chua 2006: 5-15). Legal systems in Indonesia are still evolving and corruption may prevail, foreigners may receive unfair treatment, or laws are misinterpreted. The point is that a foreign company is foreign and thus always subject to the political whims of the local government to a greater degree than a domestic firm.

Economic factors

The economic level of a country is the single most important uncontrollable environmental element to which the foreign marketer must adjust the marketing task (Cateora and Graham 2005: 244-275; Czinkota and Ronkainen 2004: 88-129; Johansson 2000: 96-123). The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, the distribution systems found within a country and the entire marketing process. In static economies, consumption patterns become rigid, and marketing is typically nothing more than a supply effort (Cateora and Graham 2005: 244). In a dynamic economy, however, consumption patterns change rapidly. Marketing is constantly faced with the challenge of detecting and providing for new levels of consumption, and marketing efforts must be matched with ever-changing market needs and wants.

The current level of economic development dictates the kind and degree of market potential that exists, while knowledge of the dynamism of the economy allows the marketer to prepare for economic shifts and emerging markets. Economic development is generally understood to mean an increase in national production which results in an increase in the average per capita gross domestic product (GDP). Besides an increase in average per capita GDP, most interpretations of the concept also imply a widespread distribution of increased income. Economic development, as commonly defined today, tends to mean rapid economic growth and increases in consumer demand improvements achieved in decades rather than centuries.

Proff (2003: 36-40), for example, sees a correlation between GDP per capita and private cars per capita and sees a GDP per capita of US$10,000 as critical to be able to purchase a private automobile in Brazil, Taiwan and Mexico. Karmokolias (1990: 3) shows similar figures. Discussions in Indonesia and Malaysia have shown the same figure, however, the limit of US$ 10,000 seems to be getting lower due to the increasing availability of consumer credit in Indonesia (own observation, Jakarta, September 2004; DM, interview 2004).

Infrastructure

One indicator of economic development is the extent of social overhead capital, or infrastructure, within the economy. Infrastructure represents those types of capital goods that serve the activities of many industries (Czinkota and Ronkainen 2004: 22-29, 106-108). Paved roads, railroads, seaports, communications networks and energy supplies, (all of which are necessary to support production and marketing) are included in a country’s infrastructure. The quality of infrastructure directly affects a country’s economic growth potential and the ability of an enterprise to engage effectively in business (Cateora and Graham 2005: 251). Infrastructure is a crucial component for the uncontrollable factors facing marketers (Czinkota and Ronkainen 2004: 106). Without adequate transportation facilities, for example, distribution costs can increase substantially, and the ability to reach certain segments of the market is impaired (RD, interview December 2004). Infrastructure includes the presence or absence of financial and commercial services, such as agencies, warehousing storage facilities, credit and banking services, market research agencies and quality-level specialized middlemen (Cateora and Graham 2005: 253). Generally, the less developed a country is, the less adequate the infrastructure is for conducting business. Companies, as one can see in the case of Indonesia, do market in less-developed countries but it is often necessary to modify offerings and augment existing levels of infrastructure (RD, interview December 2004).

Although some publications such as (Czinkota and Ronkainen 2004: 21-29) pay significant attention to the study of geography in the context of international marketing, the discussion of geography related to characteristics of a place and its natural attributes such as terrain, hydrology and climate will not be included in this study as its focus is on cultural forces. Additionally, the competitive arena, that is, competitive forces in Indonesia, as an uncontrollable environmental factor, will be discussed briefly with the mode of entry (i.e. the ways in which a company can enter a given country’s markets) (Johansson 2001: 41-45). As reviewed, the uncertainty of different foreign business environments creates the need for a close study of the uncontrollable elements in international marketing. To adjust and adapt a marketing strategy and its implementation in a foreign market, marketers must be able to interpret effectively the influence and impact of each of the semi- and uncontrollable elements in the marketing programme.

The international marketing literature, as shown elsewhere, provides a vacillating view of marketing thought. On the one hand is the observation that the world is becoming increasingly interdependent. International markets and international exchanges, such as trade and finance, are becoming accessible, and tend to imply that the “global village” (McLuhan, 1983) is a reality. This idea of virtual financial streams accessing and affecting every corner of the world is complemented by the observation that some products and brands are following these financial flows and are becoming obtainable everywhere. Nowadays, the French mineral water “Evian” can be found anywhere in the world, even in remote Indonesian villages. On the other hand, literature, for example by Usunier and Lee (2005), Hofstede and Hofstede (2005), along with Trompenaars and Woolliams (2004) suggest that, due to the enduring nature of the cultural variable and cultural diversity, it is far more realistic to imagine the existence of numerous dissimilar global villages instead of just one. In an increasingly interdependent world where barriers to trade and international exchanges are diminishing, cultural differences remain the single most enduring feature that has to be taken into account for international marketing strategies.

The latter view assigning greater significance to the culture variable is increasingly making headway in the corporate world. The following explanations should exemplify the meaning of cultural influences and will be illustrated in the following four practical examples.

BMW in China

Western companies sense an enormous potential market in China. However, so-called marketing experts commit serious blunders when praising their products. Someone who depicts the figures in his commercials fighting a dragon should not be surprised if his advertising campaign fails. The car manufacturer BMW always endeavours to have a unified image when presenting its brand. On every continent, the Bavarians extol the virtues of their muscle cars with their slogan “Sheer Driving Pleasure”. The universal look is also valid when BMW launches a new model on global markets. Every car should be advertised with just one campaign.

When the new BMW 3 Series was launched, the manufacturers strayed from the usual pattern, at least in China, even though the advertising concept had paid off in Europe. With the slogan “The Driving Force” in the European TV commercial for example, one could see a group of runners who formed the silhouette of the new BMW. This was supposed to stand for sportiness, a typical BMW trade mark. Originally the same advertising spot was designed to tempt well-heeled Chinese consumers into the car showrooms. However, those in charge at BMW in the People’s Republic of China put on the brakes. The reason may seem banal but it could have led the introduction of the BMW 3 Series model to a debacle. The protagonists of the “driving force” were sweating, which in China is not at all associated with being fit and sporty. In fact it is considered to be unpleasant and disagreeable. Cars destined for the upper classes simply cannot be advertised in this way. “Local experts explained to us that physical exertion does not match the target group of supreme decision-makers”, explains Martin Huber from the advertising agency Interone, which advises BMW in China. “Being sporty means something different in China. Sport has to express something more elegant than it does in Europe”, also says Andreas Kunz, spokesman for the BMW group in China.

As a result, the Chinese population never got to cast their eyes on the “runners” campaign. Instead, Interone and BMW came up with their own campaign specifically for China. The result is a commercial with overtones of serene elegance. The BMW 3 Series model is not in the foreground: the cool, at ease decision-maker is. “This commercial strays substantially from the usual sporty positioning of the BMW 3 Series”, according to Interone manager Huber. Notwithstanding, the campaign was successful. “The sales figures speak for themselves and show us that we are on the right road”, emphasizes the BMW spokesman, Kunz. No sweat, no rush – good for BMW that these cultural idiosyncrasies have found their way into the 3 Series campaign. In many other cases the experts miss the bull’s-eye. “Chinese culture is very specific. Most western marketing experts are unable to think themselves into it”, explains Hans Joachim Fuchs, head of branding advisory committee, Chinabrand.

Size and brand awareness do not really protect concerns from mistakes. “There are enough companies among them - even the larger concerns which approach the topic ‘advertising in China’ too ingenuously”, says Tim Faber, lawyer for the business area China for the company Rödl & Partner. Actually, the large companies and branded goods’ producers predominantly account for advertising mistakes in the People’s Republic of China presented in almost every seminar on advertising faux pas in China.

Some other prime examples of advertising mistakes follow. Take, for example, the Japanese car manufacturer Toyota which achieved notoriety by using stone lions saluting the 4 wheel drive model “Prado” in an advertising campaign. Yet in China, predatory cats are a symbol of authority. The lions showing deference to a Japanese product, angered the Chinese audience. In another commercial, a Toyota-Jeep pulled a Chinese military truck out of the dirt. That was the final straw. The Chinese took offence and the car manufacturer stopped the unfortunate campaign.

McDonald’s had to beg for forgiveness recently too. The burger griller advertised its special offers by showing a customer on his hands and knees begging for a discount. A gesture of such humiliation displeased the audience. They complained to the state media, which consequently banned the commercial from its program. More recent examples of misunderstandings are connected to the Chinese language. This is how advertisers reported Coca-Cola’s attempt to translate its brand name phonetically. The result, among others was "Ke-kou-ke-la" which means “bite the wax-tadpole” Arch rival Pepsi did not do much better. With their slogan “Come alive with the Pepsi generation”, those in charge translated it as “Pepsi brings your forefathers back from the grave”.

Apart from damaging the brand and company reputation, this kind of misunderstanding can also have legal implications. ”Advertising is a sensitive subject in China. Advertising is considered part of the media, which, in spite of the opening of China for the market economy, is still somewhat restrictive”, reports China expert Faber. “Each advertising agency is required to employ a state controlled advertising supervisor. For advertising agencies financed by overseas investment it is actually a pre-requisite”, according to the lawyer.

China’s laws governing advertising have many traps. Anyone showing the People’s Republic of China’s flags, coats of arms or national anthem, is guilty of hostility to the state. The area of “Offending national pride” is even more explosive. What could be interpreted as fun or irony for Europeans or Americans could come across as offensive with the Chinese (take the examples of Toyota, Nike and Co).

A further detailed example should serve to reinforce the thesis’ supposition that tunnel vision treatment of the culture variable still exists. This example reveals why China banned a Nike television commercial (part of an international marketing campaign for Nike Basketball that uses symbolism from traditional Chinese culture including dragons, stone lions, goddesses, Yin Yang, and Buddhas) for not upholding national dignity and interest, and respecting the motherland's culture. The commercial features NBA player LeBron James battling against villains representing "Hype," "Temptation," "Haters," "Complacency," and "Self-doubt." Both U.S. and foreign audiences watch the commercial narrated in Mandarin Chinese with subtitles as it is part of a so-called global campaign.The subject of this controversy will be highlighted below.

The Dragon battles back to beat Nike

Easily dismissible as a classic piece of government over-reaction, Beijing's banning of US sportswear manufacturer Nike's latest television advertisement - featuring a US basketball hero trouncing dragons, a martial-arts teacher and flying spirits - says a lot about China's lingering sense of victim status. Titled “Chamber of Fear”, the advertisement featured National Basketball Association star LeBron James simultaneously dribbling a ball while fighting off several adversaries, clearly Asian and very possibly Chinese. In the ad, produced using a computer-game format, James' goal was to encourage children to learn from his own upbringing and experience to confront life's hurdles and not shy away from them. Part of a global advertising campaign, the ad was aired nationally for more than a month before a statement on the ban was issued on December 6 by China's State Administration for Radio, Film and Television (SARFT). Since the government said the ad “violates regulations that mandate that all advertisements in China should uphold national dignity and interest and respect the motherland's culture”, Nike (named after the winged Greek goddess of victory) had no choice but to admit defeat and apologize. Nike subsequently relaunched the ad in a heavily edited format. With no further government explanation offered, viewers of national and local channels were left to make up their own minds about why Nike's “Chamber of Fear” should have caused such offence.

The answer comes in two parts. The first is the fact that the computerized adversaries that were soundly defeated included an ancient-looking martial arts teacher complete with long, wispy beard, several female spirits “feitian” (literally “flying heaven” similar to Buddhist bodhisattvas), and - perhaps most crucially - two dragons, the traditional symbol of the Chinese nation. All the defeated adversaries are icons closely associated with Chinese culture. The second is that James is a black American. Whether it would have mattered if James were white or Asian remains a matter of conjecture. What is certain is that in some people's eyes Nike was being cavalier in its use of Chinese cultural icons, and depending upon how far you take the imagery, conveying an impression of Western cultural domination. All the Chinese in the advertisement were defeated, including the dragon.

The incident is unlikely to cause long-term damage for Nike, which runs a powerful nationwide marketing campaign to promote its “cool” image. The company can perhaps take comfort in the notion that there is supposed to be no such thing as bad publicity. “This commercial was always likely to provoke dispute in China,” said Yao Ming in an after-game interview on December 9. “So it didn't surprise me when I heard it had been banned and widely criticized by Chinese people, especially youngsters.” “It is a cultural conflict. In China, the dragon is the symbol of China and Chinese culture and the feitian - the flying woman - is regarded as sacred and holy. They are not respectfully treated in the Nike commercial," said Yao. He clearly understands how cultural conflict can have a great impact. The NBA All-Star centre himself had the experience of adjusting to American culture when he arrived in the US to play in the NBA. “My modesty is often regarded as cowardice. But Chinese tradition has taught me not to be aggressive. Yet aggression is valued on the basketball court of the NBA,” said Yao. “Conflict will occur when you are ignorant about another culture and things will be even worse if you take too much for granted,” said Professor Gu Donghui, a sociology expert at Fudan University.

This report was based on information gleaned from the following internet sources: http://www.china.org.cn/english/2004/Dec/114219.htm; http://news.bbc.co.uk/2/hi/asia-pacific/4083265.stm; http://www.usatoday.com/sports/basketball/nba/cavaliers/2004-12-06-james-china_x.htm; http://news.xinhuanet.com/english/2004-12/22/content_2367984.htm; http://chineseculture.about.com/b/a/131186.htm; http://www.chinadaily.com.cn/english/doc/2004-12/09/content_398845.htm (27 July 2005);

Advertising criticism such as this is by no means limited to China. In Southeast Asia there have been clear attempts by governments to stem the tide of Westernisation where, it has been felt, this may be at variance with, or damaging to, indigenous cultural values (McDonald and Roberts 2000: 12). Indonesia is a case in point where the ban upon TV advertisements during the early 1990s was, in part, interpreted as a deliberate endeavour to check any further dilution of the Indonesian way of life. Cultural sensitivity to the encroachment of Westernisation, as depicted by something as seemingly innocuous as a foreign brand or product, should not be overlooked (SL, interview October 2004; IG, interview December 2004; IS, interview September 2004). On the other hand, MNCs are blamed for importing raw materials from developing nations without transferring needed production technologies to these countries (Peach 1987: 1507). This is often the reason why multinational companies are blamed for cultural imperialism that endangers local cultures through the proclamation of the “American way of life” (Angehrn 1986a: 63). Neocolonisation of markets by virtue of a foreign brand or product is perhaps carrying the argument to extremes, but it is quite evident that cultural affinity, shown in localized marketing approaches, may provide a benefit of considerable value.

When participating in the seminar “Marketing of Consumer Goods in Asia“ at the INSEAD-MBA school, Singapore, in October 2004, the author presented the following case as one problem area similar to those in the above-mentioned examples. The topic of discussion was the repositioning of luxury watch brand, TAG Heuer in China, whose 1998 global campaign “Inner Strength“ was unsuccessful.

TAG Heuer in China

Prestige, performance, avant-garde technology and absolute reliability: these four “watch-words” have characterized TAG Heuer’s philosophy since its founding in 1860, when Edouard Heuer set up the company’s first workshop in Switzerland. Over the years, TAG Heuer, with its passion for sports, mastered the challenge of timekeeping and has become the official timekeeper of many international championships. TAG Heuer has always shared certain values with the competitive spirit of sports figures, such as pushing one’s limits and the quest for perfection and absolute precision. It is therefore only natural that since its founding, the company has joined forces with some of the world’s most celebrated sports figures. The following print advertisements reflect this.

http://www.worldtempus.com/wt/1/3855/, http://www.thambassadors.com/ambassadors/maria_sharapova.cfm (21 January 2006)

Before 1991

Campaign “Six Features” with Ayrton Senna “Champagne Resistant à 200 mètres”

1991-1994

“Don't crack under pressure”, with Ayrton Senna and Michael Schumacher

1995-1997

“Success. It's a mind game”

1998

“Inner Strength” with Marion Jones, Mika Hakkinen and Boris Becker.

2000

“Beyond Measure”

2002

“What are you made of?” with David Coulthard, Inès Sastre and Steve McQueen

2003

“What are you made of?” with Tiger Woods

2005

“What are you made of?” with Brad Pitt, Uma Thurman and Juan-Pablo Montoya join Tiger Woods, Maria Sharapova, Kimi Raikkonen, Steve McQueen and Yao Ming

“Don’t crack under pressure” (1991-1994) was one of the major successes of the TAG Heuer brand. This campaign illustrated the pressure of sport and the intense concentration athletes exercise, while insisting on the notion that the approach to sport is far more mental than physical. The ad is a tribute to the brand’s determination and to that of its ambassadors, such as Formula 1 racing-driver Ayrton Senna (Image right, courtesy of Tag Heuer).

The “Success. It’s a mind game” campaign (1995-1997) had revealed a prestigious and evocative vision of sport as it had never previously been represented, definitively establishing the brand within the luxury world. It depicts the mental pressures to which athletes subject themselves in order to win: a hurdler sees himself jumping over a giant razor blade; a horse-rider imagines herself jumping from one skyscraper to another; a swimmer refers to a competition with sharks chasing after him in the other lanes of the pool. This campaign, created by famous photographers Russel and Connie Guzman, Nadav Kander and Russell Porcas, earned numerous awards including the Lion d’argent at the Cannes international advertising festival (Images, courtesy of Tag Heuer).

The “Inner Strength“ campaign featured famous athletes such as Boris Becker and Mikka Hakkinan and highlights the spiritual strength of sport achievers. The campaign was targeted at consumers who wanted to be perceived as spiritually strong.

In direct line with these successes, in 2002 TAG Heuer launched the print advertising campaign “What are you made of?”, which once again overturned advertising clichés and codes. “What are you made of?” opens up a new era of communication for TAG Heuer by adopting direct and emotional language. TAG Heuer asks its own ambassadors the leading question What are you made of? and places them opposite their favourite watch. What is a success? A campaign created according to the "Chinese portrait" principle, with successful objects mirrored by talented individuals. David Coulthard and Ayrton Senna, associated with the Kirium Formula 1 and Link chronographs are shown in the ads. Steve McQueen is seen with his legendary Monaco and Inès Sastre next to their Link Diamonds watch.

Launched in May 2003 worldwide, the new film “What are you made of?” represents a major advertising event, by diverting the historic TAG Heuer concepts and making golf its new source of sporting inspiration. This evolution in the links tying TAG Heuer to top-level sports, is embodied in the greatest golfer of all time, Tiger Woods. Pursuing its historical commitment to Formula 1, thanks to the arrival of golf, TAG Heuer has an opportunity to rise to a new film-making challenge: how can one spark rivalry between two apparently irreconcilable sports in an extreme timekeeping race? A spectacular film that breaks with existing codes. Who can beat Tiger Woods? An F1 driver takes on the golfer on the legendary Monaco circuit. Golf ball versus car, swing versus V10, the story of a duel involving absolute precision. Dizzying bursts of speed and mental slow-motion sequences follow on from each other on the screen, with the omnipresent superimposition of obsessive timekeeping... Ultra-fast digital visuals express action, tension and sporting commitment, while the slow-motion parts are a reminder of the extreme concentration involved. The technological power of the Formula 1 vies with the mental strength and perfect gestures of Tiger Woods. Following his ball with his gaze, he guides it through what he calls the "zone", overcoming the unusual obstacles of the city of Monaco and its circuit, in order to reach its goal. 

TAG Heuer is making news in 2005, as Brad Pitt, Uma Thurman and Juan-Pablo Montoya join Tiger Woods, Maria Sharapova, Kimi Raikkonen, Steve McQueen and Yao Ming on its Dream Team of TAG Heuer ambassadors. All three celebrities are part of the new "What are you made of ?" campaign produced by Patrick Demarchelier, the famed fashion photographer. The result: a stylish campaign that perfectly embodies the blend of sports and glamour for which TAG Heuer is renowned (Images, courtesy of Tag Heuer).

Thanks to campaigns of this kind, companies try to distance themselves from other brands and to target a specific target group. Rolex differentiates itself by putting up and maintaining its brand messages – reliability and performance.

http://www.rolex.ch/en/ (13 December 2005); http://www.patekphilippe.com/ (13 December 2005)

Patek Philippe stresses its authenticity and the fact that its heritage that matters. Its message is that people are buying for the next generation and many of their timepieces are collectors’ items. TAG Heuer, conversely emphasizes the sportiness of its watches. While overtones of status, associated with the brand Rolex for example, are easily transferred to Asia (the brand stands for status and prestige worldwide and achieves e.g. in Indonesia, an almost 100% brand awareness), it is difficult for TAG Heuer with its associated attributes of sportiness and performance to appear relevant to the buyer and to motivate consumers to purchase. TAG Heuer initiated its China business with the “Inner Strength “ campaign, launched in 1998. The campaign, although a real success in Europe, was “a total failure in China” (author, presentation October 2004).

The reasons behind the failure are the following. In Europe the value of sports is both physical and mental, whereas in China it is purely physical. Consumers in Europe wear sport watches to exemplify their physical fitness or spiritual strength. Sports watches, such as those by TAG Heuer, are appropriate for business, and thus a premium price is reasonable. In China however, sports watches are primarily functional and are perceived as a casual watch, inappropriate for business, and therefore not worth paying a premium price for. Answers given by Chinese consumers after the campaign failed were, for example: “Wearing sports watches to work is like wearing slippers to attend operas”, or “I can’t justify paying RMB 7,000 (US$ 840) for a sports watch that is worn only when I exercise”. After the failure of TAG Heuer’s brand campaign in China, the watch maker was forced to re-think how to provide a relevant brand value for a sports watch to appeal to Chinese consumers who are not avid sports enthusiasts (sports-insensitive). The following image represents the campaign before the re-positioning. This campaign failed.

Figure B-12 Boris Becker for Tag Heuer (image, courtesy of Tag Heuer)

TAG Heuer’s new campaign changed drastically. TAG Heuer re-positioned its brand as a formal business watch with sporty overtones. Chinese appreciate spiritual values such as determination, but athletes in international campaigns lead consumers to associate the watch with physical values and not with the spiritual values which are highly respected in Chinese culture. To solve these issues, a local advertising campaign “The Attitude of the Achiever” was developed for China. “The Attitude of the Achiever” campaign featured business achievers, which was the most appealing image to the Chinese in TAG Heuer’s target group. The campaign featured Chinese idioms about determination and highlighted this quality as the attitude that brought about business success. The new campaign closed the so to speak culture gap. It replaced athletes by business achievers, which repositioned TAG Heuer as a formal business watch and increased the perceived retail price. Sales increased by 40 percent in the first half of 1999. The following two images are examples of this campaign.

Figure B-13 Tag Heuer in China (1)

Figure B-14 Tag Heuer in China (2)

Although TAG Heuer now advertises in China with one of the most popular athletes, Chinese basketball player Yao Ming (under contract in the US), and although the heavy local coloured but still very successful campaign “The Attitude of the Achiever” has been stopped, great differences are evident when viewing the pictures of sports stars used in those campaigns (image right, courtesy of Tag Heuer). Yao Ming, for instance, is not recognizable as a basketball player; he is portrayed wearing a suit. The celebrities in the endorsements used outside China such as Maria Sharapova, are, on the contrary, recognizable as sports stars because of their typical sports gear. In the campaigns they are displayed to an extent playing their sports. In the campaign intended for China, Yao Ming’s portrayal is a so-called glocal compromise. On the one hand, TAG Heuer’s global standards are adhered to, i.e. taking sports stars under contract in order to reinforce the manufacturer’s positioning as a producer of sports watches. On the other hand, local adaptation is considered, i.e. Yao Ming is depicted as a successful and respected Chinese citizen abroad wearing appropriate clothing and not as a sweat drenched basketball player.

However, it is doubtful to what extent campaigns which show individualistic heroes can be successful in a cultural sphere in which adaptation or subordination to groups is presenting a common cultural behaviour form.

The above-mentioned examples clearly reveal that the relationship between culture and marketing can be described as reciprocal (Angehrn 1986: 203; Dahringer and Mühlbacher 1991: 170). Furthermore, Dahringer and Mühlbacher go as far as to postulate (1991: 170): “Not only does culture influence marketing; marketing also influences culture”. Thus, culture imparts the social context in which international marketing operates and that it is a, if not the, central determinant of international marketing (Usunier and Lee 2005: 2-3; Schütte and Ciarlante 1998: 1-16; Trompenaars and Woolliams 2004: 3-24; Lasserre and Probert 2001: 27-54). This central positioning of culture in international marketing was conveyed practically in the above examples. In the context of these examples, it should be indicated that the described companies’ faux pas were not mistakes that would have required the deepest knowledge of Chinese culture. That renders the mistakes even more infuriating since they could easily have been avoided. Mistakes of this nature occur because it is believed that attracting customers in the target markets could work globally since their customers worldwide would have adapted to one another in the course of globalization and modernization. This, however, is a misapprehension.

Although Seidel (1995: 158) sees some evidence for the increasing adoption of local approaches (termed multi-cultural strategy), it seems that MNCs refrain from adopting the “glocal” mindset and allocate extensive resources to researching cultural environments which could give them clues on how to adapt products and marketing strategies to suit local consumers. The case study (Part D) which was researched and elaborated on, shows, with the help of the Indonesian example, how successful marketing will look when it integrates the culture of the target country. The interdependence between customers and their environment illustrates the relationship between culture and international marketing, as the above-mentioned practically-oriented examples illustrate. The relationship between culture and international marketing is, as the previously-mentioned examples exhibit, in many cases, far from being able to be described as balanced. Statistical analysis, forecasting techniques and operational studies as taught in business schools around the world are not completely incorrect and are important technical skills. But companies frequently underestimate that it is inappropriate to assume that technical rationality characterizes the environment in which these techniques are applied and that “cultures resemble the laws of physics and engineering” (Trompenaars and Hampden-Turner 1997: 4).

Companies frequently overlook the fact that when transferring a product or marketing plan from one culture to another, the underlying assumptions of the culture in which it is placed will give it new meaning (Trompenaars and Woolliams 2004: 16). What all the examples mentioned so far have in common, is that they attribute culture significant influences to marketing. This is particularly true as marketing is much broader than selling (with which it is often narrowly associated). It encompasses the entire company’s market orientation toward customer satisfaction in a competitive environment (Kotler, Ang, Leong and Tan 2003: 16-29).

Therefore, fundamentally, the intention of the international marketer must be to create marketing mix approaches that communicate identity and create an affinity with the target market. In other words, marketing strategies require close attention to both customers and competitors (Kotabe and Helsen 2004: 12).

These practical examples serve to sensitize the reader to the relevance of cultural influences on the marketing mix and to the main section to follow.

Although at first glance the expression “culture” appears to be comparatively unequivocal, upon closer inspection it reveals itself to be ambiguous. This is owing not least to the fact that several scientific disciplines and intellectual traditions of thought used this term in a subject-specific and therefore often different manner. In the Anglo-Saxon world, the word “culture” (Latin “colo, -ere”, with its root meaning "to cultivate") was first revealed in printed format in 1483 in the sense of worship and reverential homage. How the expression was interpreted has changed over time. At the beginning of the 20^th century, meaningful culture was ostracized from “indifferent nature“. Nature gives rise to spontaneously growing natural products from mother earth. Culture, on the other hand, is that which is created by mankind, for example created by ploughing and sowing (processing nature). It has been only since the end of the 18^th century that the expression has been used in the context of comparing progress of mankind and various societies (for example, the European, Asian or African culture). Because it is largely unknown why culture developed in different ways and what differences signify, the concept has been criticized by some as random. Baeker (1985: 1) considers the concept of culture as a European ethnocentric construction. Therefore, a binding core definition would neither be available nor expected in the future. Various theories or currents can be differentiated according to whether they focus on the genesis of culture more or less statically (Sobrevilla 1971). Thus in the 19^th century a static-universal-anthropological concept dominated, contributing to the interchangeability of the terms “culture“ and “region” in various disciplines (for example Middle Eastern and Oriental studies which continue to use both concepts interchangeably today). In the first half of the 20^th century a division between anthropology and sociology occurred which was equally the result and the expression of a then acute rivalry between both disciplines. In contrast to anthropologists who retained their original static conception and interpreted culture in terms of behavioural patterns (culture patterns), sociologists developed a comparatively dynamic perspective. They interpreted society as a social structure, i.e. as a network or system of social relationships, for which culture provides the context. Hofstede (1999) describes culture metaphorically as “software of the mind” and Jaeger (1986: 179) as “mental programs that are shared”. Both describe culture in a scientific language as a specific combination of (1) values, (2) basic underlying beliefs and (3) presumptions for a society (about humankind and the world). The effects of various cultural influences on several behavioural areas were systematically investigated in the course of the research discipline’s development. These included consumer behaviour, negotiation and conflict management, the former being the research subject of this thesis.

It was also a sociologist who, with his analysis, started the field of research into cultural studies in whose tradition intercultural marketing is steeped: Max Weber. Rather as a structure (What is culture?) and genesis (How and why cultures develop in different ways?) the consequences of culture and religion interested him (Müller and Kornmeier 2000: 87; Inglehart 1998: 302). Weber justified his cultural concept anthropologically, and from the perspective of marketing research it could be said that he rejected the naïve unstructured empiricisms and he postulated that hermeneutics is the most important method.

Many definitions, mostly vague and abstract, have been formulated for culture (Kroeber and Kluckhohn 1952). Some say that no definition of such a complex construct as culture is possible (post-structuralism). Deconstructing culture and its elements is, in their view, objectionable as it suppresses historical and diachronic analyses, a method described as reductionistic. They argue that culture is too complex, and has no structure or entity. Contrary to the above, there are the structuralists’ approaches. According to structuralist theory in anthropology, meaning within a culture is produced and reproduced through various practices, phenomena and activities which serve as systems of signification. Structuralists study activities as diverse as food preparation and serving rituals, religious rites, games, literary and non-literary texts, and other forms of entertainment to discover the deep structures through which meaning is produced and reproduced within a culture.

Hall, who offers significant descriptions of culture, traces the difficulties of a definition of culture not back to its complexity, but to the limits of language to describe culture. He argues (1976: 57):

“The paradox of culture is that language, the system most frequently used to describe culture, is by nature poorly adapted to this difficult task. It is too linear, not comprehensive enough, too slow, too limited, too constrained, too unnatural, too much a product of its own evolution, unnatural, and too artificial.” (Hall 1976: 57)

Onkvisit and Shaw (1993: 257) give the following definition: “… culture is a set of traditional beliefs and values that are passed from generation to generation”. Culture, it seems, is usually transmitted from parents to children, but social organizations, interest groups, the government, schools and religious institutions also come into play. “Culture is prescriptive, …facilitates communication, … is subjective, … is enduring, … is cumulative, … is dynamic” (Onkvisit and Shaw 1993: 257). The development of collective mindsets and behaviours is intensified by social pressure (Czinkota and Ronkainen 1993: 154). Despite many different definitions of culture, anthropologists seem to agree on three of its characteristics (Hall 1976: 16):

“[Culture] is not innate, but learned; the various facets of culture are interrelated – you touch a culture in one place and everything else is affected; it is shared and in effect defines the boundaries of different groups.” (Hall 1976: 16)

Of the many possibilities of definitions of cultures, one definition and view of culture proved to be particularly suited to the meaning of “culture” in the context of international marketing und will be discussed in the following paragraphs.

The theoretical basis’ common deficit negatively influences comparative cultural research (Holzmüller 1989). Basically the methodological structure of culture comparative management research (Redding 1994: 332) can be differentiated from nomothetic and ideographic research strategies. Weber, Parsons, Kroeber and Kluckhohn and Porter’s research strategies are, according to Redding, (1994: 332) rather nomothetic, as is Hofstede’s strategy. Intercultural marketing’s requirement profile deems the choice of a nomothetic research strategy necessary, since this thesis aims to develop an appropriate analytical diagram which will serve further research projects both in country-wide culture comparisons and on other comparison levels, that of ethnic groups, for example.

Culture in the framework of this thesis, is understood as an explanatory construct which is operationalized and thus comprehensively comparable. Since an appropriate initial definition of culture needs to be made, culture, for the purpose of this thesis, is understood as a binding orientation system for society or group members (for example members of an ethnic group).

Hofstede (2005: 4), whose cultural analysis has been widely adopted in the arena of international management and partly in international marketing, shares the idea that culture is learned and not innate and therefore derives from one’s social environment rather than from one’s genes. Hofstede (1993: 19) sees culture as a collective programming of the mind, i.e. culture is always a collective phenomenon, “because it is at least partly shared with people who love or live within the same social environment …” (Hofstede 2005: 4) and distinguishes the members of one group of people from another. Hofstede’s definition of culture is particularly suitable for research into consumer behaviour since culture is hierarchically structured with the aid of the so-called layer model (or culture onion model). In this model “culture” is seen as an abstract reflective of reality, as a system of rules, codes and symbols which enable a particular culture’s members to behave coherently. The collective system of meaning (kollektives System von Bedeutungen) (core of the layer model) derived from this model, differentiates several cultures from each other. From a formal point of view it is irrelevant whether a country, sub- or corporate culture is being addressed. This allows the necessary cultural comparisons for intercultural marketing.

Often the culture onion (layer model) (Figure C-1) is chosen as a diagrammatic way of presenting culture in the layer model as is the case for Trompenaars (Trompenaars and Hampden-Turner 1997: 22; 46) and Hofstede (1997: 8). In the culture onion, the visible symbols, heroes and rituals form the first cultural layer. The second invisible inner layer, therefore the invisible core of culture, is formed by culture specific values.

Figure C-1 Pictorial representation of the defining premises of culture

Hofstede distinguishes four manifestations of culture: symbols, rituals, heroes, and values. In the above figure (C-1) these are depicted like the layers of an onion, indicating that symbols represent the most superficial, and values, the deepest manifestations of culture, with heroes and rituals falling somewhere in between.

Symbols are words, gestures, pictures, or objects that carry a particular meaning recognized only by those who share a culture. The words of language or a particular kind of jargon belong in this category, as do dress, hairstyles, flags, status symbols, brands like Coca-Cola. New symbols are easily developed and old ones quickly disappear; symbols from one cultural group are regularly copied by others. This is why symbols are shown in the outer, more superficial layer in the above figure. Coca-Cola, Pepsi, Marlboro and Nike are examples of brands that have become global symbols. Yet they may include different associations in the U.S., the country of origin of the brands, than they do for Indonesians.

Heroes are persons - alive or dead, real or imaginary - who possess characteristics that are highly prized in a society, and who thus serve as role models for behaviour (Hofstede 2005: 7). Even fantasy or cartoon figures, like Batman in the United States and Astérix in France, can serve as cultural heroes. In the television age outward appearances have become more important in choosing heroes than they were before. Fantasy heroes can become known globally, but the stories in which they play a part are often local. In Indonesia, Inul Daratista, a dangdut

Dangdut is a genre of Indonesian popular music which is partly derived from Arab, Indian, and Malay folk music. Beginning in the 1970s, it developed among working class Muslim youth, but especially since the late 1990s has had a broader following in Indonesia. A dangdut band usually consists of a lead singer backed by a band of four to eight musicians. The term has been expanded from the 'desert-like-style' music, and embraces other musical styles today. Modern dangdut incorporates influences from Latin, house, hip hop, R&B, and even classical music. Most major cities, especially on Java, have one or more venues that have a dangdut show several times per week. The concerts of major dangdut stars are also broadcast on television.

Rituals are the collective activities considered socially essential within a culture: they are carried out for their own sake (Hofstede 2005: 8). Examples include ways of greeting, ways of paying respect to others, and social and religious ceremonies. In the above figure, symbols, heroes and rituals are included in the term practices. They are visible to an outside observer. Their cultural meaning is invisible however; it lies in the way the practices are interpreted by insiders of the culture. In Indonesia, product launches increasingly coincide with Ramadan (particularly its last days - the holiday of lebaran or Idul Fitri in Arabic) and the selamatan (a religious meal - selamat - cosmic salvation) (SL, interview October 2004; IS, interview October 2004; HaS, interview December 2004). Hofstede subsumes symbols, heroes and rituals under the term practices, as they are visible to an outside observer.

Values lie at the core of culture. Values are defined as “broad tendencies to prefer a certain state of affairs over others” (Hofstede 2005: 8). Values are among the first things children learn, not consciously but implicitly. The core values of culture are stable, and often what is presented as a new “trend” is merely a new practice format of existing and stable values.

With regard to cultural change, Hofstede notes that our world is changing but there are many things in society “that technology and its products do not change” (Hofstede 2005: 12). If young Indonesians drink Coca-Cola or eat at McDonald’s, this does not necessarily affect their attitudes toward authority. In some respects, young Indonesians differ from senior Indonesians, just as young Germans differ from senior Germans. Nevertheless, these changes mostly involve the relatively superficial spheres of symbols and heroes, and of fashion and consumption. Hofstede (2005: 13) declares: “There is no evidence that the values of present-day generations from different countries are converging”. Thus, culture change can be fast for the outer, visible layers of culture (symbols, heroes and rituals, which are labelled as practices), but culture change is slow for values. McCracken (1986: 71) describes these changes, though slow, as “constantly in transit”. Nevertheless, values are not deeply changed, as there is the need to fit in, to behave in ways that are acceptable to the groups we belong to.

Based on this structuralist definition, culture has to be operationalized firstly to be able to compare countries and secondly to contrast social groups and their culture within a country (in the case of a multiethnic country). There are a variety of approaches available for the operationalization of culture. The prerequisite is that not only has it to describe the observed, i.e. visible layers of the culture onion, but also to explain the core of culture, i.e. the invisible moral concepts and norms, and then to draw conclusions from them and apply them to the observed visible practices (consumer behaviour). So it is necessary to connect concepta (explanatory part) and percepta (descriptive part) and to find an investigative model for the above explained research formation. A mere description of Indonesian consumer behaviour would not have allowed a comparison with other countries. Neither would such a description be valid long-term due to its dynamic nature, i.e. transience of visible practices means that it would only be valid short-term.

The rule orientation defines how one judges other people’s behaviour. One differentiates between universalistic and particularistic societies (Trompenaars and Hampden-Turner 1997: 29-4), which are distinguished by the respective behavioural nature of their members. Trompenaars’ and Hampden-Turner’s “universalism versus particularism” value orientation describes a preference for rules rather than trusting relationships. Universalistic cultures tend to feel that general rules and obligations are a strong source of moral reference. People from these cultures tend to follow the rules and look for a single best way of dealing fairly with all cases (Trompenaars and Woolliams 2004: 51). “Do not lie. Do not steal. Do unto others as you would have them do onto you” (the Golden Rule), are some of the standards adhered to in universalistic cultures (Trompenaars and Hampden-Turner 1997: 31). People from universalistic cultures assume that the standards they hold dear are the right ones, and attempt to change the attitudes of others accordingly. Universalistic, or rule-based behaviour, tends to be abstract and to imply equality in the sense that all persons falling under the rule should be treated in the same way (Trompenaars and Hampden-Turner 1997: 31). Particularistic societies, on the other hand, are those where particular circumstances are much more important than any rules. Bonds of relationships, such as family and friends, are stronger than any abstract rules, and responses may change according to circumstances and the people involved (Trompenaars and Woolliams 2004: 51). The person is not “a citizen” but one’s friend, brother, wife or person of unique importance. One must therefore sustain, protect or discount this person no matter what the rules say. Personal relationships may be of greater importance than the rules in these societies, which is the reason for them being called relationship-based societies.

Empirical findings on the first orientation present Indonesia as rather particularistic and it scores similarly compared to China and Singapore (Trompenaars and Hampden-Turner 1997: 35; Boucher-Floor, THT Consulting, email August 2005). However, the charts presenting the country ranking for this dimension offer a rather patchy picture for Indonesia and other Asian countries thus leaving many questions unanswered (Trompenaars and Hampden-Turner 1997: 37) and rendering a detailed investigation necessary. Owing to the data available, it can preliminarily be assumed that Indonesia is rather particularistically oriented, as is reflected in the following figure (C-5).

Figure C-5 Indonesia scoring rather particularistically

Since Trompenaars and Hampden-Turner (1997: 35-36) see a connection between religion and the first orientation, the inclusion of other Muslim countries’ scores in the rule orientation might have offered some hints as to whether Indonesian society needs to be seen as universalistically or particularistically oriented with its results on consumer behaviour. Notwithstanding, very few Islamic countries were investigated, resulting in insufficient data being provided to make an accurate statement as to which direction Islamic countries tend. Additionally, a comparison with the neighbouring country Malaysia should be treated with caution, since, according to Ricklefs (2001: 9) the Islam of Java is “… rather different in style from that of Malaya or Sumatra”. This was also confirmed by Braten (1999: 150-172). In the context of the cultural foundation of this orientation, Trompenaars and Hampden-Turner (1997: 35-36) argue: “universalists are more common in Protestant cultures, where the congregation relates to God by obedience to His written law”, whereas Catholic cultures where there are intermediaries between God and his adherents, “forgive sins or make special allowances”. Some religions, for example Catholicism, consequently are more relational and particularistic. This is reflected in the orientation’s ranking (as presented by Trompenaars and Hampden-Turner) in which countries where the majority of the population is catholic, such as the Philippines, score rather particularistically (Boucher-Floor, THT Consulting, email August 2005).

The relationship between religion and this orientation is the reason why a look into Islam, as the religion of more than 88 percent of all Indonesians (Suryadinata, Arifin and Ananta 2003: 105), is necessary in order to look for indications as to whether Indonesian society scores particularistically or universalistically in general. This is a multifaceted undertaking since: firstly, it is evident that the modalities and cultural achievements of religions are far richer in Indonesia than in many other countries (in Indonesia disparate, even opposing, beliefs were fused into syncretistic practices over time, a sign of cultural acceptance). “Indonesians are fond of marvelling at the complexity of their own society” (Vatikiotis 1998: 92) underscores the validity of this observation. Secondly, Islam in Indonesia reveals little similarity to the far more austere Muslim regimes of the Middle East (whose Islamic countries score rather particularistically). Thirdly, the undertaking is complicated by the fact that some analysts tend to portray Islam as rather universalistic (no separation between religion and state, unity of the Muslim community “tauhid”), where others offer a different picture, i.e. they highlight its particularistic aspects. The latter describe Islam as having a generally universalistic approach but some elements would suggest particularistic behaviours.

Despite its universalistic character in the sense of unity of all Muslims, certain elements, for example in “sharia” (sacred law) (Schimmel 1990: 54-56; Newby 2002: S), tend to make Islam rather particularistic. This can be seen in its display of gender relationships (Jones 2002: 219) and its distinction between non-Muslims and Muslims (Noerdin 2002: 179-186). This view is supported by the idea that the original Muslim community of Medina represented a monotheistic vision entrenched in a community of clans (Lapidus 2001: 37), placing a great deal of emphasis on bonds of relationship within kin groups. Moreover, in order to gain a complete picture of how religions and their core values could have shaped Indonesia’s particularistic or universalistic score, not only Islam needs to be considered. Other religious denominations need to be considered, given the diversity and discontinuities of religions in Indonesia.

It emerges therefore that an analysis of Islam for categorizing Indonesia as universalistic or particularistic is insufficient since the first Indonesian grown Islamic communities were established around the 1280s (Taylor 2003: 66; Ricklefs 2001: 3) and the earliest Islamic states not before the 15^th century on Java (Schumann 1999: 435; Ricklefs 2001: 4-5; Damais 1957: 353-415). Woodward (1989: 53) writes in this context: “It is known that there was a Muslim presence in Java as early as the late fourteenth century” and thereby confirms the relative influence of cultural behaviour in Indonesian society owing to its late arrival.

Consequently, in Indonesia one is confronted with several landscapes of belief, some indigenous, others Muslim and Hindu, transposed with their respective values from India and the Middle East (Hall 1964: 12-24). Hinduism and Buddhism, Islam, and Christianity were brought in that order from across the ocean and absorbed without being superimposed on one another. Elements of the previous religions’ forms were preserved and integrated into the new faith (Islam) (Ricklefs 2001: 59). Thus, elements of all these religious customs can still be seen side by side today (Ricklefs 2001: 59-69). This can be seen in Indonesia where Muslim and pre-Islamic local identities and affiliations blend together. Islam came to the Indonesian archipelago during a period which Anthony Reid (1993, Vol. II, Ch. 3), has called the “age of commerce” (1450-1680). Islam was preceded by Hinduism and Buddhism (Kulke 2001: 349-350; Bellwood 1997: 138), which together with Islam and Christianity represent the major religions in Indonesia (Suryadinata, Arifin and Ananta 2003: 103-138). In addition, there are indigenous religions which have been practiced throughout the Indonesian archipelago for centuries (Schreiner 2001: 159) and are, with their affirmative character, an integral part of Indonesian identity (MP, interview December 2004). Their various forms continue to influence Indonesians today. “Religion came from across the sea, but customs and tradition came down from the mountains”, says an Indonesian proverb, demonstrating that indigenous religions have been around much longer than the world religions. The observation that Islam was a seaborne civilization, adaptable to archipelago conditions, when Indonesian societies were converting (Taylor 2003: 73), underscores the perception of an unorthodox Islam, first introduced by Arab traders in the 7^th century (Dahm 2002: 3; Schumann 1999: 434).

This rich cultural heritage of pre-Islamic Indonesia, often regarded as “classical” (Ricklefs 2001: 59), provides authoritative cultural standards and frames of reference even today. In this context, Johns (2002: 165-191) describes neither the arrival of Islam nor its development as being “spectacular”. This is reflective of the idea that Islam is to be considered as a “cultural influence on the Indonesian scene, but not as the dominant theme” (Federspiel 2003: 202). “Islam in Southeast Asia has its own styles and its own temper and intellectual traditions” (Johns 2002: 165). Sacral practices and folk beliefs colour and live alongside the profession of Islam (Johns 2002: 165) since Islam was “transmitted at different levels of intensity and perceived in rather different ways according to the cultural backgrounds of the various communities” (Johns 2002: 171). He adds that numerous cults survived alongside Islam, together with practices and rituals and the set of spells and magical formulas that derived from the Indic and megalithic traditions (Kulke 1999: 349-369; Johns 2002: 172).

Moreover, for the examination of the rule orientation, it is imperative to look into explanations as to why Indonesians converted to Islam. Historians of Indonesia often refer to the Islamic concept of equality of believers as a powerful reason inducing conversion in the four hundred years of Islamization of the archipelago (Taylor 2003: 73). They contrast Islam’s equality of believers before God with Hindu and Buddhist beliefs in a hierarchy of souls, and argue that this allegedly striven for equality by Islam was the reason for the conversion of many sections of the population. However, Taylor, for example, states that the idea of the Islamic concept of equality as the powerful reason for conversion is not tenable (Taylor 2003: 73). He argues, inter alia, that the view of Islam as having a concept of equality, “goes against Koran teachings that accord higher status to Muslims over non-believers, men over women, and owners over slaves” (Taylor 2003: 73). He supports this view by adding: “… the argument ignores the history of Islam in which binding rulings (fathwahs) proclaim submission of subject to a Muslim ruler as a religious duty (Taylor 2003: 73). Ricklefs, too, rejects the idea that Indonesians were attracted to Islam as its egalitarian ethos supposedly provided relief from the Hindu caste system, too. He argues: there is “no evidence whatsoever that there was anything egalitarian about Islam in practice … none of the Islamic societies … was in any sense egalitarian.” (Ricklefs 2001: 15).

According to official figures, as stated beforehand, some 88 percent of the Indonesian population is Muslim (Suryadinata, Arifin and Ananta 2003: 104-105). This makes Indonesia the largest Islamic nation in the world. However, Islam as practiced here is much more liberal when compared with other Islamic nations. A referendum held in 1956 revealed that there was no majority in favour of turning Indonesia into an Islamic state (Dahm 1999: 230-231). Although many Javanese groups have accepted Sunni teachings in recent years, and although the revivalist “dakwah” movement has convinced many Indonesian Muslims to take their Islamic obligations more seriously, others have resisted for perpetuation of their own particular beliefs and practices (Hefner 1987: 533-554). Such revitalized Islamic activity, under the demand of the “Sunnatization” of life worlds, includes increased attendance at mosques, attention to fasting, performance of the pilgrimage and other indications of religious association. Despite the aforementioned re-Islamization of Indonesian society in the last 15 years or so, the indigenous elements are still lived, and Indonesian Muslims, in the main, have not followed the lead of some Malaysian Muslims, in adopting militant political attitudes and taking actions to further their Islamic agenda (Federspiel 2003: 207).

As practised today in Indonesia, Islam is strongly characterized by various elements of indigenous religions and local beliefs, as well as Javanese culture. Islam can be very orthodox as in Aceh, as well as virtually nominal, as in Central Java, where it is practiced in a blend with animism and Hindu-Javanese mysticism (Geertz 1956: 134-158). The large majority of Javanese, called “abangan”, represent a very traditional Javanese view of the world. They do not adhere strictly to the teachings of Islam. Their view of everyday life and religion is strongly influenced by traditional Javanese opinions and elements carried over from the Hindu-Buddhist period. This is in contrast to the “santris”, who represent about one third of the population and who are a closed society adhering strictly to Islam and its teachings. Ricklefs, who describes the diffusion of Islam as “one of the most significant processes of Indonesian history” (2001: 3) points out ,too, that Islam in Indonesia is a product of cultural assimilation and accommodation as encountered in the high culture of Old Java (Ricklefs 2001: 9). The following examples underpin this observation. Customary regulations (adat) remain significant in Indonesia’s regional cultures, particularly in life-cycle ceremonies, such as marriage, birth, puberty, death and inheritance (Garang 1974: 10-42). The Department of the Interior was assigned the administrative oversight of Javanese mystical orders with instructions that these practices were to be nurtured (Federspiel 2003: 205). The common argument that Islam has been indigenized in Indonesia reflects the notion that attention should be given to tradition based on pre-Islamic Indic civilization. This indigenization is the reason why syncretism is still evident throughout the country. Hinduism and Buddhism made their way into the courts of the Hinduized states of Southeast Asia as early as the 7^th century (Kulke 1999: 349).

Therefore, in Indonesia, cultural traits which influenced the first dimension in pre-Islamic religions must be traced, too, as Islam (as well as other religions making their way into Indonesia in later periods) was significantly enriched by mystic elements. Even though it makes sense to classify Indonesia as particularistic, it is necessary to take a look at why Hinduism and Buddhism seemingly back the hypothesis of Indonesia as particularistic. A history of Hinduized culture spanning a thousand years has left a legacy of diverse mystic traditions in the country. Hinduism is the oldest world religion and was the first to reach Indonesia. Although in Indonesia Hindu influences have been superseded or overshadowed by the influences of other religions (principally Buddhism and Islam), Hinduism left an impression lasting to this day (Hiltebeitel 2002: 3). Its heroic tales can be found in puppet plays and classic Javanese dances. Sanskrit, the language of the Hindus, made many inroads into both the Javanese and the Indonesian language (Sneddon 2003: 45; Nothofer 1999: 73-76). The “garuda”, the legendary giant bird, has survived as the national emblem, and the word “Pancasila”, describing the state philosophy, is derived from Sanskrit. Bellwood adds (1997: 139): “…the only ethnic group in Southeast Asia to have maintained a coherent – even if highly modified – Hindu tradition is the Balinese”. This does not, however, imply that Hinduism influenced the cultural traditions that today at first sight appear unaffected by Hinduism, but which were influenced anyhow.

Hinduism, a Vedic religion, is characterized by a society organizing people according to a caste system (Klostermaier 1994: 333-344; Schluchter 1984: 45-50; Weber 1988: 108-114; Eliade and Culianu 1995: 291). The ideal social arrangement (organization) was to reflect the theory of the law of castes and life stages, which was worked out in texts as a model for the whole of Hindu society (Hiltebeitel 2002: 15). A person’s duties vary according to caste and stage of life, not to mention other factors such as gender, family, region, and the quality of the times (Hiltebeitel 2002: 15). Hiltebeitel explains (2002: 15):

“…the ideal represents society as working to the reciprocal advantage of all castes, each one having duties necessary to the proper functioning of all castes, each one having duties necessary to the proper functioning of the whole and the perpetuation of their hierarchical principle that defines the whole.” (Hiltebeitel 2002: 15)

Not only Hinduism supports the idea of Indonesia being rather particularistic. Buddhism does, too. Buddhism, a religion without the caste system of Hinduism was, in pre-Islamic Indonesia, a religion in which “… a new elite of religious specialists appeared” (Goméz 2002: 61). Buddhist teachings are not absolute statements about reality which make it malleable to diverse populations (Goméz 2002: 71). Furthermore, the form of Buddhism which was assimilated by the Indonesian archipelago can be described as eclectic (Eliade and Culianu 1995: 277). Most of the Buddhist schools believed that only a few human beings could aspire to become fully awakened beings (Eliade and Culianu 1995: 264-277). But the attainment of liberation was a great achievement, and a person who was assured of an end to reincarnation (nirvana) was considered the most saintly, and deserving of the highest respect (Goméz 2002: 58). Swearer (2002: 119) adds that Buddhism in Southeast Asia was diverse and eclectic, infused with elements of Hinduism and became “transformed in the process” (120) and part of a larger Indian cultural influence. It competed with autochthonous forms of animism as well as Brahmanic cults (Swearer 2002:123) which are again particularistic due to their differentiation of society and particular behavioural systems for each stratum. Today, the majority of Buddhists are to be found in Java, and its followers are mainly found among Indonesian of Chinese descent. Buddhism reached the Indonesian archipelago via trade as did other religions (Ray 1994: 121). Although social status in Buddhism is not rigidly caste bound, it is however, linked to professions. Ray (1994: 124) notes: “… Buddhist literature emphasized the occupational divisions among the people and the distinction between the higher and lower occupations.” This view reflects the idea of particularistic elements of Hinduism and Buddhism, which had dominated the Indonesian archipelago for more than one thousand years before the arrival of Islam and which are still present in Javanese traditions today (Hall 1968: 12-40). This would give reason to assume that Indonesia, formed by its rich cultural heritage of Hinduism and Buddhism, might score particularistically, following the dimension’s underlying assumption of a relation between a country’s score and religious history.

It is relevant to include Javanese social structure, too, in this comparative perspective, in order to better understand why it is plausible to describe Indonesia as rather particularistic. For centuries, Javanese social culture has deeply influenced Indonesian society. The Javanese have a tradition of absorbing foreign cultures and of blending them into their own culture in an unparalleled way (selective adaptation). Old and new, foreign and indigenous are all integrated, with long-standing traditions being continued. Even today, many Indonesians consider Javanese behavioural patterns as binding. Many Javanese principles have become, by extension, Indonesian principles (Dahm 1999: 231). The history of Javanese society, embodied in Javanese patterns of thinking and behaviour, still continues to shape present-day life, with harmony being the ultimate goal and conflicts being avoided at all costs (rukun) (Markham 1995: 67-71). Another key term is “display of respect” (hormat) (Markham 1995: 72-77). In all matters, “face” (preservation of face) plays a central role (Mulder 1990: 139).

These traditional Javanese cultural traits can still be found in most villages throughout Java. It is there that the division between the common people and the rich elite, as practiced for more than a thousand years, is still evident. The kings of the city states during the Hindu-Javanese era were perceived to have cosmic powers, and the king would rule his people with his magical powers (kesektèn) (Kulke 1993). Whilst the kings, and after them the sultans, were clearly superior to all worldly matters and viewed as deities (Kulke 1999: 103), the priyayi residing at the Javanese courts developed their own elite culture. There were court ceremonies and music, dances, courtly literature, and the art of batik-making, all of which blended into a culture for the privileged at the courts. Status and etiquette were inseparable from it. The sultanates of Surakarta and Yogyakarta, in particular, were the centres of “kejawen”, the Javanese etiquette. Courtly culture had a particularly strong influence on social manners. All behaviour had to obey the rules of politeness; the objective was to be “alus”, which means harmonious and reflective interaction. Refinement was the measure of all things (Keeler 1984: xvii-xxiv). In the opinion of the Javanese, the ability to be ”alus“ is a real symbol of power (Anderson 1972: 38). This included polished social manners as well as neat presentation. Acting differently was called “kasar”, meaning rough, unrefined, uncontrolled and generally inconsiderate behaviour (Keeler 1984: xvii-xxiv). As was the tradition of a courtly culture, mystic rituals were the expression of the world view of a small elite, although Javanese mysticism with its teachings of inner values, “kebatinan”, was and still is practiced by lower social classes, and traditionally expressed through various aspects of life, most notably the arts, which are again enjoyed by all social strata (Mulder 1979: 13). Social divisions in Indonesia are seen as the result of two thousand years of Hindu-Javanese development (MP, interview December 2004). Accordingly, there is a segment of “small people” (wong cilik), including peasants and the poorer classes on the one hand, and the “priyayi” on the other, consisting of civil servants, members of the wealthy classes, and more recently, intellectuals with university education (Koentjaraningrat 1960: 89; Geertz 1969: 6). Even today the priyayi enjoy a very high social standing (Markham 1995: 55). Good form, “kehalisan”, is their ideal. Priyayi have always been the stalwarts of the culture adhered to at the former Javanese courts. All the aforementioned examples support the notion that Hinduism has decisively shaped Indonesian culture. Headley (2004: 79) sums up nicely: “The hierarchy of a kinship system like that of the Javanese … insisting on a very rigid status system is linked to Hinduism”. Javanese aristocratic names often indicate status, as do clothes, language and behaviour. These attributes of Javanese culture do not only influence the first orientation, but also, as will be expressed later, other orientations, for example the status and the emotional orientation. Koentjaraningrat (1967: 391) writes in connection with social relationships in many parts of Indonesia: “Kingship, for instance, is one, but by no means the most important organizing principle”.

Reasons to argue that Indonesia scores rather particularistically can be found outside the religious sphere too, and have been agreed on by some political analysts. Freddy Kalidjernih explains this value orientation in the context of foreign relations (Kalidjernih 2001: 1-9). He reveals that particularism stands for relationship-based behaviour which is deeply rooted in Indonesian society. Also the idea of “bapakism” (literally fatherism) where a “bapak”, a superior (father), and a “anak buah”, an inferior (child), have reciprocal duties, speaks for a particularistic society. Bapakism is the Indonesian variant of the patron-client relations which can be found all over Southeast Asia (Dahm 1999: 243). According to Jackson and Rye (1978: 35): “These diffuse, face-to-face, enduring, non-contractual relationships are the primary social cement integrating Indonesian organization …” They go on (ibid: 35): “Substantial inequalities of income and opportunity exist throughout Indonesia…” People would interpret the huge social differences as “God given” (ibid: 35). Others see a relationship between corruption and particularistic societies.

To summarize, one can say that Indonesia seems to be rather a particularistic society than a universalistic one, and the aforementioned cultural traditions and religious conditions are regarded by the author as sufficient evidence to categorize Indonesia as rather particularistic (MP, interview December 2004). Once again the emerging consensus among researchers who believe that universalism is a feature of modernization per se, of more complex and developed societies, and who think that particularism is a trait of smaller, largely rural communities where everyone is known personally, could be rebutted. This is the case in many other Asian countries which, despite their modernized character, still score particularistically. Trompenaars and Hampden-Turner themselves doubt the opinion that universalism and modernization go together, as the dimension is closely related to religion (1997: 35).

After examining the hypotheses that Indonesian society is rather particularistically oriented, it is now necessary to examine the ramifications of this orientation on marketing and consumer behaviour.

Choosing where to shop

Although a particularistically influenced consumer behaviour (which can be accommodated for by a marketing mix targeting these behavioural patterns), the benefit of explicit use of this orientation’s meanings in relation to consumer behaviour seems to have been greatly underestimated in Indonesia until now. Cultural conditions of the orientation have led to a social life and consumption patterns in Indonesia which are more particularistic than in most western nations, which is the reason why the marketing mix must be customized to these cultural differences. As mentioned, in particularistic societies, relationships are especially important, for example those to family and friends. But the meaning of relationships can be extended to those outside this private social sphere, for example, those between buyers and sellers, and producers and distributors. These relationships tend to be close in Indonesia, where significance is attached to the interdependence between subjects inside and outside the marketplace. Interviews and observations showed that these linkages exist not only between the commercial players in markets (intra-market), but also between these players and the end-consumer (inter-market) ( IS, interview October 2004; HS, interview December 2004). Even in Jakarta, which is a collection of villages each with its own market and stores (van Diermen 1997: 44; IS, interview October 2004), people from all social backgrounds still tend to shop daily und prefer local neighbourhood stores in view of the fact that in Indonesia’s large cities, the traffic situation can only be described as chaotic. Those who do so, have built up strong relationships with their sellers. The boom of convenience stores (which are also called “neighbourhood stores”, reflecting the importance of intra-community relations) is, as figures show, especially strong in particularistic societies (such as Thailand) and much less so in universalistic societies (such as Germany). Of course, there are generally many reasons behind such trends, but one could be that the particularistic consumer prefers a nearby shop (where one can meet neighbours and build-up a relationship with the employees) to an anonymous super- or hypermarket. This is true for relationships on traditional markets, as well as modern convenience stores or luxury boutiques (MP, interview December 2004), i.e. there is a dichotomy between formal/informal sectors, which are both capitalist modes of production and consumption reminiscent of Boeke’s (1942) “theory of ‘dual economy’”.

Customer-relationship management (CRM) [pemasaran hubungan pelanggan]

Relationship-based consumer behaviour can be beneficial for companies if consumers are provided with services in ways reflecting the importance of particularistic, i.e. relationship-based conduct. Retail Asia

http://www.retailasiaonline.com/ (16 March 2006)

Figure C-6 Le Meridien Jakarta CRM

In Indonesia one CRM program is frequently quoted, mostly because of the size of its customer base. Matahari

http://www.lippobank.co.id/produk_dbt_mthr.html (17 August 2005)

Banking and the credit card sector (in contrast to the retail segment) introduced CRM programs in Indonesia early, since they were aware of the significance of personal relations. Financial services in Indonesia have also implemented a number of CRM programs resulting, for example, in the opening of numerous so-called VIP lounges at airports to pander to their customers. This has been incredibly successful and Indonesians who enter these lounges by showing their golden credit cards almost burst with pride. The high demand for, and easy availability of, gold cards in Indonesia has led banks to the strategy of upgrading most of their customers to platinum level in order to make them show their cards (HaS, interview December 2004).

Consumers do not only spend more on cards of higher tier levels, since they can signal their financial background via their cards, but also because the CRM can cater for card holders’ requirements and wants in a more targeted manner. In the November 2004 edition of “Prestige Indonesia” Vadyo Munaan, MasterCard International Vice President and Country manager, explains that the premium card business is being driven by “the greater perceived prestige of being a Gold or Platinum cardholder”. (Prestige Indonesia 2004: 94-95). He adds: “MasterCard has been surprised at the amount of Platinum card usage” (Prestige Indonesia 2004: 95). Munaan believes that there are currently 15 million Indonesians who qualify for premium cards and this segment is likely to grow. He explains that, before the crisis, the percentage of gold card holders was about 20 percent of the total, and the classic card holders, 80 percent. However, after the crisis, this balance shifted to 50:50 as if status symbols had become more important - “the one you pull out is the platinum card”- (ibid 2004: 95). For further growth, MasterCard advises its issuing banks to tie the cards to additional benefits to boost customer relationships. He sees points and discount schemes as big pull factors, as in other countries. The author believes that the tier system of credit cards and its popularity in Indonesia, which is much higher than in other markets, can be transferred and implemented also in retailers’ CRM.

Figure C-7 Credit cards in Singapore and their CRM schemes

A comparison of countries and their rankings in the rule orientation with Transparency International’s global corruption perceptions index (CPI), reveals that corruption is especially rampant in particularistic oriented countries. As the following figure shows, advertising sometimes uses this kind of taking advantage. An advertising campaign such as this is possible in Singapore, which is generally considered not to be corrupt; however, in Indonesia which is generally considered to be very corrupt, an advertisement of this kind would be met with resistance (AS, interview December 2004).

Figure C-8 Titanium Card in Singapore "Power corrupts. Use it wisely"

Ideas and recommendations for action

The particularistic behaviour of Indonesians combined with its status consciousness (which will be discussed in detail later) offers substantial business opportunities. Indonesians expect to be treated according to their status and spending patterns. This means a good customer (high-turnover) prefers retailers where his standing and commitment to the shopping outlet are reflected in services around the shopping experience. This means, in fact, that the Matahari Club Card does not conform to Indonesians’ preference to be recognized not only according to their status but also to their commitment to the outlet. A Matahari Club Card as part of a CRM program which recognizes customer commitment, i.e. turnover, shopping frequency etc. not only in terms of points accrued but also in services, such as different tier club cards, check-outs according to tiers etc. might be more beneficial for the company in terms of customer satisfaction and subsequently, spending. There is a common saying in business, that one makes 80 percent of turnover with 20 percent of the customers. This is universally true and this 20 percent of customers in Indonesia seems to need to be treated according to their particularistic background. In more luxurious surroundings, for example, in SOGO department stores, one could think of implementing not only different check-outs but also of having invitations to special events or late-night shopping when busy well-heeled customers have more time and are not stuck in traffic (as discussed with HaS, interview December 2004). Personal shopping experiences, such as being greeted at the entrance to private viewing rooms, could complement the shopping experience. In the automobile industry the shopping experience, for example, can be differentiated on the basis of which car one is interested in and then customers can be dealt with in different showrooms complementing the lifestyle represented by the car (DM, interview December 2004).

Generally it seems that CRM programs are becoming increasingly important all around the world. However, in particularistic societies such as Indonesia, pandering to customers’ thirst for status (there is a positive correlation between the rule and the status orientation), prestige and treatment according to their relationship to the outlet, combines with customers’ willingness to show their special relationship and customer status off. Special hospitality events which cater for a company’s best clients are not only covered by local press in Indonesia, but parallels can be found in other particularistic societies.

In Singapore, BMW went so far as to cement its relationship with clients by setting a four-page promotional feature which shows nothing but portrait pictures of their best customers under the headline “Society’s Top 300” (Singapore Tatler April 2005: 98-101), while a two-page ad features BMW’s 7series with the tagline “Vision, the true aspect of leadership”. The importance of the relationship with customers becomes particularly evident in promotional features such as these.

Irwan Danny Mussry, the director of Time International Indonesia, reflects on the special customer loyalty trend by saying: “Limited edition timepieces are extremely important in the eyes of our customers here in Indonesia” (Soelaeman 2004: 32-33). A customer in a particularistic society expects much more to be treated according to the relationship built with the company (HS, lecture October 2004). In a country where collecting watches is one of the hobbies of the well-off (Appendix 1, Figure 223-224) it makes sense to sell limited editions to the most loyal of customers and to inform them early of new models. Special horology workshops enjoy popularity in Indonesia, which is the reason why European watch manufacturers frequently offer very exclusive seminars in hotels in Jakarta (Appendix 1, Figure 223-224). What they are trying to do is to secure long-term customer loyalty and retention. European watch manufacturers’ keen interest in their special Indonesian and Singaporean customers is also shown in the edition of the most exclusive watches. Thus the German Watch Manufactory “Glashütte” presented a special edition (limited to only a few dozen watches) to celebrate the 40th anniversary of Singapore’s independence. These watches were discreetly decorated with Singapore’s national flower, the orchid, and were specially made for the loyal customers of the company in Singapore. The benefits of customer cards are however not only seen in the context of increasing customer loyalty but it is also believed that by giving customers more benefits they are less likely to ask for discounts, a behaviour still widespread in Indonesia (HaS, interview December 2004).

Interestingly, in particularistic societies (such as Indonesia) where customer relationships need to be fostered, more than 79 percent of respondents to the Siemens Mobile Lifestyle Survey in which more than 3,000 people were surveyed, agreed that “mobile phones and SMS help to foster customer relationship” (2001). This particularism comes into play again in the form of ring tones pertaining to individual callers. In Indonesia (43 percent) and the Philippines (48 percent) of interviewees answer that they “… have a distinct ring tone to distinguish my loved one when he/she calls”. This figure is much lower in less particularistic and universalistic societies.

Relationships to national or ethnic groups

Relationships to customers can also be fostered by emphasizing one’s “Indonesianness”, and familiarity with Indonesian values can be used as a means of competing with foreign companies. Sampoerna and Indofood have been able to achieve a high standing in Indonesian society (reflected by their brand values) (Indonesian Brand Award 2004a). Other possibilities might be to stress friendly service and the fact that they represent sound family values, saying that they have been a family-run business for the past fifty years or so.

Another interesting consumer behaviour feature which can be linked to the rule orientation is the following. Indonesians as well as Singaporeans, and to a much lesser extent Malaysians (Malaysia scores much lower on the particularism range), are very particularistic about festive days. A festive day in any ethnic group is welcomed as a reason to celebrate and offer sales specials. Where else than in Singapore would one find a shop with a sign saying “Jesus is the reason for the season” to make people aware of the Christmas sales?

Figure C-9 Localized advertising campaigns (1)

Singapore has always been a very diverse society in which the need for marketing to different ethnic groups has been taken for granted. European luxury brands in an, for the high-end market, unprecedented move to niche or intercultural marketing, have started to create commemorative items in a tribute to Singapore’s national day (Channel News Asia 2005a). Sales figures for the S$6,000 “National Day fountain pen” created by Montegrappa surpassed expectations. The French jewellery house Cartier, counting Singaporeans among their most loyal customers, created “a white gold Lion pendant and pen named ‘Living Harmony’” which sold out quickly (Channel News Asia 2005a). Behind Cartier’s particularistic, i.e. localized product, is a lot of understanding of the diverseness of Singaporean society. Cartier’s designer Orina Maretzi explained:

“…the main concept was to represent the four different cultures in Singapore. [One] can see on the murals, there are two temples, an Indian and a Chinese, a Christian church and a mosque for the Muslims. This piece represents the four cultures living together in a harmonious and democratic way.” (Channel News Asia 2005a)

The following figures (C-10 - C16) highlight the impact of ethnic-specific marketing in particularistically oriented societies.

Figure C-10 Localized advertising campaigns (2)

Figure C-11 Advertising and festive days

Figure C-12 Twisting tradition: BMW’s award-winning ads in Singapore (1)

Figure C-13 Twisting tradition: BMW’s award-winning ads in Singapore (2)

Figure C-14 Localization of the 4 Ps in Singapore

In Indonesia, with 88 percent Muslims, the need to take social diversity into account seems to be less urgent. However, the reality requires a different approach as Nestlé and Unilever have recently shown (Part D of this thesis).

Another strong, interesting argument supporting the difference between particularistic and universalistic societies could be the higher brand loyalty of Asian consumers, who are generally more particularistic than consumers in western countries. Brands, so it is believed by advocacies of the identity-oriented theory in brand management, are recognized by consumers as personalities (brand personalities) and over time they establish relationships to these brands (“brands are friends”) (Meffert et al. 2002: 42). One can assume that the intensity of consumers’ relationships is higher in countries where relationships and relationship-based behaviour play a larger role.

Figure C-15 Localized marketing approaches in Singapore (ad, courtesy of Miele)

Figure C-16 Glashütte’s tribute to its Singaporean customers

The first orientation, however, does not only translate into relationships with humans and brands, but also into specific products. Research by the author revealed that agreement with the idea “my mobile phone is the technological extension of my personality” correlates with the country’s score in the first dimension. In Indonesia (65 percent), which scores rather particularistically together with the Philippines (62 percent), the majority of the populations agree, whereas in Australia - a rather universalistic society - only 19 percent of the people agree with the statement (Siemens Mobile Lifestyle Survey 2003). The same correlation is seen in interviewees’ agreement with the statement “when I leave my mobile phone at home – I just have to go back home and get it” and “if I don’t receive an SMS or call for a long time I begin to check my mobile phone constantly” (Siemens Mobile Lifestyle Survey 2003).

Relationship-based behaviour is also apparent in the usage of celebrities (artis) who endorse products on Indonesian TV. According to Daniel Ziv, (2003: 31) Jakarta is home to approximately three hundred gossip and celebrity tabloids, through which Indonesia’s working class lives vicariously. Drivers and housekeepers spend much of their time watching soap operas on TV and reading the latest gossip about their favourite stars, so “that the relationship becomes almost personal” (Ziv 2003: 31). Clearly this admiration for media and sports stars is reflected in Indonesian advertising, where, compared to China, specialists such as doctors are less likely to endorse products. Professional arguments seem to be less important, as do rational TV ads.

Given the observed interaction between, for example, retailers and consumers, which appears to be much closer than in universalistic societies, the following course of action can be recommended. In order to secure long-term relationships (which are more significant in particularistic societies such as Indonesia than in so-called individualistic societies), a special way to address customers is necessary. How this sales approach can happen, whether with CRM programs or with a much localized advertising campaign, was explained in the previous paragraphs and was illustrated with some examples. Appendix 1, (Figure 22-48, 64, 66, 77) offers further visuals, and makes the meaning of this orientation in consumer behaviour (and therefore in advertising – promotion of the 4Ps) apparent. Just how far marketing mix localization can go, is shown firstly in the case-study (Part D) and secondly in the exhibits showing various McDonalds products from Prosperity Burger to McD Ayam (Appendix 1, Figure 7-11).

Trompenaars’ and Hampden-Turner's “communitarianism versus individualism” value orientation (Trompenaars and Hampden-Turner 1997: 50-68; Trompenaars and Woolliams 2004: 62-72) is virtually identical to Hofstede's “collectivism versus individualism” dimension (Hofstede and Hofstede 2005: 73-114). This orientation reflects one of the most frequently discussed and researched concepts. Hofstede defines this dimension as follows:

"Individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after him- or herself and his or her immediate family. Collectivism as its opposite pertains to societies in which people from birth onwards are integrated into strong, cohesive in-groups, which throughout people's lifetime continue to protect them in exchange for unquestioning loyalty." (Hofstede 1994: 51; Hofstede and Hofstede 2005: 76)

Collectivism and individualism deeply pervade cultures since an individualistic culture sees the individual as the end and improvements to collective arrangements as the means of achieving it. Individualism is based on the principle of asserting one’s independence and individuality. All societies have individuals and groups, but individualism stresses the smallest unit as being that where the solution lies (Usunier and Lee 2005: 55). Individualism has been described by Parsons and Shils (1951: 10) as “a prime orientation to the self”, and collectivism as “a prime orientation to common goals and objectives” (Trompenaars and Hampden-Turner 1997: 50). Collectivistic societies consider not the individual, but the group to be the most fundamental component of society (Trompenaars and Hampden-Turner 1997: 57). The orientation covers how people relate to others and concerns the conflict between what one wants as an individual and the interests of the group to which one belongs (Trompenaars and Woolliams 2004: 62-63; Trompenaars and Hampden-Turner 1997: 50).

In individualistic cultures, one’s identity is in the person. People are “I”-conscious, express personal opinions, and self-actualization is important; individual decisions are valued more highly than group decisions. In collectivistic cultures, people are “we”-conscious (Newman and Grauerholz 2002: 52-54). Their identity is based on the social system to which they belong, and it is important to avoid the loss of “face” (preservation of face).

Collectivistic cultures are, in contrast, “shame” cultures (Bakhtiar 1994; Neckel 1991). The expression used by people from collectivistic cultures is having or losing “face”. Another difference between individualistic and collectivistic cultures is it that in the latter, priority is given to relationships with people, whereas in individualistic cultures, priority is given to tasks.

Between 70 and 80 percent of the world’s population is more or less collectivistic. All of Asia, Africa, and Latin America are collectivistic (de Mooij 2005: 62). Indonesia scored 14 on the individualism index which is rank 68-69, compared to Singapore which scored 20 like China (rank 56-61), and Malaysia, 26 (rank 52). A lower score in the dimension, i.e. a lower rank, stands for rather collectivistic societies and vice versa.

Figure C-17 Indonesia scoring rather collectivistically

Many countries that score highly on Hofstede’s power-distance-index (portrayed later in this chapter) score low on the individualism index and vice versa, which corroborates the negative correlation between the two dimensions. These assumptions are confirmed by Talcott Parsons (1937), well known for his idea that every group or society tends to fulfil four “functional imperatives” (structural functionalism), which support the assertion of correlations between Trompenaars’ and Hampden-Turner’s dimensions. One of the characteristics used by him to describe societies is the differentiation between “group” and “self”. A society whose priority is “group”, i.e. a collectivistic society, also shows, according to Parsons, the characteristics of “particular” which can be translated as being “particularistic” in Trompenaars’ and Hofstede’s terms (described in the prior paragraph about rule orientation). One can therefore assert that collectivistic societies are rather particularistic, too, and individualistic societies are rather universalistic.

Figure C-18 Correlations between different orientations

In the context of this orientation (which is of the utmost importance for the Indonesian and for Asian cultural as well as consumer behaviour) it was deemed necessary to explain first the effects of the orientation on cultural behaviour, prior to explaining the cultural premises of the orientation. The decision to proceed in this way was taken since this orientation can be considered basically one of the most important for consumer behaviour and the orientation is clearly reflected in everyday life. It is precisely this behaviour evident in everyday life (cultural behaviour) which influences consumer behaviour.

Extreme collectivism and extreme individualism can be considered the opposite poles of the second global orientation of national cultures, and have been studied by Hofstede (1991, 2005) as well as Trompenaars and Hampden-Turner (1997). In individualistic societies, relationships with others are not obvious and prearranged: they are voluntary and have to be carefully fostered. In the collectivistic society, there is no need to make specific friendships: who one’s friends are, is predetermined by one’s family or group membership. In collectivistic societies, such as Indonesia, the family within which the child grows up consists of a number of people living closely together: not just the parents and other children, but, for example, grandparents, uncles, aunts, servants, or other housemates. This is known in cultural anthropology as the “extended family” (consanguineous family) and used to refer to kindred (an egocentric network of relatives that extends beyond the domestic group) who do not belong to the conjugal family (Hill and Kopp 1989: 44-58; Newman and Grauerholz 2002: 7-12¸ Saxton 1983: 327-329). Cultures in which the extended family is common, usually happen to be collectivistic cultures (Newman and Grauerholz 2002: 55-56). When children grow up, they learn to think of themselves as part of a “we” group, a relationship that is not voluntary but innate. The “we” group is distinct from other people in society who belong to “they” groups, of which there are many. The “we” group (or in-group) is the major source of one’s identity and the only secure protection one has against life’s hardships. Therefore one owes lifelong loyalty to one’s in-group, and breaking this loyalty is one of the worst things a person can do (AS, interview November 2004). A mutual dependence relationship which is both practical and psychological develops between the person and the in-group. The loyalty to the group that is an essential element of the collectivistic family also means that resources are shared. If one member of an extended family of twenty persons has a paid job and the others do not, the earning member is supposed to share his or her income in order to help feed the entire family (HS, conference October 2004).

In contrast, a minority of people in the world lives in societies in which the interests of the individual prevail over the interests of the group and which are called individualistic. There, most children are born into families consisting of mother, father and, possibly, other children. This type is called “nuclear family” (conjugal family) (Hill and Kopp 1989: 44-58; Newman and Grauerholz 2002: 7; Saxton 1983: 327-329; Hutter 1981: 94). A conjugal family (sometimes known by the British sociological term, “cornflake family”) is a household distinct from the extended family (Newman and Grauerholz 2002: 7). Nuclear families are typical in societies where people must be relatively mobile, such as hunter-gatherers and industrial societies (Hill and Kopp 1989: 44-58). In nuclear families, relatives tend to live elsewhere and are rarely seen. As they grow up, children from families such as these, soon learn to think of themselves as “I”. This “I”, their personal identity, is distinct from other people’s “I” (Hofstede and Hofstede 2005: 75).

In an environment of intense and continuous social contact (such as that of an extended family), the maintenance of harmony with one’s social environment becomes a key virtue that extends to other spheres beyond the family. In most collectivistic cultures, direct confrontation by another person is considered rude and undesirable. The word “no” is seldom used, because saying “no” is confrontational. In individualistic cultures, on the other hand, speaking one’s mind is a virtue (Hofstede and Hofstede 2005: 86). Confrontation can be salutary: a clash of opinions is believed to lead to a higher truth. According to Magnis-Suseno, in the region of Java described by him, obedience within the family is not sanctioned by the mother’s punishment or expression of disapproval, but rather by the threat that some external force (bad spirits, dogs and strangers) will do something to the child (Magnis-Suseno 1981: 44). In this way, the child experiences its own family solely as the source of its emotional and physical security. Every type of behaviour which is in accordance with the family unit, is internalized as being correct. By the same token, everything which divides the family is considered to be wrong. The outside world is a permanent threat. Magnis-Suseno has a direct explanation as to why Javanese, even when they are adults, fit unreservedly into their groups in the same way. To be opposed to someone else’s will, is tantamount to revolt spiritually and emotionally. The principle of conflict avoidance is ultimately extended to social relationships as a whole. The code of customs of the common law “adat” is especially affected by it. Avoiding confrontation (“rukun”) is the most important commandment (Mulder 1978: 39).

The orientation and communication

When people meet in an individualistic culture they feel the need to communicate verbally (Hofstede and Hofstede 2005: 88), in order to confirm their relationship to one another. Merely being present is insufficient, and silence can lead to misapprehensions. Social conversations can be depressingly banal, but they are compulsory. In a collectivistic culture, the fact of being together is emotionally sufficient; there is no compulsion to talk unless there is information to be transferred. Raden Mad Hadjiwibowo, an Indonesian businessman from a Javanese noble family, recalls family visits from his youth as follows (Hofstede and Hofstede 2005: 88-89):

“Visits among Javanese family members needed no previous appointment. … it never occurred to one that a visit would not suit the other party. It was always convenient. […] There we sat, but nobody spoke. We were not embarrassed by this silence; nobody felt nervous about it. Every now and then, thoughts and news were exchanged. But this was not really necessary. We enjoyed being together, seeing each other again. After the first exchange of news, any other communication was utterly redundant. […] After an hour or so, the guests would ask permission to leave. With mutual feelings of satisfaction, we parted. In smaller towns on the island of Java life is still like this ...” (Hofstede and Hofstede 2005: 88-89)

According to this quotation, mere physical togetherness suffices, and constant chatter and communication is superfluous. This, of course, does not imply that Indonesians always remain silent. They are very loquacious; what is important is that speaking is not necessary to confirm their relationship to another conversation partner. For this, mere presence will suffice. When discussing this orientation, the following theories are also to be examined. In the context of language and communication, U.S. anthropologist Edward T. Hall (1959, 1966, 1976) distinguished cultures on the basis of their way of communicating along a dimension from high-context to low-context (Hall and Hall 1989: 6-10; Hall 1976: 101). According to Hall (Hall and Hall 1989: 6) “context is the information that surrounds an event…” Hall (1976: 101) explains:

"High context transactions feature pre-programmed information that is in the receiver and in the setting, with only minimal information in the transmitted message. Low context transactions are the reverse. Most of the information must be in the transmitted message in order to make up for what is missing in the context." (Hall 1976: 101)

High-context communication is one in which little has to be said or written because it is mostly either in the physical environment or supposed to be known by the persons involved, while very little is in the coded, explicit part of the message (Hall and Hall 1989: 6-7). This type of communication is frequent in collectivistic cultures. Hall (1989: 6) explains that Japanese, Arabs, and Mediterranean peoples, who have extensive information networks among family, friends, colleagues, and clients and who are involved in close personal relationships, are high-context. A low-context communication form is one in which the mass of information is vested in the explicit code, which is typical for individualistic cultures. Many things that in collectivistic cultures are self-evident must be said explicitly in individualistic cultures (Hall and Hall 1989: 9). Although Hall does not define “context” precisely, the following components can reasonably be presumed: location, people involved (age, gender, dress, social standing, etc) (Hall and Hall 1989: 6).

As a result of the following analysis, Indonesia, (as many other Asian countries) can be described as a culture of high-context communication, i.e. a culture where context plays a significant role. One example is the rule of politeness; the manner of speaking perceptibly shifts in register according to the age, gender and social position of the conversation partner, as well as the relative positions of the speakers (pupil/teacher, buyer/seller, and employer/employee). The word “no” exists in Bahasa Indonesia but is rarely used (Nothofer 2001: 29).

The orientation and language

So far, the mostly high- and low-context modes of communication and their relationship to meaning in general have been discussed. Yet the cultural element “language”, generally assumed to be associated with the social orientation of a society, (Sapir 1929: 214) has not been discussed. Yoshi and Emiko Kashima (1998: 461-486) studied the relationship between culture and language. Among other features of languages, they studied “pronoun drop”, the practice of omitting the first-person singular pronoun from a sentence. They included thirty-nine languages used in seventy-one different countries and looked for correlations with a number of other variables. The strongest correlation was found in the social orientation, i.e. between collectivism and the pronoun drop practice.

Languages spoken in individualistic cultures tend to require speakers to use the “I” pronoun when referring to themselves, whereas languages spoken in collectivistic cultures allow or prescribe dropping this pronoun. “Bahasa Indonesia” (Indonesian language), a normative form of the Malay language, (an Austronesian or Malayo-Polynesian language) (Bellwood 1997: 97-99; Sneddon 2003: 7-10) which had been used as a lingua franca in the Indonesian archipelago for centuries (Bellwood 1997: 141), and was elevated to the status of official language in 1945, practices the “pronoun drop”, too, as well as the drop of subjects where grammatically allowed (Sneddon 1996: 160-165; Nothofer 1998: xiii-xv, 9; 1992: 10). The “pronoun drop” in Bahasa Indonesia, a grammatical phenomenon of many languages spoken in collectivistic societies, underscores the conclusion (made by Trompenaars and Hampden-Turner as well as Hofstede) that Indonesia scores rather as a collectivistic-oriented country. However, Bahasa Indonesia’s and other regional Indonesian languages’ (such as Javanese and Sundanese) grammar rules seem to have major impact on dimensions concerning, for example, the status orientation (ascribed versus achieved status) and the power orientation (high versus low power-distance) (both orientations will be discussed later), too, since many of these regional languages use different personal and possessive pronouns depending on characteristics (age, status, kin group) of the person addressed, and also show the pronoun-drop rule (Nothofer 2001: 29-32).

An analysis of not only the main language Bahasa Indonesia but also of regional languages and dialects gives rise to the impression that these were languages whose grammatical rules (for example pronoun drop) are similar to those in other collectivistic countries. This in turn reinforces the impression that these languages shape Indonesian society collectivistically. Further linguistic characteristics which could support the contention that Indonesian society can be described as collectivistically oriented, are the following.

The English language, spoken in the most individualistic countries, (the United States, Australia and the United Kingdom) representing ranks one to three on Hofstede’s individualism index (IDV) Hofstede and Hofstede 2005: 78), is the only one that writes “I” with a capital letter. In Bahasa Indonesia, for example, the word “saya” (meaning “I” in English) is actually often dropped because its usage is seen as inappropriate in certain circumstances (Sneddon 1996: 165). Hazel Rose Marks and Shinobu Kitayama (1994) argue that the way people experience their self differs with the culture they live in and influences whether a culture is rather individualistic or collectivistic.

According to Hofstede’s interpretation (2005: 93), “… individualistic cultures encourage an independent self [whereas] collectivistic cultures an interdependent self”. It is generally believed that the essence of the relationship between the individual and society, at least in the West, has changed considerably since the Renaissance (Martin 2004). In earlier societies, individuals were defined primarily in terms of their surrounding community: the family, the clan, the tribe, the city-state or the feudal group (Trompenaars and Hampden-Turner 1997: 52) but with individualism being the result of periods of intense innovation such as the Renaissance, the Age of Exploration, the Netherlands’ Golden Age, the Age of Enlightenment, and the Industrial Revolution, collectivistic behaviour was repelled (Zwiedineck-Südenhorst 1949; Weippert 1949). In contrast, the Arabic-Islamic region and later the Ottoman Empire too, did not experience the enlightenment and thereby secularization, which rejects the theological idyll of unity of church and state (Hendrich 2004: 47-62), and which does not significantly support the development of the individual independent of his environment. Since the Indonesian archipelago was outside the sphere of influence of this era, it can be assumed that it was largely unaffected by this development.

Hadiwijono (1967: 51) investigates among others, the individualization factor in Indian influenced Javanese traditions. Accordingly, an explicit historically grown concept of mankind can be derived from old Hindu-Buddhist Javanese sources. Individualization is regarded here, however, as negative. Precisely as a result of individualization, human beings suffer, which means that they are bound to the cycle of reincarnation According to this, individualistic actions should be avoided and one should conform to the group. Freedom in this connection is only seen as liberation from the coarse, i.e. from the material world and personal, individual passions. Furthermore, “adat” is endowed with a spirit of collectivism (Garang 1974: 27). In Indonesia, the collective system is summed up, for example, in the expression “gotong-royong”. The origins can be traced, among others, to external conditions (the effect of the environment on people and their culture has been well-known since the age of Enlightenment) for example, in the working practices of wet rice cultivation, which requires mutual support and help. These environmental factors determine an individual’s or group’s behaviour and lead to conforming behavioural patterns, i.e. to cooperative oriented working patterns within the community (Garang 1974: 31).

A whole range of causes and effects has been offered to explain the decreasing importance and appeal of collectivistic behaviour (Usunier and Lee 2005: 54-56). But the idea that increasing individualism is a part of the rise of civilization itself, needs to be treated as a cultural belief rather than an undisputed fact, explains Hofstede (2005: 110-114), since Asian societies which have experienced modernization in the form of economic development still score rather more collectivistically than individualistically. The cultural contribution of the Age of Enlightenment (which advocated rationality regarding ideas concerning God and instigated revolutionary developments which influenced pietism) leads to a further important cultural element for the social orientation: religion. This means that, besides language which seems to influence societal behavioural modes resulting in a rather individualistic or collectivistic score, religion needs to undergo examination to decode its influence on this dimension. However, the consensus of opinion is that religion is not the definitive criterion for the investigation and classification of a country within the social orientation since, as already shown, the cultural element “language“ provides unequivocal clues. The following observations on religion are therefore kept to a minimum.

According to Hofstede (2005: 112), there is considerable evidence that individualism and collectivism follow the Protestant-Catholic religious divide. Trompenaars and Hampden-Turner (1997: 52-53) offer the following explanation. Each Puritan worshipper approached God as a separate being, seeking justification through works. Roman Catholics have always approached God as a community of the faithful. Research has found that Catholics score higher on group choices and Protestants significantly lower. Hofstede, too, confirms this with his findings that Latin catholic cultures, along with Asian cultures of the Pacific Rim, score lower on individualism than the Protestant West, particularly the U.S.

Although no research has been done on Islam in this respect, Arab countries, as well as Pakistan and Turkey score rather collectivistically in Hofstede’s research with Indonesia emerging as one of the most collectivistic countries (rank 68-69 of 74) (Hofstede and Hofstede 2005: 83). In Arabic, Islam means "submission" (understood as submission to God) (Newby 2002: I) and is described as a “Dīn” or “Deen”, meaning “way of life” and/or “religion” which indicates the unity of Muslims (community of the faithful, no separate being) who do not believe in absolute free will, since that contradicts God's omniscience and omnipotence. There is no official religious authority which decides whether a person is accepted into, or dismissed from, the community of believers, known as the “Ummah” (family or nation). Muslims regardless of differences regard themselves as one “ummah” (Newby 2002: U). The latter, seen as a community of believers as opposed to non-believers, manifests collectivistic orientations in its rituals of collectivistically oriented nature, for example, the pilgrimage to Mecca, fasting or the Friday prayers (which often have a significant community or even political role). The assumption that a collectivistic orientation in Islam colours Indonesian society is reinforced still further through basic Islamic tenets, i.e. equality and fraternity between all believers. The hypothesis that Indonesia is a collectivistically shaped society is further confirmed by this.

Thus, following this discussion, it can be declared as proven that Indonesia is to be classified as rather collectivistic. The effects of this collectivistic orientation on consumer behaviour and international marketing will be shown in the following section.

The following remarks commence with a brief overview of to what extent scholars consider that the purchasing-decision process is influenced by the social orientation. So far, in this field of research, the individual who makes a usage oriented purchasing-decision has been the focus. However, the latest research from the Asia-Pacific region reveals that the decision to purchase a certain product or service is not always an individual one, especially in collectivistically oriented societies, where groups such as the family influence the decision to purchase considerably more than in individualistically oriented cultures (HS, lecture October 2004).

After introducing the literature which reflects these new findings, an investigation of the repercussions of the social orientation on advertising will be carried out. A comprehensive perspective has been chosen, i.e. advertising initiatives from the collectivistically oriented Indonesia will be compared to those of individualistic societies. Furthermore, an example from the German advertising world has been chosen with the presentation of the ice cream brand Magnum. With the help of this example, the extent to which advertising reacts to political and social transformations (which can in turn alter consumer attitudes) is illustrated. This example should be seen as a means of making the reader sensitive to the case-study in which Unilever Indonesia reacted to societal change (Part D). Subsequently, with the aid of an example (growth in the fitness sector) a discussion will be held as to whether or not a change of orientation (in the area of conflict between individualism versus collectivism) is perceptible in Indonesian society. Firstly, however, a brief overview of current research in the field of purchasing decision-making is necessary.

The orientation and purchasing decisions

As aforementioned, most of the available marketing literature depicts individual consumers who make their own decisions (Jeannet and Hennessey 2001: 201-207). While the individualistic conception remains very much at the heart of the mental picture of marketing, there has lately been recognition of shared social intentions. For instance, Bagozzi and Lee (2002: 229-230) describe the concept of social intentions, termed “we-intentions”, to perform a group act. While there is a great deal of support for attitudes and subjective norms explaining individual intentions, they suggest a greater influence of the group on we-intentions, including group norms and social identity. They find multiple group influences on we-intentions, including social identity for Korean consumers. In similar studies, for example by Lee and Soutar (2004), it is also found that group norms strongly influence Singaporean’s we-intentions to travel to Australia. Another area of research, i.e. family decision-making, has a history of examining group decisions. The family is often seen as an interacting group of individuals, all influencing each other. While an organic conception of the family as a single-decision-making unit is not easily grasped, some intercultural consumer behaviour researchers have depicted the family group as an organic entity, as opposed to a casual collection of individuals who share information and some common interests and constraints, living together within the family cell. This is particularly true in Asia. Redding (1982: 112-113), for instance, emphasizes that:

“In most Asian cultures there is a particular grouping to which a person belongs, which involves him or her in patterns of obligation and behaviour of a special kind … It would, for instance be naïve to suppose that the spending power of a teenage market in a western country would be equivalent to one in, say, Hong Kong or Singapore.” (Redding 1982: 112-113)

The discretion over the use of income is heavily influenced, in the case of the Chinese teenager, by the expected contribution to the family. The tradition of deference to parental wishes also affects buying patterns in clothing, leisure expenditure, etc., especially as it is normal to live at home until marriage, i.e. expenditure for certain things which are used communally by the family, can be much higher, since numerous family members can be involved in financing the purchase.

The influence of collectivism on family decision-making has been well documented in literature where, particularly in China, Taiwan and Japan, a high level of joint decision-making has been reported (Chen et al. 1999). For China, Yang (1989) describes the influence of what she calls “familism” on behaviour as individuals, as family members and as consumers. The dimension of individualism versus collectivism presents that the vast majority of people in the world live in societies in which the interest of the group prevails over the interest of the individual (more countries cluster in the quadrant representing “collectivism” than in the quadrant “individualism” (Hofstede and Hofstede 2005: 83). The delimitation of particularistic behaviour on the family is also apparent in the economic sphere. The overseas Chinese business conglomerates are almost exclusively family businesses (Wijaya 2002: 229-256; Hamilton 1996: 13-26).

The orientation and advertising

All the aforementioned works reflect initial approaches as to how a collectivistic social orientation affects purchasing decisions. Subsequently, how purchasing decisions in collectivistic oriented societies are reflected in advertising, will be ascertained. To illustrate the analysis, where necessary, current examples taken from the world of advertising have been selected and compared to advertisements in less collectivistically oriented societies. The difference between collectivistic and individualistic cultures is reflected in the different roles of advertising and branding. In collectivistic cultures, corporate brands are favoured over product brands (de Mooij 2005: 64). In Indonesia, one can build a relationship between a company and consumers better than between (abstract) brands and consumers, which leads to public relations (PR) activities, in which the company being presented is considered more important than in the United States, for example, which scores rather individualistically. This often happens with the help of advertorials or newspaper articles about the company which do not always name the client. However, the consumer is not only interested in the manufacturer but also in its products; the product brands play a lesser role than the manufacturing brand or the name of the manufacturer in collectivistic oriented societies (HS, interview December 2004). In collectivistic cultures, people are more interested in concrete product features than in abstract brands, reflected in the fact that the Indonesian consumer asks a lot of questions and this results in a more time-consuming purchasing process.

Individualists tend to see brands as unique human personalities. In the extremely individualistic United States, even children have been named after big brands, such as L’Oréal, Chevrolet, and Armani, as de Mooij (2005: 65) vividly notes. More examples of the differences between individualistic and collectivistic countries could be added, but in the interest of brevity only a few have been quoted. In collectivistic societies the brand is seen as a symbol or an organization, whereas in individualistic societies it is regarded as a person or a concrete product. This behaviour is another reason for the high quality expectations in rather collectivistically oriented societies. This was especially apparent during the Asian crisis during which consumers did not switch to cheaper generic (no-name) products, private label products or “me-too” products but stuck to reputable companies which symbolize quality and trust to them more so than product brands do. Trust and quality are to be found in the organization (firm) or its logo, rather than in the brand name or the product itself. In this way, Indofood and Nestlé and their company logos are trusted rather than the individual products and brand names of these companies. This observation has to be taken into account when labelling products and advertising them. Well-known and trustworthy individuals should make their name and logo clearly visible to Indonesian consumers. Unilever Indonesia’s campaign for Sunsilk shampoo clearly shows Unilever’s name although Sunsilk is actually the brand name being advertised. In other countries the Unilever logo in Sunsilk campaigns is not visible.

As described elsewhere, an important difference between individualistic and collectivistic cultures is between low- and high-context communication. In individualistic cultures, the public tends to be addressed in a direct and personalized way. Words like “you”, “we”, and “I” are frequently used. So are imperatives. Some examples from highly individualistic cultures are: “Mein Magnum und Ich” (My Magnum and I) (Magnum of Unilever), “Just do it” (Nike), “I’m lovin’ it” (McDonald’s). In rather individualistic cultures, the personal pronoun “I” is frequently used, as in the global advertisement for McDonald’s. Such approaches tend to be rather unattractive in collectivistically oriented cultures, especially in countries where the pronoun-drop in languages is prevalent. The considerable impact with which a language endows advertisements reflects its importance as an influential cultural element on this orientation. The following example is designed to show how certain events can alter communication and visual language in advertising initiatives.

Figure C-19 Advertising and purchasing decisions (1)

Figure C-20 Advertising and purchasing decisions (2)

Magnum ice cream and the September 11th

According to Unilever Germany (GM, Unilever Germany, speech November 2002), the events of September 11^th led to a perceptible shift of the social orientation towards collectivism in all societies. This led to a rejection of extreme hedonism (shown in individualism), in favour of so-called soft-hedonism (which is more collectivistically coloured) to use the language of advertisers and trend scouts in Germany. This reflects a global change of values which resulted in family and religion assuming greater importance. The post-September 11^th metamorphosis had to be translated visually into advertising language. Unilever Germany, for example, reacted by changing the way in which the ice cream brand Magnum was positioned and communicated. The hedonistic, almost egoistic appearing ice cream which was eaten alone (seen in the campaign Me & My Magnum) in the 1990s became the caring, sharing ice cream of post-September 11^th society. The content and visual language of the campaign had changed radically. The solitary character was replaced by a group of family and friends eating this brand of ice cream together. Even the range of products was adjusted accordingly to match changes in society. This led to the introduction of ice cream products with the brand name Magnum, intended to be shared and eaten together. This example highlights the influence of the social orientation on every day behaviour and consequently on consumer behaviour. As is the case for each of the orientations, these values will remain stable in the long term. However, value orientations can shift short and mid-term in the area of the social orientation either towards collectivism or individualism. This can be seen as a result of the events of September 11^th which caused a rupture, especially in Western societies.

The orientation expressed in the visual language of advertising campaigns

The following aspect demonstrates, too, the considerable difference between collectivistic and individualistic societies as reflected in advertisements. The difference between the independent and interdependent self has an important impact on advertising appeal. Members of individualistic and collectivistic societies will respond differently to advertisements emphasizing individualistic or collectivistic appeals. In collectivistic cultures, such as Indonesia, appeals focusing on in-group benefits, harmony, and family are more effective. In individualistic cultures like the United States, advertising is more effective when appeals to individual benefits and preferences, personal success, and independence are made. A commercial where a man breaks out from a group and starts doing something on his own that the group has not thought of, would be seen positively in individualistic cultures but negatively in collectivistic Indonesia (AS, interview November 2004). Furthermore, the following aspect is important not only for advertising but also for product development. Whereas in collectivistic cultures people like to share things, in individualistic cultures people tend to keep the nice things for themselves. The above-mentioned ice cream brand Magnum has used this approach, as illustrated in their advertisements that say, “I share many things, but not everything”. A statement such as this would be unthinkable in Indonesia, as interviews revealed. Furthermore, as demonstrated, in collectivistically oriented societies a lot of things are shared. Gerke (1995, 2000), shows that students, for example, purchase an item of clothing together, which the group members can take in turns to wear. This fact should be borne in mind should a product be developed especially for collectivistically oriented societies.

The orientation also impacts on visual language and communication. In collectivistic societies, people do not like being alone or eating alone, whereas in individualistic societies people cherish their privacy. In collectivistic cultures, being alone means one has no friends or identity (JK, lecture October 2004). If one is alone, one is outside the group to which one belongs. This difference between advertisements showing individuals and loners, or showing people as part of groups is particularly evident in the visual language of advertising campaigns. Whereas in individualistic cultures people can enjoy fast food alone and being alone can even have a relaxing function, this is not the case in collectivistic cultures where people enjoy food together as illustrated below. Visuals by “McDonald’s Indonesia” or “KFC Indonesia” reflect this aspect: people in their commercials never eat alone, but always with family and friends.

Concepts reflecting collectivism may be more successful across borders than the highly individualistic approach. Marlboro, although not a resounding success in Indonesia (Marlboro’s parent company Altria bought the Indonesian cigarette maker Sampoerna to increase market share and sales in Indonesia) (de Mooij 2005), was more successful in Asia than Camel. The Camel man represented the lonely, masculine individual whereas the (also very masculine) Marlboro cowboy was implicitly part of a group. Sometimes he was seen alone, but he always returned to the campfire, to his companions. This is of course merely an assumption, but it appeared to interviewees in Indonesia to be a plausible explanation (AS, interview October 2004; BR, interview October 2004).

Figure C-21 Collectivism and visual language

However, in this context a value paradox between belonging-independence can also be recognized in Indonesian advertising, where on the one hand one sees groups of people in advertising, but on the other hand celebrities endorsing a product frequently are depicted alone. This reflects the fact that desired values can be diametrically opposed to one’s own reality (for example, individual success as a contrast to conformance to the group) (de Mooij 2005: 172).

Tag lines in advertising campaigns

Advertising content in individualistic cultures can refer explicitly to the independent self, for example “Designed for the Individual” (Mitsubishi, UK), “In a world of conformity some things are still made for the individual” (Herblein watch), and “Go your own way” (Ford Probe). Examples of collectivistic claims are “Prospering together” (Chiyoda Bank), Philips Electronics presents the slogan “Together we make your life better” in some cultures (always in local language) whereas in Dutch and German advertisements, the claim is “Let’s make things better” (always in English). The name “Tchibo Privat Kaffee” (Tchibo Private Coffee), makes such universalistic claims as “Überall auf der Welt” (everywhere in the world), supposing that the feeling will be the same for all people in the world who drink coffee. “Worldwide” and “world” are power words for individualistic societies, whereas “modern” and “international” (they appeal to the need to conform, and to belong to a new and greater world) are popular appeals in collectivistic cultures. Reader’s Digest (www.rdtrustedbrands.com), for example, publishes data on personal traits found in readership surveys. One of the traits is measured on the scale modern-traditional and the percentages of answers from people who considered themselves to be modern correlate with collectivism.

Considering the fact that approximately 70 percent of the world population is more or less collectivistic and many global advertising campaigns (usually made in their international advertising centres London or New York) reflect individualistic values, it is fair to assume that much global advertising is only effective for a small part of the target group. Most global ads address people in a direct way, show people alone, and refer to all sorts of individualistic claims such as “the power for self-expression”, (for example an international ad for Lexus).

The body and the self: an indicator of growing individualism in Indonesia?

After explaining the influences of the social orientation on advertising, an investigation of the phenomenon observed, i.e. of the trend among certain social strata signing up at a fitness club, will follow. In the field of market research, this trend has often been associated with individualization in society. Closer inspection of consumer expectations and behaviour has revealed however, that this assumption was not tenable in Indonesia. This trend was selected since the significance of local in global trends is abundantly apparent here. It is actually the area of leisure activities where changes have occurred which could easily be misinterpreted as signs of growing individualism in Indonesia. The following comments on the increasing popularity of fitness centres in Indonesia (as in other countries in Southeast Asia) is intended to demonstrate that exact analysis and interpretation of trends is necessary if they are not to be misinterpreted as a change in social orientation (values).

In Indonesia, fitness clubs which offer training facilities to individuals for individual sports (as opposed to team sports) seem to be gaining in popularity, at least with certain segments of society, usually younger people who have the financial means to join a fitness club and reside in one of Indonesia’s major cities. The success of muscle growth health supplements, sold nearly everywhere, confirms, together with images of men in advertisements, the trend towards a more hedonistic beauty ideal in Indonesia reminiscent of those in the Europe of the 1980s and 1990s. De Mooij (2005: 78) notes that there is no indication that individualistic cultures are healthier or unhealthier than collectivistic cultures, but the fact that people in individualistic cultures are more focused on their self is visible in a greater concern for their own health than is the case in collectivistic cultures. Analyzing the fitness trend in Indonesia and the seemingly hedonistic attitude of young Indonesians, no matter from which racial and religious background, falsely leads one to believe that this trend is a reflection of the individualization of society, i.e. a shift of the social orientation towards individualism. The following observation may also lead people unfamiliar with Indonesian society to drawing such conclusions.

A California fitness manager explained why the chain’s club in the entertainment centre of Jakarta’s famous Plaza Indonesia shopping centre offers workout facilities which allow mall visitors to watch men and women “exhibiting” themselves while doing sports: “Indonesians like this; we even added another floor where shoppers and fitness club members are only separated by panoramic glass windows” (CFM, interview September 2004). These windows do not fall short of their target. Many shoppers watch the sports enthusiasts watching shoppers admiring their stamina and beauty from behind windows in a steel-and-glass environment. Similar developments can be witnessed in Singapore where “The Straits Times” presents a so-called “HotBod” section of men and women showing-off their trained bodies in its Sunday edition, which in the Sunday papers in more individualistically oriented Germany (compared to Singapore) would be scarcely imaginable.

Conversations which took place in Jakarta quickly revealed however, that individualism only appears to play a role in the fitness and beauty trend. In individualistic countries such as the United Kingdom, people sign up at fitness clubs in order to work out when and how they please. Such individualistic thoughts however do not apply in Indonesia. There, the emphasis is on wanting to play sports with other people in a safe, clean and cool environment. When visiting one of these clubs, the notion of “communal“ becomes apparent when one sees people swapping machines and when it is realized that group training is the most popular form of training for both men and women. The following comments are intended to explain these findings with the aid of diverse examples.

With regard to Indonesia scoring collectivistically and being described as “not a place to be alone”, one can also assume that Indonesians prefer to do sports (as well as so many other activities) with others. Nothofer (1992: 74) reflects this assertion through his research into the Indonesian language. He explains that in most Western languages words like “noisy”, “busy” and “highly populated” are negatively connoted whereas “quiet” is seen in a positive way. Nothofer explains that in Indonesia the opposite is true. “Ramai” (noisy, busy) is seen positively and “sepi” (quiet), negatively. This can be seen as suggestive in the sense that Indonesians prefer to be with a group of people, instead of being alone. There might seem to be a positive correlation between individual sports/leisure activities and a move towards a more individualistic society. This, however, is not the case. In fact, the reverse is true. Indonesia reveals collectivistic leanings since the population prefers being in a group and the crowded fitness centre atmosphere panders to this predilection. Nothofer (1992: 74) adds that when Indonesians are confronted with loneliness (“kesepian”), they tend to switch on the radio or TV in order to create an atmosphere of “ramai” (noisy, crowded) which they prefer to quiet surroundings. Living-space prices reflect this preference, too, i.e. houses and flats are most expensive in lively, rather noisy areas, as it comes with the positive connotation of having access to markets, services, goods and wealth (PM, interview December 2004; PM is the wife of a Soeharto minister and society lady whose family owns several domiciles in Menteng). The mansion in which the interview took place is in heavy traffic Jalan Surabaya where one side of the road is occupied by informal traders, attracting hundreds of customers per day, and the other, by exclusive houses protected by meter high concrete walls). Despite being able to build palatial-like mansions for her family in South Jakarta (Kebayoran Baru and Pondok) where there is much less traffic and noise and more space, she answered that she would never move, giving the exact reason of “kesepian”, mentioned above.

Possible misinterpretations of the orientation’s impacts

Caution is necessary however when investigating the repercussions of the social orientation on certain behavioural patterns or preferences which could be interpreted as collectivistic in one society, but could have an entirely different significance in another country. The following examples are intended to draw attention to the danger of an ethnocentric analysis of consumer behaviour.

Marieke de Mooij (2000, 2005) compared fifteen European countries and finds meaningful correlations between consumers’ behavioural data and the social orientation. In all these cases, a country’s score on the individualism versus collectivism index (social orientation) explains the country differences in consumer behaviour better than national wealth does, argues de Mooij. According to her consumer survey, persons in rather individualistic countries are more likely to live in detached houses than in apartments or flats compared to collectivistic countries. This first correlation is not applicable to Indonesia. In Indonesia most people live in houses, not flats, although particularly in urban regions, flats in the form of condominiums are becoming increasingly popular. This is because these housing developments offer many facilities (Appendix, Figure 253-271) which the average owner of a condominium flat could not afford to install in his or her house. Therefore, in Indonesia, although it scores rather collectivistically, most people live in houses. The trend towards people moving into apartments and flats in condominiums cannot be seen as a trend in the direction of collectivism, as de Mooij’s study would suggest, but rather in the direction of individualism, i.e. of having one’s own space separate from the extended family (Interviews with residents of Apartemen Taman Rasuna Said 2004).

Figure C-22 Housing developments in Indonesia

In addition, de Mooij (2005: 63) remarks that people in individualistic countries are more likely to have a private garden and to own a caravan (trailer, mobile home) for leisure. To associate caravan ownership with individualistic behaviour (in the sense that one has the freedom to go and stay wherever one wants), might be valuable in the American or European context where this correlation exists. However, applied to other cultures where travelling by caravan seems uncomfortable or even uncivilized to members of the social strata who could afford such a vehicle, this correlation is meaningless (AS, interview October 2004; BR, interview October 2004). De Mooij (2005) also finds proof of a correlation between individualism and home ownership as well as life insurance. High rates of home ownership exist in Indonesia as in many other Asian countries, although they score rather collectivistically. Indeed, Asia has the highest home ownership and saving rates in the world. The fact that life insurance has not taken off in many countries in the Asia Pacific region seems does not seem to be associated with collectivistic values, but rather with legislation which prevented foreign insurance companies from offering insurances to local individuals in many markets. However, as soon as the financial and insurance markets were liberalized, in the case of Indonesia after 1998, sales of life insurance and other financial products soared. These examples show that de Mooij’s correlations are culturally bound, if not ethnocentric. It seems logical that do-it-yourself (DIY) activities, (which reflect the idea of a lifestyle in which the person tries to be self-supporting and not dependent on others), tend to be more popular in individualistic countries and reflect the way of life in such societies. But the reasons why, for example, DIY activities are not adopted by Indonesians are not connected to collectivism but to Indonesia’s cultural traditions where manual labour is seen as low-class. These examples demonstrate that simply transferring results from consumer studies is not feasible without the benefit of intimate knowledge of the culture of the respective markets to be investigated.

The orientation and social change

Trompenaars and Hampden-Turner (1997: 52) argue that individualism is often regarded as the characteristic of a modernizing society, while collectivism is reminiscent of more traditional societies. Conventionally, all societies were more collectivistic than individualistic because of the interdependence characteristic of agrarian communities. Individualism as such, is a rather modern phenomenon of culture, which began in 16^th-century England through the work of such philosophers as Kant, Bacon, Rousseau, Hume and Locke (Farr 1982: 15-37; Hauser 1994: 25-53, 97-123; Kopper 1979: vii-ix; Kopper 1983: 48-92, 93-113, 124-193; Loeb 1981: 25-75). Schütte and Ciarlante (1997: 29) add: “Individualism has come to be considered a natural component of a modern.” However, according to them (ibid 1997: 29), Asian cultures are now challenging this assumption. Singapore, Japan, and South Korea are thoroughly modern societies that continue to have firmly entrenched collectivistic orientations. Even at a level of per capita income equal to or larger than Western countries, Singaporean society has conserved distinctive collectivistic elements in its family, school, and work spheres. Of course, as in any rapidly modernizing society, there is great concern that Asia’s young people are becoming too individualistic and losing traditional morals and virtues (FEER 1996: 50). The Singaporean press, for example, regularly publishes stories concerning breaches of traditional family solidarity or criticizes the materialistic behaviour of adolescents loitering in shopping malls. It remains to be seen what the future will hold and whether the values of Asia’s teenagers are “rock solid” as described in an article in the Far Eastern Economic Review:

“Their elders complain that they are acquisitive, fickle and faddish, steeped in Western fashions and shallow consumer values. On the inside, though, most cling to the family as the bedrock of life; they are fiercely proud of their own countries and cultures and often reject what they see as the individualism of the west.” (FEER 1996: 50-52)

It remains to be seen how these transformations will change society and in what way they will impact on consumer behaviour. According to HS (lecture, October 2004), the deep roots of national cultures make it likely that individualism-collectivism differences (social orientation) will survive for a long time to come (see also: Hofstede and Hofstede 2005: 114). Yet, if there is to be any convergence among national cultures, it should be on this dimension (Hofstede and Hofstede 2005: 114). Indeed, as the examples in Indonesia indicate, parts of Indonesian society tend to be moving at least in behavioural modes such as leisure activities, in a more individualistic direction, although their core values are still highly collectivistic (HS, interview October 2004). The success and inevitability of individualism remain therefore rather questionable. The strong positive correlation between national wealth and individualism is undeniable, with the arrow of causality directed, as shown earlier, from wealth to individualism. However, societal change occurs slowly over generations and core cultural traits, such as collectivistic behaviour, which have been part of a society for more than a thousand years, do not change within a short period of time.

As was shown above, the significance of this orientation became especially apparent for the fourth “P” (promotion), i.e. for the visual language of advertising campaigns. Rarely are individual people depicted in Indonesian campaigns. This is not indicative of Indonesia’s dominant image of people not wanting to be, or being alone. In the appendix (Appendix 1), numerous additional examples are available which serve to sensitize the reader to this orientation, and to highlight their implications.

The third dimension, the “specific versus diffuse orientation”, concerns the degree of involvement in relationships (Trompenaars and Woolliams 2004: 72). The orientation has been adapted from Trompenaars and Hampden-Turner (1997: 69-101). The idea behind this orientation is the degree to which people engage others in specific areas of life and single levels of personality, or diffusely in multiple areas of lives and at several levels of personality at the same time (ibid 1997: 81).

The orientation reflects on the fact that in a specific-oriented culture, a manager segregates out his or her work and isolates this from other dealings outside the work sphere. Each area - one could describe them as life spaces - (for example the life space “work”, “family”, “past time activity 1, 2 etc.”) is considered apart from the other, i.e. as a specific case. However, in countries which score rather diffusely, every life space and every level of personality tends to permeate all others. An example will serve to illustrate this difference. The Indonesian tycoon (IK, interview April 2001, August 2001, October 2004) is considered and expected to be an authority in all domains of life. He runs a well-known Indonesian business conglomerate

http://www.datascrip.com/ (17 November 2005)

Of course, reputation always flows over to some extent into other areas of life. However, the extent to which a person’s standing in one life space influences his standing in other life spaces varies between societies. In diffuse societies one’s reputation in one life space, for example work, permeates all other life spaces. What is specific in a strong diffuse orientation is the underlying assumption that what people are, naturally, legitimately and forcefully, influences the roles, power and capacities they have in society. A typical causal chain in this dimension is: he/she is a director, thus he/she belongs to the elite, and thus he/she must wear an expensive watch. In specific societies clear limits are set between life spaces. Here, for example, a job title is a specific label for a specific job in a specific place (Trompenaars and Hampden-Turner 1997: 83).

Trompenaars and Hampden-Turner have used the model of Kurt Lewin (1935, 1951), a German-American psychologist, in research of this dimension (see figure below). Lewin (1935, 1951) presents in his study “A dynamic theory of personality” personality as a series of concentric circles with “life spaces” or “personality levels”, and sees contrasts between diffuse and specific oriented cultures. Lewin’s circles show specific cultures, such as the U.S., as having much more public than private space, the latter segregated into many specific sections. The specific citizen can have status and reputation at work, in the sports club etc. but the status stays specific, i.e. it does not affect the person’s reputation in other life spaces. A person who enters any of these life spaces is not necessarily a close or life-time friend and being admitted into one life space is not a very big commitment. One knows the person for limited purposes only, for example to play golf. This example reflects a society which scores rather specifically. The following exhibit depicts Lewin’s theory which differentiates between specific and diffuse oriented societies. The difference between specific oriented societies (clear division between individual and public spheres) and diffuse (large private sphere, smaller public sphere which is categorized by smaller but not divided individual spheres) is evident.

Figure C-23 Lewin's life circles (author's adaptation)

In diffuse societies it is more difficult to access a person’s life spaces as life spaces have no borders and barriers, i.e. if a person is allowed to enter one life space the person actually enters all life spaces. Trompenaars and Hampden-Turner (1997: 82) note: “The private spaces are large and diffuse, which means that once a friend is admitted, this lets him or her into all, or nearly all, your private spaces.” The concentric circles are not simply mental pictures but refer to physical spaces in which people live. This is why private spaces, which include the home for example, are highly guarded in diffuse societies. This is visible for example in how private spaces are protected with high hedges and walls as is the case in Indonesia. Another concept connected with the idea of the relationship orientation is the principle of “losing face” which is important in diffuse cultures where one’s lost face would permeate all other life spaces. China, Indonesia, Southeast Asia and Japan all score diffusively, whereas Germany scores in the middle of the ranking. The United States are very specific-oriented (Trompenaars and Hampden-Turner 1997: 88, 93) whereas Indonesia scores in a rather diffuse-oriented manner.

Figure C-24 Indonesia scoring rather diffusely

The relationship orientation has major impact on consumer behaviour and how companies can use the implication derived from the orientation in international marketing. The orientation has, for example, implications for customer relationship concepts such as endorsements (the inclusion of famous people in advertising campaigns), the involvement of people in the buying process and extends to the idea of which different requirements customers’ needs products have to fulfil in a diffuse society compared to specific societies.

Not a great deal of research has been done into the extent to which culture elements, such as language or religion, influence the relationship orientation. However, it seems that the orientation correlates to some extent with the high-context and low-context orientation of countries. That is, those societies which score as high-context also score as diffuse. Therefore, language is probably one of the cultural elements which influences the orientation. Reasons why the Indonesian and other Asian languages score as high-context have been stated elsewhere and shall not be repeated here.

Figure C-25 Correlations between different orientations

It is important in this respect to remember, that in Indonesia, a grammatical phenomenon called “pronoun-drop” (Nothofer 2001: 29-32), which has been discussed already (in the context of the social orientation), and which is deemed to be a sign of a high-context language, with all the resulting consequences which affect this orientation, can be proven for the Indonesian language.

Additionally in this orientation, religion as a cultural element influencing a country’s score is again significant. A diffuse score, often combined with an affective score (emotional orientation) (to be discussed later) is very common in Muslim countries, according to Trompenaars and Hampden-Turner (1997: 96), whereas Indonesia scores marginally as diffuse-neutral. The fact that the Indonesian score is diffuse is important in this case, and has major implications on how Indonesian consumers behave and how companies have to adapt their international marketing programs to court them. Owing to the comments concerning “high-context and low-context cultures” and “pronoun drop” made in previous sections describing other orientations, this section has been kept to a minimum, in the interests of brevity. The significance of this orientation is reflected by the influences concerning international marketing and consumer behaviour.

The orientation and product usage

One of the orientation’s important implications for companies is that in diffuse-oriented countries, such as Indonesia, products which might be used only for a specific purpose in specific-oriented societies are used for other purposes as the purpose for which the product was originally designed or intended (RD, interview December 2004). The diffuse consumer behaviour in diffuse societies leads to certain products being diverted to different uses from those intended by the company. Particularly in the realm of fast moving consumer goods (FMCG) is this visible in Indonesia and other diffuse-oriented nations where consumers are creative in using products for a diverse range of activities (for example tooth paste is used to clean tea pots whereas in specific countries there are probably products just being offered for this activity). Another often-mentioned misappropriation is the use of soap bars to clean hair. The list presented in interviews seemed endless. In these diffuse-oriented countries it is important for a company to have precise visual product usage descriptions in addition to text descriptions (IS, interview 2004). This is particularly important since, according to IS, Indonesians do not read manuals, which has lead to the misuse of products in many categories and which has sometimes resulted in injuries (IS, interview 2004).

Since products and their possible usage are seen more holistically in diffuse cultures where there are no specific life spaces, products should therefore also be designed in a way which allows multiple usage (multi-functional devices). From an Asian viewpoint the product appears to have more features when it is really an identical product (Kotler 2003: 31). A golf shoe in Indonesia might not only be worn on a green, but also in other locations or on other occasions. Or, for example, cereals are not only be consumed for breakfast but whenever one enjoys them. This has implications, for example for advertising campaigns which should not show actors eating breakfast at a specific time but perhaps at different times.

The orientation’s influence on purchasing decision-making

Evaluations of participating observations in Indonesia revealed that consumers from diffuse oriented societies need more time to make a purchase than those from specific oriented societies. The reasons for their requiring a longer decision-making time for purchases is that, as a rule, sales consultations last longer, and the consumer checks the various product uses since a sole use of the product seems illogical to him or her. This leads to sales consultations for luxury goods, for instance, taking longer in diffuse societies than in specific societies. This was ascertained by implementing concepts such as participating observation, mystery shopping, customer observation, sales staff and manager interviews (SOGO, PRADA, Louis Vuitton, The Time Place, Cortina Watch, Versace, Hugo Boss)

Interestingly, most companies which represent European luxury brands in Indonesia (import and sales) belong to the Soeharto clan. The French luxury brand Hermes, for example, is represented by a niece of Soeharto. Most up-market boutiques call “Plaza Indonesia” its home, which together with the Grand Hyatt Hotel above the mall, is believed to be owned by the Soeharto family, too.

Due to the impact of diffuse-oriented behaviour orientation, sales consultations (mystery shopping)

A service test which serves to evaluate and determine quality of customer service of companies. This activity from market research and the findings leaned from it are the precondition for further initiatives to optimize service and to eliminate deficits. To this end mystery shopping is conducted (usually under cover) to evaluate criteria relevant to service. Staff friendliness and competence etc. are tested. A test customer poses test questions and rates quality of service.

Figure C-26 Product presentations in diffuse-oriented societies

In contrast, in specific-oriented countries, where customer service is merely a question of selling, the selling process is not as time-consuming and detailed. Here, questions are not asked about personal lifestyle or wardrobe and the reason why the product is being purchased (in specific-oriented countries there is only one use for each product). The following figure, adapted from Trompenaars’ and Hampden-Turner’s model (89) illustrates strategies for getting to know other people and can be translated into the sphere of sales, too. The figure below shows the typically diffuse strategy (common for example in Indonesia) on the left. Here one circles around the stranger, getting to know the person diffusively and one gets down to the specifics of business only later when relationships of trust have been established. On the right hand side of the figure one can see the specific strategy where one gets down to the specifics of the business deal immediately. Selling with a culture more diffuse than one’s own is very time-consuming. In diffuse cultures, everything is connected to everything else. This is true not only in the context of retailing but overall in business negotiations where one’s business or interview partner from a diffuse-oriented culture may wish to know where you went to school, who your friends are, what you think of life, politics art, literature and music.

Figure C-27 Communication in diffuse and specific societies

The orientation and endorsements

The relationship orientation influences consumer behaviour in that consumers in diffuse societies seldom question the connection between a celebrity and the product he or she endorses. This is why David Beckham, for example, can advertise several products in Japan, from chocolate to whiskey, since his sporting reputation influences every life space (i.e. he is famous and successful, so he must know the best chocolate and whiskey, for example) (see also, Appendix 1, Figure 306).

Figure C-28 Endorsements in diffuse-oriented societies (1)

Figure C-29 Endorsements in diffuse-oriented societies (2)

Figure C-30 Endorsements in diffuse-oriented societies (3)

In specific societies, ads are used more specifically, i.e. if a sport star advertises chocolate, it must seem to be healthy chocolate (diet chocolate) and it has to have attained a degree of credibility in the sports world. Advertising has to communicate clearly the connection between sports and chocolate (for example, eating chocolate on the tennis court). However, Beckham can, for example, advertise chocolate in a non-specific environment due to his fame in diffuse-oriented societies, as seen in the above figures. Another important point when using celebrities in advertisements is their credibility and ability to integrate. In a diffuse society such as Indonesia where religion plays a big role in the public and private life of people, people who are not only famous but also religious and who embody Islamic ideals have to be selected for endorsements (like for example Unilever Indonesia which successfully engaged Inneke Koesherawati).

Figure C-31 Inneke Koesherawati endorsing Unilever's Sunsilk in Indonesia

Since life spaces are not separated but are inextricably entwined, the celebrity chosen to endorse a product has to appear credible in life spaces of importance to the consumer. This is vital in Indonesia and Malaysia where religion is not one’s own business and where celebrities are asked explicitly about their religious beliefs. This is the reason why there are hundreds of web pages and weblogs (blogs) on Indonesian stars (such as Inneke Koesherawati, chosen for the Sunsilk campaign), so that their fans and admirers can exchange ideas. In Inneke Koesherawati’s case, her clothes (the veil) are of particular interest and her beliefs are of general interest. The diffuse orientation can be advantageous for celebrities as someone who is famous in a particular field, especially music, can try out every imaginable field at the same time and still be successful. It is not relevant to ask why a model is trying out acting or singing; she is famous, so she must be good at everything.

The orientation and brand appeal

Generally speaking, the diffuse orientation has a positive correlation with the status orientation, meaning that diffuse societies are generally status oriented, too. When both concepts are considered with a product, this means that a brand name has to embody status and prestige in multiple life spaces (spill-over effect), not just in one. A brand normally known only by runners (for example, ASICS), which does not however guarantee status in other life spaces is less likely to be chosen over a brand which does guarantee this (IW, interview November 2004).

Another concept is brand loyalty. Trompenaars and Hampden-Turner (1997: 91) believe that diffuse cultures value loyalty more than specific cultures which could mean that brand loyalty is higher in diffuse cultures than in specific cultures. It would be interesting to see whether there actually is a correlation between brand loyalty and the orientation. The Indonesian consumer market is still too immature however shown in the fact that people consistently try out a different shampoo and soap, to allow a scientifically based investigation to be conducted (IS, interview October 2004). It is widely known that recent research actually shows that brand loyalty is high in some categories. However, what relationship this has with the orientation is unclear since data is unavailable (DT, interview December 2004) and as a result cannot be explained in greater detail.

The orientation and advertising

The diffuse orientation also has implications for advertising. Advertising in diffuse societies is to be carried out in such a way that the company is seen to be feeling responsible for the personal problems and welfare of its customers, consumers and society as a whole. Based on the concept of life spaces in diffuse oriented societies, citizens do not regard a company in a limited sense, but it is seen as a corporate citizen, with joint responsibility for the economic, social and political development of the country (IS, interview October 2004). This responsibility has also to be transferred to advertising. Especially in Indonesia, this became apparent in advertising campaigns during the financial crisis where companies indicated, for example, how products could be used more sparingly in order to avoid costs. Generally speaking, in diffuse oriented societies, public relations (PR) initiatives are an extremely important advertising tool compared to the marketing mix in specific societies (AR, interview, January 2004). Finally, company representatives must note that in a diffuse-oriented society, such as Indonesia, a more holistic marketing approach is needed as it is important to understand that products might be used outside the specific usage-pattern for which the company originally designed the product. Since there is no clear line drawn between people’s individual life spaces, the marketer is to approach the market from a wide range of perspectives including religion, language, history, and politics, etc. It is ideal, however, to start at a much earlier stage in the planning process i.e. to know the respective markets’ customers and their wishes, and to include both in the planning. This thesis, with its delineated orientations, fulfils this demand (pre-requisite). How companies can be faithful to this requirement will be shown in the case-study (Part D).

Reason and emotion both play a role in relationships between people, an observation which introduces the dilemma between the “neutral and affective orientation” (Trompenaars and Woolliams 2004: 83). The contrast between affective and neutral cultures is described by Trompenaars and Hampden-Turner (1997: 63) as: “Members of cultures which are affectively neutral do not telegraph their feelings but keep them carefully controlled and subdued.” In affective cultures people show their emotions and get an emotional response in return. People in neutral-oriented cultures, on the contrary, do not show feelings as openly and emotionally as in affective-oriented cultures. The amount of emotion one shows therefore is often the result of convention (Vester 1991: 98-124). Vester (1991: 98) explains: “Emotions are ‘characterized’ by culture; they are ‘cultivated’ by cultural codes, i.e. emotions are represented in a system of signals, are expressed by semiotic processes and are ‘interpreted’ by means of signals” (“Emotionen sind durch die Kultur ‘gezeichnet’, durch kulturelle Codes ‘kultiviert’, d.h. Emotionen sind in Zeichensystemen repräsentiert, kommen durch semiotische Prozesse zum Ausdruck und werden mittel Zeichen ‘interpretiert’”, translation by author).

In contrast, in cultures scoring highly on affectivity, people show their feelings plainly by laughing, grimacing, scowling and gesturing. People in affective cultures attempt to find immediate outlets for their feelings. However, one should be careful not to over-interpret differences between neutral and affective cultures. Neutral cultures are not necessarily cold or unfeeling, nor are they emotionally repressed. Societies do differ only in the extent to, and the way in which feelings are expressed, but do not differ in the issue of whether feelings are expressed at all, or not which means that showing emotions is culturally restricted.

There are considerable variations between countries’ rankings. Countries were classified according to their response to questions asking, for example, if they would express their feelings openly. In Indonesia 55 percent, in China 59 percent and in Singapore 48 percent of those who participated in the survey were in favour of not showing emotions openly, according to Trompenaars’ and Hampden-Turner’s research. Malaysia (30 percent of respondents were in favour of not showing emotions openly) scores much lower and other Muslim countries, like Egypt and Kuwait, score even lower, i.e. are actually in favour of showing emotions openly.

People in affective-oriented countries reveal their thoughts and feelings verbally and non-verbally, an extreme example is behaviour at Middle Eastern Muslim funeral services or via the most recent uproar over the caricatures of Mohammed which reflects the transparency of their emotions and the expressiveness with which they try to release tensions. Touching, gesturing and strong facial expression are also common in affective countries where statements are declaimed fluently and dramatically. The amount of visible emotion is a major difference between cultures. Indonesia, however, scored in the middle, (namely between neutral-and affective, and is therefore less affective-oriented than most other Muslim nations, but also less affective-oriented than Malaysia). Indonesia is therefore to be considered as neither solely neutral nor as purely affective-oriented, as shown in the figure below.

Figure C-32 Indonesia scoring "in the middle"

The contrast between affective and neutral cultures is closely related to the “being” versus “doing” divide (status orientation). If people are strictly “doing”-oriented they generally tend to disregard expressions of “being”. Feelings and affectivity are seen as being in the purely personal and private realm. Thus, neutral cultures tend to suppress these feelings and view their direct expression as inappropriate for effective interaction. This correlation can be pictorially expressed in the following way.

Figure C-33 Correlations between different orientations

Prior to examining the repercussions of the orientation on consumer behaviour and international marketing, in the next paragraph, the general cultural conditions which lead to the previously described behavioural patterns, will be examined.

Asked which cultural influences made Indonesia score so differently from all other Muslim nations, interview partners in Indonesia argued that the reason is to be found in Javanese social conduct where loud and very emotional behaviour is unacceptable (Magnis-Suseno 1981: 37-54). It is considered polite to speak slowly, softly and monotonously, whereas fast, loud speech is considered crude, and shows great variation in pitch (Markham 1995: 104). Similarly in the Javanese Shadow play, wayang, heroes, knights and noblemen use monotone, polite, and soft speech (“alus”). Giants, demons and comic characters, on the other hand, speak using the crude “kasar” register (Soepomo 1968: 54-55; van Groenendael 1985: 21-39). Javanese social behaviour, according to interviewees, has influenced Indonesian people’s behaviour to some extent over time although large differences between ethnic groups in Indonesia are still noticeable (MP, interview, December 2004). However - and this is an interesting point to make - it was mentioned, that it seems Indonesia is moving somehow in the direction of being affective, although Trompenaars and Hampden-Turner (1997: 94-97) believe that value orientations will remain stable over time. However, social practices such as popular music and TV, have partly left behind the rather neutral emotional behaviour of Indonesians. Take for example “Dandgut” music, the shows presenting it and Islamic TV dramas which tend to be highly emotional (more emotional than, for example, German soap operas). These shows reflect only one trend, i.e. they can be found on the outer layers of culture, and not the core. The change to often highly emotive behaviour on TV or on shows can be approved but does not imply however that such behaviour would be acceptable in real life.

Again however, one of the cultural elements shaping this orientation is religion and Islam is generally seen as affective (emotional) where emotions flow easily, effusively, vehemently and without inhibition. The heated, vital, animated expression once only known from TV news broadcasters in the Middle East, has now entered Indonesia, too, as could be vividly observed during the Tsunami catastrophe (own observation, December 2004). Notwithstanding, this development in Islam seems to play a lesser role (at least for Indonesia) in its effect on the orientation, than, for example, in the Middle East. The reasons behind this are Buddhism and Hinduism with their religious concepts focusing on contemplation and containment, which together with indigenous Javanese world view, colour Indonesian cultural behaviour which can be described as neutral in its emotional dimension. Here, one can see that although there are differences between Asian countries, religion here seemingly has less impact, otherwise Indonesia and Malaysia would score more like Arab countries where warm, expressive and enthusiastic behaviour is not seen as lack of control over one’s feelings. As the orientation is strongly connected to communication, i.e. the exchange of information, it seems reasonable to suppose that “language” is another cultural element which influences a society’s orientation between neutral and affective. Indonesian speakers have a rather monotonous style which reflects the self-controlled attitude of respect. Frequently, the higher the position a person holds, the lower and flatter the voice. Shouting is a sign of loss of “face” (BR, interview November 2004).

The orientation and advertising

The emotional orientation issue is important in the field of marketing communication whether it is TV, radio or print advertising. Every culture has certain codes and rituals that allow for a compromise between the two extremes, namely affective and neutral. What varies, is the starting assumption: (1) expressing emotions is legitimate and useful for action (affective cultures) and (2) expressing emotions needs to be separated from action (neutral cultures). To what extent emotion in advertising can be expressed, depends on the extent to which the society is neutrally or affectively oriented. It is perfectly feasible to express positive emotions in a humorous way in the less affective (rather neutral) Indonesia. Negative emotions on the other hand, cannot be shown since that would lead to a loss of face in Indonesia. However, this differentiation is more complicated in Indonesia than in other countries, such as China, since the former appears to be stuck somewhere in the middle between neutral and affective. China, on the other hand, is unequivocally neutrally oriented, and this is reflected in advertising. Moreover, this orientation is influenced more than any other orientation by personality, i.e. the personality traits and individual interaction which influence whether a person behaves rather neutrally or affectively. However, some of the important findings about the orientation’s influences on consumer behaviour and how marketing adapts to this behaviour were revealed in interviews in Indonesia.

Generally, to be taken seriously, language in Indonesian advertisements should reflect self-control (BR, interview November 2004). The higher the status of the product advertised, the lower and flatter the voice. Cool and self-possessed conduct is admired and gesturing or strong facial expressions are often taboo (BR, interview November 2004). Advertising statements are often read out in a monotonous voice. Warm, expressive and enthusiastic behaviour (interpreted as lack of control over feelings) should particularly be avoided when promoting prestigious products since they are supposed to give status and prestige to the buyer and any display of emotion is at odds with the display of high status (RD, interview December 2004).

Of course, there is no doubt that, as a matter of principle, advertising in Indonesia should appeal to the emotions of its target consumers, but what few advertisers without Indonesian-specific knowledge realize, is that emotions play a lesser role in this country than in other Muslim countries which score rather affectively when interviews in Indonesia are considered (Social Marketing Circle Indonesia, welcome address, Power Breakfast 2004)

http://www.bisnisjakarta.com/agenda_bisnis.html?start=20&bulan=9&tahun=2004&dt=1096218000&s_q=&PHPSESSID=8ed9a7be114243126ca35e7a814be23a (12 August 2004)

Figure C-34 Emotional visual language in Indonesia (left) and Malaysia (right)

Furthermore, and this is now one of the most important findings, this changes dramatically during emotionally charged times, such as Ramadan (the Muslim fasting month), when people are generally more expressive. During this time, companies advertise with specially produced ads featuring touching, moving cultural and religious symbols and gestures. Emotions play a much larger role then in Indonesian advertising, reflecting the more affective Indonesian consumers’ psyche.

Figure C-35 Emotional visual language in Indonesia (1)

Interestingly, ads during Ramadan are then much more affective there than in Malaysia (which generally is more affective-oriented, but where advertising themes do not change in the same patterns as in Indonesia). The reason might be that Malaysia has a lower Muslim population portion than in Indonesia where over 80 percent of all citizens are Muslim. Further investigation and interviews in Malaysia (2004: CCL, AR) showed that even in newspapers and magazines which are exclusively targeted at Malays (Muslim Malaysians), such a swing towards affective ads cannot be observed. During Ramadan, emotions play a large role in making purchasing-decisions, and therefore companies should tap into this emotion through symbols (as shown in the following figure).

Figure C-36 Emotional visual language in Indonesia (2)

As can be seen from the visuals, during Ramadan ads in Indonesia are emotionally charged. A specific colour such as green, Muslim symbols, gestures and traditional, often oriental-sounding music, is played on TV and radio ads. Also, the content of television programs changes during that time; more Muslim TV dramas are played and presenters wear Muslim clothing. TV stations such as MTV play more traditional music while video jockeys (VJs) wear Muslim clothing and the studios are decorated with Arabic décor. Interestingly, ads in rather affective Malaysia, which do not become more affective during Ramadan, become very affective during national holidays, notably National day. This is the time when Malaysian ads can be described as very emotional.

Rather than displaying overt emotion to sell a product, the Indonesian will strive to create an overall atmosphere (“feeling tone”) (IS, interview October 2004) in an advertisement. This approach is especially popular when advertising traditional Indonesian products, such as domestic food or “kretek” (Indonesian for clove) cigarettes. For example, the tranquillity of a Balinese rice field requires little display of human emotion to get a message across. This kind of ad seems to be very successful since Indonesians understand the feelings and atmosphere even though there might be no strong changes in facial expressions. It requires little display of human emotions to get a message across when themes such as “Bali”, “mountain” or “Kampung” (Indonesian for village) are used in Indonesian advertising.

Figure C-37 Emotional visual language in Indonesia (3)

Figure C-38 Emotional visual language in Indonesia (4)

This can be linked to a further idiosyncrasy of the Indonesian language, namely the widely used paraphrasing. At its most polite, this form of expression can be very visual and differentiated (Markham 1995: 105).

Figure C-39 Emotional visual language in Malaysia

It is evident that, owing to the ambivalent positioning of Indonesian society (i.e. neither very affective nor very neutral), an area of conflict emerges which is especially apparent in advertising. Advertising communicates in neutral words and emotive pictures, i.e. makes use of emotive visual language. During Ramadan this impression is even stronger, i.e. the visual language becomes more affective, for example by using various cultural symbols.

The orientation and endorsements

Additionally, the emotional orientation is reflected in the choice of endorsements for products whether in promotional campaigns, such as road shows, or in media advertising. In Indonesia, whose score is between affective and neutral, celebrities are often used to endorse products. In very neutral China, however, neutrality towards displaying emotions is reflected in the frequent use of experts rather than enthusiastic product users in advertising. In China, many products are endorsed by a person wearing a long white lab coat (representing an authority like a doctor) (Appendix 1. Figure 94). In a similar way, candy may be endorsed by happy children, but a parent, doctor, or kindergarten nurse will also be there to add that the product is good for the child’s health. In China, an overtly enthusiastic advertisement or talking “too much” is often associated with not knowing much, or to use a Chinese proverb, “you have more saliva than tea” (SN, interview September 2005). Although experts are used to back products such as health supplements, for most other products the use of experts in Indonesia is rather uncommon, so advertisers fall back on popular celebrities for endorsements. This is clearly visible from the marketing campaign for the product featured in the case-study in the practical part of this work (PART D). In it, an Indonesian celebrity, not a hair expert, endorses a new hair shampoo. The celebrity endorsing the shampoo does not try to convince consumers to buy the product by listing reasons in favour of purchasing the product, as the hair expert would do.

It remains to be seen whether or not advertising activities on the part of companies will become more affective and whether they will make greater use of religious imagery, owing to the influence of Islamization. In a multiethnic country, would ethnic-specific marketing not be more sensible since twenty percent of the Indonesian population is not even Muslim and the Sino-Indonesians with their on average high disposable incomes could, for example, easily be put off by advertising which is overly affective? Particularly in the context of this orientation, more in-depth research needs to be carried out considering ethnic-specific advertising appeals.

It is a matter of fact that all societies assign certain of their members higher status than others. By doing so they signal that special attention should be given to these individuals of higher status. To describe the variation in how different societies assign status to their members, Trompenaars and Hampden-Turner introduced the “dilemma between achievement and ascription” (Trompenaars and Hampden-Turner 1997: 102-119; Trompenaars and Woolliams 2004: 97). Generally, status is the relative rank that an individual holds, with attendant rights, duties, and lifestyle, in a social hierarchy based upon honour or prestige. Status may be ascribed (assigned to individuals at birth without reference to any innate abilities) or achieved (requiring special qualities and gained through competition and individual effort). The first form of status is called “achieved status” and the latter “ascribed status”. While achieved status refers to what one does and to what one has done (“doing”), ascribed status refers to who one is (“being”) (Trompenaars and Woolliams 2004: 97). Ascribed status is therefore typically based on gender, age, race, family relationship, or birth, while achieved status may be based on education, occupation, marital status, accomplishments, or other factors. In ascriptive oriented societies, one is one’s status. It is important to see how different the logics of achievement and ascription are and not consider either as meaningless. The status orientation is correlated with the power orientation, i.e. countries which score highly on Hofstede’s power distance index (Hofstede and Hofstede 2005: 43-44), also score highly on the ascribed status orientation. Both orientations’ implications for consumer behaviour and international marketing partially overlap, but their cultural foundations are different as well as their character, or meaning. As can be seen in the figure below, status orientation correlates positively with power orientation, i.e. in high power distance societies, ascribed status orientation dominates.

Figure C-40 Correlations between different orientations

A certain status is natural to one as one’s birth or formal education through which one’s innate powers were made manifest. Ascribed status simply “is” and requires no rational justification, although such justification may exist. In these societies one is, for example, respected more because of age and experience than for achievements, whereas achievement oriented societies believe that such behaviour is rather archaic (Trompenaars and Hampden-Turner 1997: 103). In ascriptive oriented societies, therefore, status is attributed to those who “naturally” evoke admiration from others, that is, older people, males, highly qualified persons and/or persons skilled in a technology or project deemed to be of national importance. To show respect for status is to assist the person distinguished in this way to fulfil the expectations the society has of him or her (Trompenaars and Hampden-Turner 1997: 113). In these societies the individual is unique and not easily comparable with others.

Most literature, such as David McClelland’s (1966) “The Achieving Society”, sees achievement orientation as part of modernization processes. The theory goes that (this idea results from the essence of American Protestantism), once business achievement is rewarded, the process is self-perpetuating. However, Trompenaars’ and Hampden-Turner’s research shows that the achievement orientation might be sufficient but not necessary for modernization and economic growth. South Korea and Japan (Trompenaars and Hampden-Turner 1997: 105) score in an ascription oriented and not in an achievement oriented way. Their score has been stable over the years, despite the countries’ modernization with all the social and economic transformations that went with it. Indonesia scores as a very ascriptive society (Boucher-Floor, THT consulting, email August 2004; Trompenaars and Hampden-Turner 1997: 105; Trompenaars and Woolliams 2004: 98) whereas Singapore is much more achievement oriented. This is abundantly clear from advertising as it will be demonstrated.

Figure C-41 Indonesia scoring highly status-oriented

The cultural foundation of the orientation in Indonesia will be discussed in detail in the following section.

The orientation and religion

What are the cultural foundations causing Indonesia to score as one of the most ascriptive oriented societies? There appears to be a reasonable answer to this question. The cultural element religion exerts the greatest ability to shape society in all of the countries investigated. Depending on content, moral guidelines and interpretation, religions shape culture in diverse ways. In the context of this orientation, the ability to shape status orientation can either be ascribed or achieved depending on the existing religion in the country. According to Trompenaars and Hampden-Turner (1997: 104-107) the idea of achievement orientation generally goes back to the essence of Protestantism: the pursuit of justification through works which long ago gave achievers a religious sanction and capitalism its moving spirit (Trompenaars and Hampden-Turner 1997: 104). People work hard to assure themselves of the esteem of their culture (Weber 2005). Catholic countries ascribing status to more passive ways of life, Hinduism associating practical achievements with delusion (Eliade and Culianu 1995: 293-294), and Buddhism teaching detachment from earthy concerns (Eliade and Culianu 1995: 267-268) are all forms of ascribed status with its impact on social behaviour. Aspects of ascription vary greatly from country to country whereas Protestantism correlates with achievement orientation and Catholic, Buddhist and Hindu cultures score in a considerably more ascriptive-oriented manner. Howe (2001: 84-108, 138-162) illustrates what importance status and hierarchy still exert on Bali today.

Although Trompenaars and Hampden-Turner (1997) make no reference to Islam and in which way Muslim belief influences the status orientation, taking a look at how several Muslim countries score in this orientation provides clues. In Trompenaars’ and Hampden-Turner’s tables (1997: 105-106), Muslim countries score highly on the ascriptive orientation although Islam preaches essential egalitarianism within the community of the faithful. This apparent contradiction can be justified in the following way. The tendency of the Islamic ethic to strengthen the community at the expense of the extended family or tribe has not succeeded, however. Muslim society, until modernizing influences encroached upon it, had remained basically one composed of tribes or quasi-tribes which strengthened elements such as descent and lineage (which are clearly “being”) and influenced a society’s orientation in the direction of ascribed status.

However, the ascribed-status supporting role of Islam, whose ability to shape cultural behaviour and therefore the status orientation, is less prevalent in Indonesia. The reason for this is, pre-Islamic religions have been influencing Indonesia’s contemporary social structure in a lasting way, as already discussed at length in the context of other orientations. The concept of ascribed status is founded in its history and especially refers to the time before Islam became influential as Palmier (2004: 5) reveals. She continues by explaining that “the conversion to Hinduism of Indonesia, and the consequential unification of the archipelago, brought hierarchy with it” (Palmier 2004: 5). The most striking manifestation of Hinduism and its impact on status groups is found in the religion’s caste system. Before the coming of the Hindus it would appear that there was relatively little social class differentiation, i.e. pre-Islamic religions also possess considerable influence in connection with these orientations.

The initial questions can be seen to be clarified, namely that Hinduism and its societal influence led to the development of hierarchies which previously did not exist in this way. The following line of argument will facilitate comprehension of these connections. Before the arrival of the Hindus, shifting-cultivation was the dominant agrarian method in Indonesia. Shifting cultivation, a flexible and highly adaptive means of production, was one of the very first forms of agriculture practiced by humans who took an area of land to use for agriculture, only to abandon it a short time later. Before rice began its spread across Southeast Asia, the physical mobility (nomadic movements) of groups relied on hunting and gathering (Piper 1993: 12). They practiced shifting-cultivation which usually did not lead to the creation of permanent settlements with hierarchical social structures. Irrigated rice seems to have become established in Java shortly before the ascendancy of the Majapahit kingdom in the thirteenth century (Piper 1993: 12). Wet-rice cultivation which was introduced by Hindus and which gradually eroded shifting-cultivation as the dominant method of agriculture, led to a settled form of existence and with it also the creation of a “social structure of differing degrees of status” (Palmier 2004: 5). In this new social structure power then came into the hands of the nobility, who were both military and spiritual leaders, and subservient to the sultan (Palmier 2004: 5). These have always gone to great lengths to emphasize and trace their descent and kin relations (Palmier 2004: 7), a fact which displays qualities of an ascribed status orientation. These new society structures offered a hierarchy of statuses. One quality which gave and continues to give value is an occupation. The value of an occupation in this system increased with distance from manual labour, i.e. the further away, the higher the status. “A way of life free from the toil of one’s hands is ‘refined’; one which involves it is coarse”, writes Palmier (2004: 5). This is an attitude to life which still persists in Indonesia and Thailand today, and which is noticeable in certain cosmetic brands’ sales figures. Since status is not associated with manual, outdoor occupations, but rather with jobs in air-conditioned offices, having tanned skin is tantamount to being unrefined, since a tan is linked to manual labour. The paler the complexion, the higher the status. This explains why so many people are attracted to skin lightening cosmetics. The following figure presents some information on these lightening products.

Figure C-42 Advertisements for skin whitening products

According to Rappe (1995: 341), self-identity on Java is especially dependent on social status. This status is pre-determined through birth or by decent, and must be corroborated through rituals. Errington (1984: 278-280) provides a sophisticated portrayal in this context. According to it, there are two kinds of self in the tradition of Javanese nobility (“priyayi”): the large, “aku”-self, and the small “ingsun”-self. “Aku” is the worldly self, brought out by interaction with the world. This “aku”-self must be overcome, so that man can achieve unity with the holy, refined “ingsun” self. Both relationships have differing personal pronouns in the first person. “Aku” is used for spontaneous, familiar discourse, in the so-called “ngoko” register in Javanese (Markham 1995: 95-98). “Ingsun”, on the other hand, is used as the personal pronoun for the king and gods of shadow play “wayang kulit” and is reserved for festive, ritual occasions. These differing spheres correspond to internal and external behaviour. In this way the “aku”-self can be assigned to the area crude (“kasar”), in which uncontrolled passions play a huge role. The “ingsun” self, in contrast, represents the refined (“alus”) area of people. From the “aku”-self one gets to the “ngsun”-self by performing mystical practices by which one attains the necessary dignified feeling (“rasa”). The following elaborations will highlight the importance of status.

The orientation and language

Besides religion, language (particularly the Javanese language) supports Trompenaars’ and Hampden-Turner’s classification of Indonesia as an ascribed status orientated society. As already explained in detail in another paragraph (power orientation) the Javanese tongue is structured so that it permits recognition of seniority and social status as well as having fine nuances (Keeler 1994: xvii-xxiv). Basically, it has two main language forms. Addressing one’s juniors, inferiors or intimates one uses “ngoko”; addressing one’s seniors, superiors or strangers, one uses “kromo” (Markham 1995: 95-98). Palmier (2004: 44) notes in this respect: “… naturally, the kinship terms of reference for seniors were usually of the honorific vocabulary, “kromo”; for juniors of the “ngoko”. Woodward (1989: 8-9) clarifies that Javanese chronicles (“babad“) are exclusively concerned with princes, kings and local saints.

The above-mentioned observations cited as the basis for Indonesia’s ascribed status orientation are, like all culture elements, prone to a dynamic process of change. These transformations led to new status symbols replacing others as described by Palmier (2004) and Gerke (1999) through shifts in meaning of noble titles and other such symbols. Palmier (2004: 48) explains:

"Whether in housing, dress, manners, education, interests, or speech, these leaders are moving out of traditional Indonesian styles into modern Western ones. And the more Western, the more prestige.” (Palmier 2004: 48)

This change in how certain status symbols are regarded does not, however, lead to a general change in status orientation in Indonesian society. This is owing to the fact that this change only affects the attributes described as practices in the model of the culture onion. The values which remain constant are therefore unaffected by this change. This is shown in the extent to which fascination with status, hierarchy and symbols (in whatever form they may take) continues to mould Indonesian society. As shown, societies confer status on individuals in diverse traditions. In Indonesia, status and prestige are associated with seniority (which is often associated with experience), nobility and job titles, family names, and ethnic and religious background. These qualities (attributes of being) generally count more than specific achievements (attributes of doing) in Indonesia. However, a change seems to have taken place over time as to which properties are associated with status. These changes took place in the form of an increasing significance of new elements, while at the same time a loss of other elements’ importance occurred. Elements are understood as differing symbols which convey status. Although the above-mentioned attributes such as family name or nobility continue to be significant, they have been complemented by materialistic attributes such as possessions (Gerke 1999). This means that status and prestige are nowadays things that can be bought, for example objects such as televisions, mobile phones, motorbikes and cars have a high status value, as do nearly all consumer goods available today. Their status increases with the price paid for the product.

Thus it is possible to possess consumer goods and the status which accompanies them through hard work and its resulting affluence. This does not mean, however, that ascribed status oriented Indonesian society is shifting to an achievement orientated one as a result. It is not activity (doing) through which affluence is accomplished, but the symbols and their display which primarily creates status. It is precisely because of this fact that status symbols continue to exert such great influence with important repercussions on consumer behaviour and international marketing. Leslie Palmier (2004) takes the change in status and its impact over time on Java as her subject matter and confirms with her research that originally the cultural element religion brought hierarchy and with it the ideas of status and prestige to Indonesia. Symbols which entitle status have changed over time. Especially the western influences which first came to Indonesia with colonization play a role. The repercussions on marketing and consumer behaviour will be explained in the next paragraph.

Status orientation has far-reaching implications on the one hand in its influence on consumer behaviour, and on the other, in the extent to which companies tailoring their marketing strategies to the orientation (insofar as those in charge) are aware of the existence of different status concerns (DM, interview December 2004; IW, interview November 2004; SL, interview October 2004; HS, interview October 2004; KS, interview October 2004; JiK, interview October 2004; LSML, interview October 2004; KSBH, interview October 2004; AK, interview October 2004; ACWC, interview October 2004; AR, interview April 2001, September 2004, December 2004; CCL, interview August 2005; SN, interview August 2005). Since this orientation affects all marketing aspects (4Ps), the orientation’s impact on the 4Ps (product, price, place, promotion) should be discussed. First of all, however, Indonesian consumers should briefly be interpreted in the framework of the status orientations.

Basically it is noteworthy that Indonesians are extremely status conscious. This consciousness is apparent in all aspects of life, not only in consumer behaviour. It influences to a greater or lesser extent the entire population’s behaviour, even though Indonesians with a Chinese background (Sino-Indonesians) are considered to be less status conscious (SL, interview September 2004). This lack of status consciousness is evident from the fact that purchasing status symbols is not a top priority for them, even if financially possible. It is not a cliché to say that it is more important for the Chinese minority to have a school and university education for their children than it is to purchase status symbols (SL, interview September 2004).

When it was suggested that all areas of life are affected by status orientation, the religious sphere is not excluded from this. Undoubtedly Indonesians show more respect for people with religious knowledge (irresponsible of religion). Differing status is recognizable, for example in Protestant communities in Jakarta, by the fact that certain chosen members of the community or foreign visitors automatically sit in the front row, and if this is not the case, they are requested to do so. Frequently the front row has different seating available - often decorative sofas. It is assumed or known that the people who are seated here have a higher status. It was observed that foreigners who generally receive high respect are usually asked to sit in the front row or at a table with a so-called VIP or a person considered to be important. The Indonesians who arranged the foreigner’s visit and who greeted him or her are also endowed with status. Therefore the people who invited the author were asked to sit further towards the front than their status would usually permit, and a year after the author’s visit they were still allowed this privilege.

The same was true of conferences and seminars where foreigners and wealthy looking Indonesians received privileged treatment. This meant that the author was automatically seated at Chatib Basri’s table (MarkPlus Economic Outlook, Jakarta December 2004)

http://www.markplusnco.com/ (13 August 2005)

Foreigners may in general perceive the status consciousness and behaviour on the part of Indonesians as somewhat grotesque. An Indonesian employee at the Portuguese embassy, for example, takes a taxi to work although these daily trips drastically reduce her disposable income (MI, interview September 2004). It was argued that as an employee at an embassy, to go by bus is not the done thing, since this would mean loss of face in the neighbourhood and in front of colleagues. Behaviour of this kind is reminiscent of Mulder’s assessment (1990: 139): “In questions of status, the Javanese are irreconcilable“. According to him, people are often obstinate and uncompromising, determined to protect their status with all means and regardless of the consequences, all of which can be traced back to the fear of losing (ibid: 139). Passengers on the bus would also wonder in the case of the embassy employee why a well dressed lady had to take the bus. The same is true of the following behaviour. Office workers take the bus to work and then change to better clothes at the workplace and change back into their old clothes for the way home (unless a dinner or outing is planned). They do this not only to keep their work clothes good, but also because it would mean loss of face to travel by public transport in good and expensive-looking clothing. Many visitors to the malls demonstrate a similar kind of behaviour, especially the younger among them, when they change clothes upon arrival at the mall. At the mall they often wear clothes borrowed from friends or jointly purchased with friends. Before leaving the mall, they change back into their everyday clothing. The fact that mall clothing is shared, is reminiscent of Indonesian neighbourhood helping (“gotong-royong”) (Koentjaraningrat 1967: 394), i.e. clothes are borrowed from family, friends and colleagues in order to go to the malls. Often people purchase an item of clothing together in order to lend it out to others depending on who needs a specific T-Shirt, for example, at a specific time. This status oriented behavioural pattern appears to be grotesque or unauthentic to the foreign observer since clothing does not necessarily reflect the biographical or financial background of the buyer in Indonesia. One has to ask oneself why specific branded goods are so important that they must be bought even they have to save on food or rent to buy them. The answer to this question is Indonesian’s extreme ascribed status orientation which was reported over and over in interviews.

The interview setting for this work was especially tailored to take account of this intense status consciousness. Interviewees were received at rented conference rooms in business centres at leading hotels. This was to show them respect and acknowledge their social status. Palmier (2004: 153) explains why this is so important in Indonesia: “To show respect for status is to assist the person so distinguished to fulfil the expectations the society has of him or her.”

The orientation and promotional activities

Generally in the context of this orientation, the fundamental question companies should ask themselves is whether customers want to own functional products that achieve a utilitarian purpose or whether they prefer to buy status. It was clear from interviews the extent to which some companies advertise their products country specifically and at the same time unwittingly translate status orientation (“doing“ versus “being“) into advertising (DM, interview December 2004). Achievement-orientated cultures market their products and services on the basis of their performance. In ascribed-status cultures, such as those generally found in Southeast Asian countries, status is ascribed to products that naturally evoke admiration from others and are symbolic representations of status. This status is less concerned with the functional capabilities of the product. If status is linked to “being” of the status orientation, the products and brands should be positioned so that their attributes are seen as prestigious. In achievement oriented cultures, the emphasis is on performance, reliability and functionality. This is especially apparent in promotions (another of the 4Ps) and campaigns designed for different target markets. The BMW campaigns can be taken as an example here. In Indonesia (which is a strongly ascribed status oriented country), BMW campaigns reflect this being orientation. In Singapore, which is much more achievement oriented, BMW advertisements have a much more technical feel. Cars are advertised in such a way that if one purchases a BMW, one’s hard work seems to be rewarded. This kind of performance oriented advertising, however, would not be broadcast in Indonesia since it would be unsuccessful there (BR, interview November 2004).

Figure C-43 BMW ads in Singapore (1)

Figure C-44 BMW ads in Singapore (2)

Figure C-45 BMW ads in Indonesia

The same goes for the luxury watch sector. In Indonesia, luxury watches are purchased more than anything else to express status and this is reflected in adverts broadcast there. In other countries (for example Germany which is regarded as scoring in a similarly achievement oriented fashion), watches are more likely to be advertised as a reward. Similarly, de Beers’ advertising in Japan shows women who should treat themselves to a diamond as a present. Japan, too, is achievement oriented. Due to ascribed status, products with logos seem to sell well in Indonesia.

Figure C-46 Wempe advertising campaign clearly reflects a "doing orientation"

Figure C-47 DeBeers new "A diamond forever" campaign reflecting a "doing approach"

Figure C-48 The status orientation in Indonesia

Experience shows that brands like Giorgio Armani which are difficult to identify, sell poorly among the logo-loving Indonesian elite. Logos are a way of setting yourself apart from others and appear to be so valuable that the fake goods available in Indonesia often flaunt logos from more than one company. Indonesian consumers’ logo-mania leads to insiders labelling Indonesian consumers as unsophisticated. They are merely interested in logos and status and not in individuality. Expensive sounding brands and logos create prestige, with European sounding names often being used to name condominium and shopping complexes and boutiques. Palmier’s argument that “…in Java names have long been important social indicators” (Palmier 2004: 119-120) is true in the world of goods, too. The resourcefulness with which Indonesian businessmen and women name their shops and goods is incredible. But they all have one thing in common. They sound outlandish and conjure up the impression of exclusivity and luxury. Many shops not only in the fashion business, but also patisseries, restaurants and clubs give themselves exotic foreign, often English, French or Spanish sounding names; most recently even Arabic sounding names are being used. In connection with product and brand names, attention should be drawn to the differing brand awareness in the luxury goods branch (as explained in the power orientation paragraph). In Indonesia, products in this sector only sell if the brand name and brand logo are clearly visible. Less ostentatious brands are only successful to a limited extent. This is why Prada in Indonesia mostly sells shoes from its sports range which is easily identifiable because of its red stripe (HaS, interview December 2004). They do not, however, sell shoes from their main range which is only recognizable as a status symbol to those in the know.

Figure C-49 Foreign names evoke status in all fields of business

It would be interesting in this context to carry out an investigation comparing status orientation scores and turn-over of individual luxury brands in selected countries. In ascribed status oriented countries, sales of those brands which have big logos would possibly be higher than in achievement oriented societies where quality is the main factor in purchasing. Price (one of the 4Ps) has a different significance as a buying criterion in an achievement oriented culture than in an ascribed oriented society. In the former, price is often a synonym for quality (high price equals high quality). In ascribed status societies, price is more of a synonym for status. This means that a high price endows the product with prestige which as a result rubs off on the consumer. In the framework of price determination SL added the following: “Price is an important buying criterion for certain products” (SL, interview September 2004).

Interestingly, status is not only ascribed to people, but also to buildings and locations. There is scarcely a residential complex without a foreign sounding name. The concept of country of origin is closely linked to this, too. This means that for ascribed status societies this purchasing argument is important, providing the products are from a prestigious country of origin. In Indonesia, products from Europe, the United States and Japan rank highly; at the lower end of the scale, China ranks after Indonesia’s own products. This idea leads to the last of the 4Ps -place. By this (as already explained in the chapter on international marketing) the environment in which the products are presented, from distribution channels to the individual outlet, is meant. Here it is important to find a place which matches the product image. This is difficult in Indonesia (especially when one leaves the cities) where approximately 75 percent of total outlets are traditional. Notwithstanding, Indonesians are very resourceful when it comes to decorating their traditional outlets. Painted scarves, company flags and pennants doll off their point of sales (POS). By doing so, they aim to crate an ambiance which reflects the product or brand images of goods sold.

Figure C-50 Examples of traditional retailing in Indonesia and presentation of products

The orientation’s impact on concepts used in consumer behaviour and marketing

In order to understand consumer behaviour, it is generally believed that one must understand the motivating forces driving consumption decisions. In other words, one needs to know what needs consumers are seeking to meet and why they choose to meet them in the way they do (Schütte and Ciarlante 1998: 90). In the context of this orientation it is necessary to reveal whether needs, motivations and means of fulfilment differ from those of Western consumers and what the cultural reasons for this are.

The most popular and well-known approach to human motivation is based on the research of psychologist Abraham Maslow (1997, 2002). Maslow’s needs hierarchy specifies that needs are arranged in a sequence from lower-level to higher-level (see following figure). Each level of the hierarchy specifies a certain type of need. Maslow identifies five needs: (1) psychological (the biological needs for food water and sleep), (2) safety and security (the need for shelter, protection, and security), (3) social needs (the need for affection, friendship and acceptance), (4) ego needs (the needs for prestige, success, accomplishment, and self-esteem) and (5) the need for self-actualization (self-fulfilment and enriching experiences). Lower-level needs (starting with the physiological) are considered to dominate higher-level needs, i.e. consumers must satisfy low-level needs before they begin to pursue higher-order needs. According to Maslow, the highest level of need is related to self-realization (self-actualization). Consumers desire to live up to their full potential. They want to maximize the use of their skills and abilities. This need for self-realization only becomes activated if all four of the lower-level needs have already been satisfied. These five basic levels of human need rank in order of importance from lower-level (biogenic needs) to higher-level (psychogenic needs). The individual’s lowest-level need which is unsatisfied serves to motivate the individual’s behaviour. Once satisfaction of that need is achieved, a new and higher need emerges that the individual is motivated to fulfil. Upon satisfaction of that need, a still higher need will emerge, again motivating the consumer to fulfil it.

Figure C-51 Maslow's Hierarchy of Needs (1)

Maslow’s hierarchy provides useful organization for thinking about needs and motives. However, the hierarchy ignores the intensity of needs. The avid consumption of luxuries in poor transitional economies illustrates aspects of oversimplification. For example, Indonesian families forgo needed food in order to afford a television or a refrigerator that then remains empty. This might seem to be an extreme example, but examples such as this really do exist. It seems that sometimes higher-level needs win over basic needs. Even in ancient cultures in which people often struggled to meet basic needs, one can see evidence of human tendencies to make art and assemble collections.

Maslow’s needs hierarchy provides a useful summary or inventory of human requirements that can be useful for marketing managers interested in understanding their customers’ necessities. However, they should be cautious in assuming that a hierarchy of needs holds. The theory assumes some overlap between each level as no need is ever completely satisfied. While all the needs below those which remain unsatisfied continuously motivate behaviour to some extent, it is the lowest level of unsatisfied need that serves as the dominating motivating force of an individual’s behaviour. Thus the theory asserts that dissatisfaction is a stronger motivation than satisfaction.

While Maslow’s theory is agreed to be broadly applicable across many social disciplines, his needs hierarchy seems particularly suited to western culture, specifically American culture (Schütte and Ciarlante 1998: 92), although Maslow himself dismissed the question of intercultural transposability by arguing: “…societies are much more alike than we would think…” (Schütte and Ciarlante 1998: 92). Kindel, on the contrary, asserts that Maslow’s needs hierarchy is inappropriate for the Chinese, particularly at its stages of self-realization. In addition, Maslow’s ordering of needs may not be consistent across cultures. Research supports somewhat different hierarchies in the East (HS, lecture October 2004). Some cultures certainly put more value on social needs and belonging (as presented in the social orientation) and less on ego needs and self-realization. Different cultures have varying conceptions of the self that are likely to influence whether they value self-fulfilment or collective fulfilment. The presentation of this concept to them led to unanimous agreement on the part of the interview partners.

In the case of the Asian consumers, not only are modifications to Maslow’s ranking of needs required, but also the definition of and even existence of such needs must be questioned (JK, lecture October 2004). Since Southeast Asians, like everyone else, must be fed and protected in order to survive, changes are not required as far as physical needs are concerned. However, it is debatable whether self-realization as a personally directed need actually exists for the Asian consumer. Instead, it may be a socially directed need reflecting the desire to enhance an individual’s image and position through contributions to society. Among the collectivistic cultures of Southeast Asia (social orientation), the idea that personal needs are the highest level of need would neither be readily accepted nor regarded positively by others. To compare Maslow’s hierarchy of needs with the one suggested as being relevant for Indonesian consumers, refer to the next figure at the end of this paragraph. Indeed, the emphasis on achieving independence, autonomy and freedom (characteristic of the individualistic value system of Western cultures) is visibly absent form Asian cultures, according to Schütte and Ciarlante (1998: 92). In the Asian context, socially directed needs are considered to be those of the highest level. Rather than redefining Maslow’s self-actualization need as a socially directed self-fulfilment need, Schütte and Ciarlante hypothesize that personal needs in Southeast Asia tend to be subordinated to social needs. As a consequence, the highest level of satisfaction is not derived from the actions directed at the self but from the reactions of others to the individual. Therefore, a more accurate hierarchy of needs in the Southeast Asian context is one which eliminates the personally directed self-actualization need and instead emphasizes the intricacies and importance of social needs. What Maslow has identified as social needs of belonging and prestige can, according to HS, (lectures October 2004) in fact, be broken down into three levels: (1) affiliation, (2) approbation, and (3) status.

Figure C-52 Maslow's Hierarchy of Needs (2) (adapted from HS, lecture October 2004)

Affiliation is the acceptance of an individual as a member of a group. In the family, this acceptance is automatic, but in most other groups certain qualifications must be met in order to gain membership. In terms of consumer behaviour, the affiliation need will encourage conformity to group norms. Once affiliation has been attained, the individual will desire the approbation of those in his group. This is a higher level need and requires effort, as approbation must typically be earned through acts that demand the respect of others. Once the individual feels sufficiently approbated within his group, he/she will desire the status that comes from the esteem of society at large. Fulfilment of this level of need requires the regard of outsiders, whereas fulfilment of the approbiation need is on a more intimate level. This status level of needs most closely resembles Maslow’s prestige need and manifests itself in highly visible conspicuous consumption.

Schütte and Ciarlante (1998: 94-97) present other attempts which are believed to complement the idea of human needs and their impact on behaviour in the context of Maslow. One of the theories presented, groups together three human needs with the most significant ramifications for consumer behaviour as a “trilogy of needs”. These are the needs for power, affiliation and achievement.

Figure C-53 Trilogy of needs

These can be related to Maslow’s needs hierarchy and go even further in delineating the contrasts between Western and Asian consumers in terms of the nature and importance of each need and the type of consumer behaviour each one inspires. Schütte and Ciarlante (1998: 94) find that while these needs can often be personally directed in the case of the Westerner, among Asians these needs are far more often socially directed. The need for power refers to an individual’s need for control. This control can be directed towards the individual’s environment as well as towards other persons or objects. When an individual feels that controlling other people or things increases his status in their eyes, the individual experiences increased self-esteem as a result. This need for power is personally directed and is related to the individual’s need for self-esteem. In the Asian hierarchy of needs, the need for power would relate to the status need when the individual feels that greater power brings with it greater esteem from others. The collectivistic Asian consumer, according to Schütte and Ciarlante (1998: 98), however, “…is typically more satisfied to remain a part of the group rather than to control it, and the personally directed motivation the Western consumer experiences is therefore relatively absent in the Asian context. However, in Indonesia, people feel a great need for power over others. Historically power over people (prestige increases with the number of subjects) in Southeast Asia was considered more valuable than power over land. Land was plentiful, people, however, compared to area of land, were relatively scarce. The need for affiliation is very similar to Maslow’s social need and therefore ranks as extremely important in motivating consumer behaviour among individuals with a high dependence on the acceptance and approval of others. As Schütte and Ciarlante (1997) reveal with their hierarchy model of needs, the affiliation need is of particular importance in collectivistic cultures and may therefore be a greater motivator than in the Western context. People with high affiliation needs often select goods that they feel are in accordance with group norms and will thus meet with the approval of their group. In the western context, this need pertains to products and services that are consumed in groups and alleviate feelings of loneliness, such as team sports, coffee bars and shopping malls. In the Western context, the achievement need is related to both the socially directed prestige need and the personally directed self-realization need. People with a need for achievement tend to be more self-confident, enjoy taking calculated risks, actively research their environments and are very interested in feedback. Products and services that signify success are particularly appealing as they provide feedback about the realization of their goals. In the Western context, products associated with the need for achievement include cigarettes, candy, alcohol, ice cream and cookies because they serve as rewards for achievement. For the Asian consumer, “…achievement is a primary means of satisfying the social need for admiration from the peer group as well as status from society at large” (Schütte and Ciarlante 1998: 96). The self-satisfaction that achievement brings to the Asian consumer is derived not from providing a means of setting oneself apart from or above the groups, but from the social rewards in terms of status and the acceptance it brings.

In other words, achievement in the Asian context is very much a socially directed need in contrast to the personally directed self-realization needs of Western consumers. The figure illustrates the different weighting of needs between Western and Asian consumers. For the Western consumer, the individualistic needs of achievement and power are more prevalent and motivating than is the need for affiliation. In the collectivistic Asian cultural context, social needs (affiliation, admiration and status) are far more motivating than the need for individualized self-fulfilment in the form of achievement and power. This might be right, but the need for power over people certainly exists in Indonesian society. The needs for power and achievement are most motivating to the Asian consumer when they are socially directed, thus being subsumed by the affiliation need. Hence, for the Asian consumer, it is the “social self” that motivates. The “private self” is sublimated to concern over the effects of one’s actions and behaviour on others. It is therefore more important to monitor the motivations of the social than the private self. Motivational research techniques designed to reveal hidden motives may provide interesting detail, but the outward, social self is the active participant in consumption choices. Since the social self is far easier for the marketer to measure and respond to than the private self, it may be relatively easy to predict responses of Asian consumers to product-offering and promotional activities (Schütte and Ciarlante 1998: 97).

To sum up, the considerable significance of this orientation in connection with Indonesian cultural and consumer behaviour must be highlighted. Strong status orientation is reinforced through the power orientation, which will be explained in the course of this chapter. Since both orientations can be considered to be the most important in terms of affecting certain consumer behaviour patterns, both will be dealt with again in the summary and discussion of the model and results for Indonesia.

The “control orientation” has been adapted from Trompenaars’ and Woolliams’ “internal versus external control value dimension” who describe this dimension as “the dilemma between internal versus external control” (Trompenaars and Woolliams 2004: 107). This dichotomy is also known as “internal locus of control versus external locus of control” (Trompenaars and Hampden-Turner 1997: 141; ibid: 107). The dimension concerns an existential matter of life which affects all human beings, i.e. the meaning people assign to their natural environment. The dimension enquires whether a culture tries to control and dominate nature or submit to it. Societies have developed two major orientations towards nature; either that one can and should control nature by imposing one’s will upon it, as in the ancient biblical injunction “multiple and subdue the earth”; or that man is part of nature and must go along with its laws, directions and forces (Trompenaars and Hampden-Turner 1997: 141). The orientation therefore reflects the idea of an inner-directed versus an outer-directed worldview. One can see considerable variations in this external versus internal control dimension between countries (ibid: 143-144).

A divide between countries is reflected in Trompenaars’ and Hampden-Turner’s ranking of the dimension where predominantly Muslim countries and Hindu India score as externally controlled. It seems that people in Muslim countries and Asian countries in general, are less likely to believe in internal control than people residing in Europe or North America. In the latter two, a strict separation between religious beliefs and science has been drawn, as well as a separation between church and state. The foundations of this behaviour will be explained in the next section. Indonesia’s score exemplifies a society principally believing in external control of the world (Boucher-Floor, THT consulting, email August 2005). Indeed, there is much evidence to indicate that Indonesian society is heavily influenced by religious and cultural influences which are the reason for the country’s score as a society where people believe in being outer-directed (externally controlled).

Figure C-54 Indonesia scoring rather externally controlled

In the course of human existence, there has been a shift from a preponderant fear that nature would overwhelm human existence, to the idea that nature can be controlled. This transformation is closely linked to the rationalization of the world, i.e. that the truth should be determined by reason and factual analysis, rather than faith, dogma or religious teaching (Kopper 1979: 1-39). Before the fifteenth century in Europe, nature was seen as an organism. People believed that nature and the environment determined what human beings needed to do, and that nature controlled them, rather than the reverse. With the Renaissance, this organic view became mechanistic and the idea that nature could be controlled, developed (Debus 1978: 1-15; Gerl 1989: 19-40). Thus religion was replaced by a civic order, culminating in the secular viewpoints expressed in the French Revolution (for example laicism). The 18th century also saw a continued rise of empirical philosophical ideas, and their application to political economy, government and sciences such as physics, chemistry and biology. The idea of uniform laws for natural phenomena mirrored the greater systematization in a variety of studies. The Enlightenment’s intellectual heritage is reflected in the view that it was the point where Europe broke through what historian Peter Gay (1966) calls “the sacred circle”, where previous dogma circumscribed thinking. The Age of Enlightenment, as is generally believed today, facilitated the beginning of a human-centric (internally controlled) versus a God-centric (externally controlled) worldview with major implications for humankind and the organization of life (Trinkhaus 1999: XVI., 667-684). However, the Age of Enlightenment - a western cultural heritage - influenced primarily the cultures out of which it originated, and in other parts of the world had too minor an influence on people’s life worlds to rationalize the organic view that nature dominates individuals and directs actions. People’s focus in these cultures tends to be on the environment rather than on themselves. This has been described as external control and has major implications on peoples’ world outlook, self-assessment and self-development. Those people who have a mechanistic view of nature have, in addition to the belief that man can dominate the environment, a tendency to take themselves as the point of departure for determining any course of action. This is known as internal control.

Fatalism is often closely connected to outer control orientations as religion exerts influence on people’s life worlds, particularly in regions where people are predominantly believers of religions which were not de-mystified by the innovation of the Age of Enlightenment. Fatalism is a belief that directly influences action, not necessarily in terms of acting less, but rather in terms of acting differently. It clearly posits the locus of control as being outside, in the metaphysical environment. There are huge differences in how religious beliefs influence this orientation. Where, for example Christianity fundamentally differs from Islam, is in the assumption that God would ask human beings to accept their destiny as it comes (Usunier and Lee 2005: 66). The Christian creed separates the worldly from the heavenly sphere more strictly, as mentioned elsewhere. Furthermore, there is a less personal and direct relationship to God than in Islam, since, at least in Catholicism, it is largely mediated by the Church. This frees the tendencies towards mastery over nature, since God gives mankind leeway in relation to worldly enterprises. In Christian religions, the way is cleared for proactive attitudes. In Islam, omniscience is, as generally in monotheistic religions, typically attributed to God. Thus, it is not primarily the presence of omniscience which exists traditionally in theology, but the degree of emphasis placed on the capacity to know everything across religions. In religions such as Islam, Hinduism and Buddhism (Weber 2005; Schluchter 1984) where this emphasis is strong, people see themselves as externally controlled (Trompenaars and Hampden-Turner 1997: 144) with major implications on cultural behaviour.

As mentioned elsewhere, Indonesia’s society is culturally influenced by the religions and traditions of the Indian subcontinent (Hinduism and Buddhism) and that of the Middle East (Islam) as well as indigenous customs (“adat") (Garang 1974: 10-40). The phenomenon of inter-personal relationships dominating all areas of Indonesian society is “adat”. The term “adat” originates in the Islamic-Arabic region, and describes non-coded local-traditional habits which are summed up in the expression “what is commonly known and accepted”, or “custom” among Islamic nomadic tribes (Garang 1974: 10). “Adat” is a means of social control.

Java, Indonesia’s main island, once the site of many influential kingdoms in the Southeast Asia region, is still, despite what Mulder (1994: 19) has called “santrinisasi” (continuous penetration of orthodox Islam), a strong repository of an amalgam of classic Javanese ideas exercising a powerful spell (“Javanization”) on present-day social, political and cultural spheres in Indonesia. At the heart of Javanese civilization there are, as exemplified elsewhere in this chapter, mystic and religious practices which are shaped by the idea of being in step with cosmic rhythm and destiny (ibid: 23), clearly favouring an outer-control orientation. Javanism’s underlying thinking that events are preconditioned and are manifestations of God’s omnipotence or the power of nature (“kodrat”), and the Javanese belief in the projective power of puppet plays (“wayang”) exemplify the assumption that Javanism promotes a view of an externally controlled world. Together with Hinduism, Buddhism and Islam, all chiefly propagating an externally directed world, one can conclude that Indonesian society in general scores in a rather externally controlled way. Finally, the hypothesis that Indonesian society is rather externally controlled, can be confirmed.

The orientations’ implications mainly concern organizational and strategic companies’ matters (rather than questions arising in the field of consumer behaviour) since the orientation’s influences on individual consumers are rather inconsequential compared to its impact on strategy and organization. The reason for this is that the relationship closely analogous to man and nature, outlined in this orientation, is that of organizations and markets (Trompenaars and Hampden-Turner 1997: 148). While the belief that the environment is all-powerful in deciding the future and can lead to fatalism or resignation (American belief), it can also lead to a company view where markets and consumers are central variables of success and where direction is taken from markets (outside) and not only from the company’s research and development (R&D) department (inside) which tends to be far away from the end-consumer. It may be for this reason that some outer-directed cultures (for example Japan, Singapore and South Korea) are among the world’s better economic performers with their innovative and consumer-centric companies (for example Toyota and Samsung). This gives clues as to why a product may succeed, i.e. not simply because the company wills it to, or because its special design features delight customers, but a combination of all product features. This shows how much it helps to be outer-directed, because this cultural tendency focuses on what customers want. It may succeed for reasons other than those which come from inside the organization, namely the customers’ preferences.

Figure C-55 Interaction with consumers in externally- and internally-oriented companies

Unlike Indonesians and generally most Asians, Germans are inside-oriented and focus on quality (RD, interview December 2004). German companies expect to sell on this, but this can also mean losing track of competitors or managing markets with a homogenous global strategy without taking local idiosyncrasies into account. For inner-directed companies, local peculiarities deriving from culture are rather meaningless as the products and services are believed to be so superior that they can sell worldwide without adaptation. As Colenso (2000: 149-168), Howaldt, Kopp and Winther (1998: 13-19) and Imai (1997: 15-26) show, such introspectiveness can lead to many faux-pas in the corporate world. Therefore, it can be concluded that the main issue related to this orientation is to connect the internally controlled culture of technology push (selling what one can make) with the externally controlled world of market pull (making what one can sell). Outer-directed need not mean God-directed or fate-directed but directed by the knowledge revolution, by a joint-venture partner or the end-consumer.

To accept direction from customers, market forces or new technologies can be more advantageous than opposing these with one’s own (or company’s) preferences. Ideas like “scanning the environment” and “customer orientation” usually come very naturally to cultures scoring as outer-directed, as mentioned elsewhere. As shown, in a cultural environment where a lot of attention is given to outside forces, companies are very keen to find out what customers want (Colenso 2000: 113-124). Manufacturers do their best to make or develop products that fulfil customer needs. The most effective organizations are those which are better at connecting the push of technology to the pull of the market (Colenso 2000: 149-168; Howaldt, Kopp and Winther 1998: 13-19; Imai 1997: 15-26).

Another important aspect regarding this orientation is that of innovation. Asia’s major inroads into Western markets have come less from products that have been invented there and more from products that were “refined”. It is believed that this is possible because of Asian’s outside orientation. Western contention that sees Asians as “stealing ideas” is also shaped by the West’s proprietary notion about what comes from inside of us and is therefore “ours”. The concept is so apparent to Southeast Asians and especially the Japanese, that they are hardly aware of it (Imai 1997: 15). Not all Southeast Asians follow the concept, but being outwardly oriented to the market is generally discernible in companies. Southeast Asians may regard western technologies as part of the environment, like fruit on a tree, which wise people pick and incorporate into themselves. Moreover concepts such as “kaizen” (refinement, improvement) have very high cultural prestige. Colenso (2000: 8) adds:

“It is important to recognize that kaizen is not an initiative, it is an ongoing organizational culture which, as a matter of primary focus, is dedicated to and active in, the process of improvement.” (Colenso 2000: 8)

The concept is heavily linked to environmental adaptation (Imai 1997: 19-21), while many companies in the West espouse the view that the consumer would adapt himself to their products. To take something from the external environment and then refine or improve it is not “copying” but simply making something better. For Southeast Asians, the process of refinement has very high cultural prestige and is considered as art in its own right (Howaldt, Kopp and Winther 1998: 13-17). To invent something, to be its author and originator, is associated with high status in an internally oriented culture. To refine and develop something that was invented elsewhere is less prestigious. Finally, it can be claimed that an outer-directed orientation is the starting point of this thesis’ contention. This is because, without taking the importance of markets, consumers and their culture into consideration, it is impossible to have successful products as the company is then too internally-oriented. What can happen in a case such is shown in the next figure.

Figure C-56 Possible results of an inner-controlled (directed) market approach (images, courtesy of Coke)

In general it seems that the most successful foreign companies are the ones that manage to combine the image of a foreign brand with some degree of adaptation to local circumstances and preferences (Imai 1997: 15-26). In international marketing, control orientation does not play a central role in direct communication with the consumer. It rather concerns the basic direction of the company - whether it works in a customer-centric way or if the organization itself is at the forefront. This is the reason why, in the context of this orientation, consumers and their behaviour played a lesser role. However, the case-study presented in Part D reverts to this orientation and shows how successfully some outer-oriented companies operate.

Time is more than what the clock says since different cultures have different concepts of time (owing to people’s need to coordinate their activities), which introduces dilemmas arising out of the different meanings given to time (Trompenaars and Woolliams 2004: 119). Time orientation has been analyzed by Trompenaars and Hampden-Turner as well as Hofstede. Hofstede (2005: 207-240) referred to this as “long-term versus short-term orientation”. For the purpose of this study it has been renamed “time orientation”, since not only differences between short-term and long-term concepts, but other time concepts will be investigated in conjunction with this orientation as well. Long-term orientation is the extent to which a society exhibits a pragmatic future-oriented perspective rather than a conventional historic or short-term point of view. Values included in long-term orientation are perseverance, ordering relationships by status and observing this order, thrift, and having a sense of shame. The opposite is short-term orientation, which includes personal steadiness and stability, respect for tradition and reciprocation of greetings, favours and gifts. Focus is on the pursuit of happiness rather than on the pursuit of peace of mind (Hofstede 2005: 210). The combination of long-term orientation and collectivism results in family ties, long-term thinking and other elements of Confucian philosophy such as filial piety and paternalism (Bond 1986: 214-216).

Hofstede’s and Trompenaars’ studies, based on the dimensions of past, present and future time orientations, were found to be important in the Chinese Value Survey (CVS), which was developed by Michael H. Bond and Peter B. Smith (1993) to measure values suggested by Chinese scholars. Both employ this concept for their own research and extend the study in a non-Chinese cultural environment. The purpose was to introduce a deliberate Eastern bias into value surveys that had historically been developed by Western scholars. This new instrument was tested on students in 22 countries (Bond and Smith 1993: 149-150). It revealed a dimension they termed “Confucian Work Dynamism”, which corresponds to a future-orientation on the one hand and a post- and present-orientation on the other (Bond and Smith 1993: 149-150, 186). East Asian countries scored highest, followed by Western countries. Key differences between short- and long-term orientations are thrift, being sparing with resources, respect for circumstances and the willingness to subordinate oneself for a purpose (Bond and Smith 1993: 149-150). At the short-term orientation pole, personal steadiness and stability, if overstressed, discourage the initiative, risk seeking, and changeability required of entrepreneurs in quickly changing markets. Other key differences are main work values including learning, honesty, adaptability, accountability and self-discipline. Leisure time is not important. Large savings are connected to funds available for investment - most of which is in real estate (AS, interview November 2004; HS, interview December 2004; IK, interview August 2004). Something that is often perceived as paradoxical in the measurements on this index is the combination of strong respect for tradition and short-term orientation in a large part of the Western world, whereas respect for old age and ancestor worship are such strong elements of Asian value systems. This reflects the desirable versus the desired: tradition is important, but it is innovativeness that is desired. Particularly in China, pragmatism tends to overrule respect for tradition. Besides Trompenaars’ and Hampden-Turner’s derived Chinese Value System, there are further theories which should be named at the juncture of this orientation.

Hall’s (1989) important study of time as an expression of culture provides an explanation of the difference in behaviour and language. One distinction by Hall of how people handle time is between monochronic (M-time) and polychronic (P-time) cultures (Hall and Hall 1989: 13-31). People from monochronic cultures tend to do one thing at a time; they are organized and methodical, and their workdays are structured to allow them to complete one task after another (Hall and Hall 1989: 13-14). Polychronic people, on the other hand, tend to do many things simultaneously. Their workday is not a chain of isolated, successive blocks; time is more like a vast, never-ending ocean extending in every direction (Hall and Hall 1989: 16-17). Germans adhere to the more rigid and compartmentalized way of dealing with time. To people who do many things at the same time, however, such as the Indonesians, Arabs or Pakistanis, punctuality is nice, but by no means an absolute necessity. In monochronic cultures, time spent on the Internet takes time from other activities, such as TV viewing. In polychronic cultures, people do both at the same time. Not all cultures are the same, however. In Japan, tight M-time is for business, and P-time is for private life (de Mooij 2005: 58), and work ethics are adapted to suit the circumstances. The figure below highlights this time concept.

Figure C-57 M-time versus P-time cultures and timing

Besides Hall’s analysis of language and time, one can distinguish between cultures and their orientation toward the past, present and future. Hall (1989: 17) identified three types of culture: present-oriented, which is relatively timeless, tradition-less and ignores the future; past-oriented, mainly concerned with maintaining and restoring traditions in the present; and future-oriented, envisaging a more desirable future and setting out to realize it. It is chiefly people who fall into the latter category who experience economic or social development (Trompenaars and Hampden-Turner 1997: 121). North Americans tend to be future-oriented; the future is a guide to present action, although the time horizon is short-term (Hall and Hall 1989: 17). The old is easily discarded and the new embraced. Most things are disposable, from ideas, trends, and management fads to marriage partners. Even the “old” is treated as new. Many Europeans are past-oriented; they believe in preserving history and continuing past traditions. Japan has a very long-term future time horizon, as has China, but they look to the past for inspiration (Hall 1989: 17). Furthermore, in societies undergoing a rapid process of economic change, past orientation is often temporarily played down (Usunier and Lee 2005: 27). This behaviour is often described as belief in the future, a phrase which is intended to express which great hope believers in the future associate with their future.

Another methodology used by Trompenaars and Hampden-Turner (1997: 125-127) to measure time interculturally is set out by Tom Cottle, who created the “Circle Test”. People are asked to think of past, present and future as being circled and asked to draw and arrange these circles in any way that shows how one feels about the relationship to the past, present and future. Four possible configurations were found. First, he found absence of zone relatedness. There is no connection between past, present or future, though in their view the future is much more important than the present and than the past. The second configuration was temporal integration; the third was partial overlap of zones and the fourth had zones touching but not overlapping, hence not sharing common regions of time (Trompenaars and Hampden-Turner 1997: 126). The figure below illustrates the results of the investigation into this concept schematically.

Figure C-58 Time zones and their relatedness

China is characterized by absence of zone relatedness, whereas Malaysia shows an orientation where all three aspects overlap, usually where the future is bigger and more important but where the past touches not only the future but overlaps it. All three aspects are important. The circle test measures how different cultures assign different meanings to past, present and future. Trompenaars and Hampden-Turner (1997: 126) extended the test to include short- and long-term horizon. Most Asian countries except the Philippines and Pakistan, which are very short-term-oriented are in the higher long-term orientation range. The Philippines and Pakistan are very-short term oriented (Hofstede and Hofstede 2005: 211) Unfortunately, there are no exact figures for Indonesia. However, Islamic countries are considered to be short-term oriented (Hofstede and Hofstede 2005: 234). The tables presented by Hofstede contain data from only two entirely Muslim countries and Islam by itself does not stand for a short-term orientation, but the strength of its fundamentalism does. This fact renders categorizing Indonesia difficult, even if advertising placed there strongly implies short-term-orientation due to its emphasis on the here and now. This was also confirmed by Tineke Boucher-Floor of THT Consulting (email, August 2005) who characterizes Indonesia as shown in the previous figure (figure: time zones and their relatedness). Yet, the most important aspect of the time orientation is whether a society is short- or long-term oriented. Indonesia scores as short-term oriented as the following figure demonstrates.

Figure C-59 Indonesia scoring rather short-term oriented

As Gurevitch states (1976: 229): “Time occupies a prominent place in the ‘model of the world’ characterizing a given culture”. People’s relationship to time changes with respect to periods of history and levels of human development, the technology available for measuring time, the emphasis given to natural and social rhythms, and the prevailing metaphysical views. This means that each perception of time corresponds to a vision of the real world, its origin and destiny (world perception). Time appears predominately therefore through this social function, in that it allows people to have a common framework of activities and helps to synchronize individual human behaviour. Encyclopedic approaches to the concept of time (Attali 1982) show that one time pattern has never eliminated a previous one. Each new time pattern superimposes itself on the one that previously prevailed. As a consequence, individual time perceptions may result from adding or mixing different basic patterns of time. Most of the literature in cultural anthropology considers time perceptions as cultural artifacts.

The orientation and religion

In conjunction with the time orientation, the culture element “religion” plays an important role in pushing people towards a present orientation, if it emphasizes that only God decides the future. In terms of temporal orientations, the Arabic-Muslim character has been described as fatalistic and short-term oriented. As stated by Harris and Moran (1987: 474):

“Who controls time? A Western belief is that one controls his own time. Arabs believe that their time is controlled, to a certain extent, by an outside force – namely Allah – therefore the Arabs become more fatalistic in their view of time… Most Arabs are not clock watchers, nor are they planners of time.” (Harris and Moran 1987: 474)

In contrast, future orientation is naturally related to the view that people can master nature, and think the future can in some way be predicted or at least significantly influenced. In societies where future orientation is strong, it is backed by the educational system and by an “imagination of the future” supported by reports on scientific breakthroughs and technological developments. A strongly economic view of time, when combined with monochronism, emphasizes the linearity of time. Time is viewed as being a line with a point at the centre, i.e. the present. Each portion of the line can be cut into slices, which are supposed to have a certain value. Basic religious beliefs play a key role in supporting such a linear view of time. Christianity has a one-shot interpretation of worldly existence. Only on the final judgment day will Christians know if they are to be granted eternal life. However, the Asian religions, including Hinduism and Buddhism, assume that on the death of the body, the soul is born again in another body. The belief is that regular reincarnation, i.e. until a pure soul is allowed to escape the cycle and enter nirvana, radically changes the nature of time in a specific life (Becker 1993: 1-22, 23-45).

Figure C-60 Worldly existence of humans: time bar versus time circle

For most Asians, cyclicity is central in their pattern of time as illustrated above. Naturally, patience is on the side of people believing in cyclical reincarnation of the soul. For Christians, it is more urgent to achieve, because their souls are given only one worldly life which in fact supposedly has important repercussions on consumer behaviour and marketing. Elements of cyclicity are based mostly on metaphysical assumptions. Elements of cyclicity of time therefore have one main origin - religious assumption about reincarnation of the soul.

The orientation and language

Besides the influence of religion on this orientation, language plays a role in that it identifies a society as being either short-term or long-term oriented. Short-term or long-term orientation can to a lesser extent be investigated with the help of language. However, it is possible to comment on the relationship between past, present and future. It seems that there are clues as to culture’s time orientation in its language, since representations of time are conveyed through the medium of language, as a means of communication and therefore collective action, too. The vocabulary of time reveals a great deal about the linkage between language and cultural representations. Since Indonesian does not have any conjugations, the time of an action (tempus) cannot be identified through the verb. Thus the verb can have many meanings from a time point of view (Nothofer and Pampus 1998: 39). Generally, the context is sufficient to determine the tense. If this is not the case, the adverbs of time can be used for assistance. In Indonesian the completion of the action is more important than the tense; comments about the tense are carried out by three adverbs (sudah [already], belum [not yet], sedang [now]). On principle, these grammatical elements reveal that there is no clear division between tenses. It could be assumed that this is why the circles do not overlap in the circle test in this case. Finally, the culture element language has a decisive influence on this orientation, too. To what extent the orientation determines purchasing behaviour is the subject of the next section.

As demonstrated, time is a core system of cultural, social, and personal life. Each culture has its own unique time frame. Different concepts of time can explain significant differences in behaviour. A few aspects of time that are relevant to consumer behaviour are summarized in the following paragraphs. Furthermore, it should be noted that many marketing concepts are time based: product life-cycle (Kotler, Ang, Leong and Tan 2003: 316-318, 329, 332), sales forecasting (Kotler, Ang, Leong and Tan 2003: 133-137) or the planning of new product launches (Czinkota and Ronkainen 2004: 613-620) to name but a few. Normative time in marketing and management seems indisputable, and its very nature is rarely questioned. It is perceived as linear, continuous and economic. However, time in an intercultural perspective is probably the area where differences are both the largest and the most difficult to pinpoint, because (1) assumptions are very deep rooted and (2) formally one adopts a common model of time, which could lead to conflicts when different models and assumptions about time meet. Short-termism is the expression used to describe the pressure exerted by money markets for profits now, in the short term. Because of the monetary value placed on time in the US, companies that have a product that will save people time usually emphasize this feature. But in other cultures not everything that will save people time generally sells and therefore this feature should not be exploited in advertising. Western advertisers tend to use clocks in their international advertising to symbolize efficiency. At the same time however, the fact that clocks are not recognized as symbols of efficiency in cultures where people have a different sense of time is not taken into consideration (de Mooij 2005: 57). The long-term orientation is often also associated with a country’s high rate of savings. In comparison to China or countries with a large Chinese minority, Muslim countries’ scores are low here, too. Investigation of Indonesian consumer behaviour clearly indicates differences between ethnic groups. Muslim Indonesians do not comply with long-term orientation (fostering virtues oriented toward future rewards) but rather their behaviour (fostering of virtues related to the past and present) conforms to short-term orientation. The “time to market” is the period of time taken from the start of the development of a product until it is offered to customers in the marketplace. A variation is “time to break even”, or how long it takes to earn enough money to cover expenses. Generally speaking, American managers seek to make this time shorter and shorter. A window of opportunity can close in your face if you are as much as a few weeks late. In sequential cultures, most attempts to decrease time to market, or time to break even are based on pushing people and events to move faster. This is the consequence of thinking sequentially. Push equals linear acceleration, or going faster. Pull strategies are popular in Japan. The Japanese start by “thinking backwards” from a future rendezvous with the customers to the pattern of current activities needed to make the rendezvous happen. Japan is also the place where just-in-time production practices (JIT) was developed. Those cultures that use pull strategies tend to put their focus on long-term effectiveness. The opposing value of long-term orientation is “save for tomorrow”. Short-term orientation is reflected in the sense of urgency so frequently encountered in U.S. advertising. Examples are “Hurry”, “Don’t wait”, or “Now 50% off”. Another expression of short-term thinking is “instant pleasure”, or living in the now and not thinking about the future, as the advertisement below illustrates.

Figure C-61 An example of short-termism in advertising (image, courtesy of GMC)

A strong value in long-term orientation cultures is reverence for nature. This is also related to collectivism, so it is particularly in the configuration of long-term orientation and collectivism that harmony of man with nature plays such a major role in people’s lives. Nature and symbols of nature are important elements in the advertising of Japan, China and Chinese-related cultures (see for example Appendix 1, Figure 307-309) and to a much lesser extent in Indonesian ads. Harmony with both nature and fellow humans is a popular subject in Asian advertising. It is part of an indirect approach that helps to build trust in the company. Much advertising is pure entertainment and visuals and objects that please the eye, many of which relate to nature (bamboo trees, flowers, autumn leaves, or other representations of the seasons) and which often have a symbolic meaning unknown to foreigners, are used (see for example the BMW X5 ads discussed). Indonesian advertising reflects thoughts and harmony less via citing actual facts than in the depiction of certain familiar practices, as illustrated in the figure below.

Figure C-62 Harmonious sentiments as indicators of long-termism

Figure C-63 Harmonious sentiments as indicators of long-termism

Many Westerners do not understand the butterflies in ads for computers or other natural elements in Asian advertising. The combination of collectivism and long-term orientation demands harmony with nature and thus explains this advertising style, the objective of which is to please the customer, not to intrude. The short-term orientation of the Indonesian society is mostly articulated in advertising campaigns for banking services, such as credit cards and consumer credits and less so in ads for consumer goods where campaigns accentuate visual elements associated with, for example the status and power orientation or the social orientation.

The orientation and shopping behaviour

The sequential tendency is apparent in purchasing behaviour. People in these societies like to do a lot of things simultaneously and therefore places where they spend their leisure time (for example malls) reflect this. In the mall, not only can one shop, but one can also ice skate, visit a spa and have something to eat. Asian’s sequential tendency could explain why shopping malls that include recreational facilities are preferred. Shopping is regarded positively and as a social activity with the possibility to meet friends, to go with the whole family, to eat, or to go the cinema. All over Asia the latest data shows that economies are becoming 24-hour economies. It seems that Asians like always having something to do.

On principle, the time orientation is clearly visible in consumer behaviour and their attitude “buy now, pay later” instead of “save for later“. This became especially apparent from the interviews conducted in Indonesia. Advertising campaigns are not necessarily targeted at the average richest groups but at the groups of people which like to spend even if they cannot afford to. It became apparent that Muslim consumers in particular were the target of advertisements since they would not hesitate to spend money on every imaginable kind of consumer good. A similar experience was had in Malaysia in 2001 where a product was initially only displayed in bookstores frequented by the Chinese-Malaysian minority. The reasoning behind it was that it was believed that they would purchase the product rather than the comparatively less well-off Malays (Willer 2003). Later, it turned out that it was precisely the less well-off Malays who did not care about the price. Kids wanted the product and it was bought for them (Willer 2003).

The orientation and consumer credit

Banks and credit card issuing institutions are aware of Indonesian consumer short-term oriented behaviour and exploit this opportunity to their advantage. Consumers are bombarded with advertising for consumer credit and credit cards everywhere. Credit card companies put up their stalls at the personnel entrances or beside the prayer rooms of an office building in order to advertise their products. Restaurants, cafés and whole malls have certain offers for credit card holders. Owning a credit or bank card in Indonesia is equated with being modern, a sales argument per se, and nearly everyone today has at least one bank card (IS, interview October 2004). Since bank cards allow people to go overdrawn, a lot of Indonesians take advantage of this if no cash is available. Paying by credit or debit card leads to a gradual deterioration of traditional retailing where only cash would normally be accepted. Modern retail outlets take full advantage of this fact. A lot of Indonesians feel rich because of having bank cards and so they love to go out shopping and use them (IS, interview October 2004).

Figure C-64 Short-termism in Indonesian advertising campaigns for banking products

Finally, it can be concluded that the orientation is on the one hand quite visible in advertising campaigns for banking services in Indonesia, on the other hand, however, less frequent in ads for products outside the banking sector. For cars, cigarettes and many other products, visuals are used which evoke thoughts of harmonious living, a sentiment associated with a rather long-term outlook of a society.

Rubber time (jam karert) - often associated with Indonesian consumer behaviour -, was not gone into in depth in connection with this orientation, since it is only important in intercultural communication and not in International marketing.

“Power distance” is one of the dimensions of national culture suggested by Hofstede (Hofstede and Hofstede 2005: 41) to put value concepts in a global comparative perspective. Power distance measures the extent to which a society and its individual members tolerate an unequal distribution of power in organizations and in society as a whole. De Mooij (2005: 60) defines power distance as “the extent to which less powerful members of a society accept and expect that power is distributed unequally”. Power orientation is reflected in the values of both the less powerful and more powerful members of society, for example by behavioural values of superiors who display their power and exercise it, as well as by their subordinates who are uncomfortable if they do not personally experience it (Hofstede and Hofstede 2005: 39-46). In high power distance societies, superiors and subordinates feel separated from each other and everyone has his or her rightful place in a social hierarchy, and as a result, acceptance and giving of authority is something that comes naturally. At society level, power distance translates into how society handles inequality. It is accepted that some people are given more status and respect than others. In cultures scoring lower on the power distance index, authority can have a negative connotation, as focus is on equality of rights and opportunity and independence are highly valued (Hofstede and Hofstede 2005: 40-41).

In the large-power-distance situation, children are expected to be obedient toward their parents. Sometimes there is even an order of authority among the children themselves, young children being expected to yield to older children, for example (HS, lecture October 2004). Independent behaviour on the part of a child is discouraged (Bond 1986: 203-205). There is often considerable warmth and care in the way parents and older children treat younger ones, especially those who are very young. They are looked after and not expected to experiment for themselves (HS, lecture October 2004). Respect for parents and other elders is seen as a basic virtue; children see others showing such respect and soon acquire it themselves. This can be confirmed in Indonesia, Malaysia, Singapore and South Korea. Respect for parents and older relatives lasts through adulthood: parental authority continues to play a role in a person’s life as long as the parents are alive. Parents and grandparents are treated with formal deference even after their children have actually taken control of their own lives (Hofstede and Hofstede 2005: 51) and children are supposed to support their parents financially and practically (HS, lecture October 2004).

In the small-power-distance situation, children are more or less treated as equals as soon as they are able to act. The goal of parental education is to let children take control of their own affairs as soon as they can. Active experimentation by the child is encouraged, for example being allowed to contradict their parents. Behaviour towards others is not dependent on the other’s age or status; formal respect and deference are seldom shown (HS, lecture October 2004). In the large-power-distance situation, the parent-child inequality is perpetuated by a teacher-student inequality that caters to the need for dependence well established in the student’s mind. The educational process is teacher-centered, that is, teachers outline the intellectual paths to be followed, are never publicly contradicted or criticized and are treated with deference even outside school. The teacher is a “guru”, a term derived from the Sanskrit word for “weighty” or “honorable”, which in Indonesia is, in fact, what a teacher is called. Corporal punishment at school is much more accepted in a large-power-distance culture than its opposite. It accentuates and symbolizes the inequality between teacher and student and is often considered good for the development of the child’s character. In a small power-distance society, it will readily be classified as child abuse.

Other key differences between small and large-power-distance countries are that whoever holds the power is right and good; skills, wealth, power and status go together; the powerful should have privileges. Power is based on tradition or family, charisma (Weber 1922: § 12), and the ability to use force. There are large income differentials in large-power-distance countries which are mostly poorer countries with a small middle-class (Hofstede and Hofstede 2005: 67). Interview partners in Indonesia, Malaysia and Singapore considered that power orientation is one of the value dimensions with the biggest impact on consumer behaviour and a major reason for European luxury goods companies having their main retail markets in Asia (KS, interview October 2004; LSML, interview October 2004; ACWC, interview October 2004; AK, interview October 2004; BH, interview October 2004), since it would provide meaningful links between the orientation and the status behaviour of a society’s members.

In the power distance index (PDI), the following countries’ scores are high, i.e. in these societies power distance is rather big, reflected in steep social hierarchies; Malaysia scores 104 (rank 1-2 of 74), Indonesia 78 (rank 15-16 of 74) and Singapore scores 74 (rank 19 of 74). The reasons for these scores will be summarized in the following sections.

Figure C-65 Indonesia scoring as rather highly power oriented

Except for Pakistan (rank 48 of 74) which scores in the middle, most Muslim countries included in Hofstede’s study score rather high, i.e. they are societies with high power-distance (Hofstede and Hofstede 2005: 41). This shows that the core cultural influences of this dimension might again be related to religion. All the religions (Hinduism, Buddhism and Islam) which colour Indonesian culture are more or less hierarchically organized as mentioned in the comments concerning the other orientations. However, Hofstede and Hofstede (2005: 66-68) do not consider religion the only element in forming the origins of power distance differences. “There seems to be a relationship between language area and present-day mental software regarding power distance” (Hofstede and Hofstede 2005: 66).

The orientation and language

Indonesian (Bahasa Indonesia) is the official language of Indonesia. It is, in a sense, a very "modern" language: officially it came into being only in 1945, and it is a dynamic language that is constantly absorbing new loanwords. While only a tiny fraction of the inhabitants of Indonesia speak it as a mother tongue, a substantial number use it as a second language (Nothofer 1999:73-75). This is remarkable as the syntax of other regional languages is believed to foster Indonesia’s high power orientation. This is an assumption which is only possible, though, since the Indonesian language was unable to suppress the significance of regional languages in everyday life (Nothofer 1999: 73-75). The Javanese, as the most influential group in Indonesia, speak a language which reflects steep social hierarchies. The Javanese language is the inferred language of more than 75 million people in the central and eastern part of the island of Java, in Indonesia (Sneddon 2003:196-197). Javanese can be regarded as one of the classical languages of the world, with a vast literature spanning more than twelve centuries (Keeler 1984: xvii-xxiv). At this juncture, the following should be pointed out.

The Javanese culture has various registers of politeness, which are reflected in different linguistic levels. Up to fourteen degrees of politeness in the Javanese language serve to identify the social standing of the person being addressed. The Javanese consider their hierarchically structured language a reliable means of assigning respect (Markham 1995: 78), which is extremely important to them for a harmonious family life and ultimately for the entire community. Although not currently an official language anywhere, Javanese is by far the Austronesian language with the largest number of native speakers (Sneddon 2003: 196-197). At least 45 percent of the total population of Indonesia are of Javanese descent or live in an area where Javanese is the dominant language, and four out of five Indonesian presidents since 1945 are of Javanese descent. It is therefore not surprising that Javanese has profound impact on Indonesian society. Javanese speech varies depending on social context, yielding three distinct styles or registers. Each style employs its own vocabulary, grammatical rules and even prosody. This is not unique to Javanese; neighbouring Austronesian languages as well as East Asian languages such as Korean, Japanese and Thai share similar constructions. In Javanese these styles are called: (1) “Ngoko”. “Ngoko” is informal speech, used between friends and close relatives. It is also used by persons of higher status to persons of lower status, such as elders to younger people or bosses to subordinates (Keeler 1984: 4-5; 29-30; 47-48; 65-66; Errington 1988: 152). (2) “Madya”. It is the intermediate form between “ngoko” and “karma” (Keeler 1984: xix; Wolff and Soepomo 1982: 25). An example of the context where one would use “madya” is an interaction between strangers on the street, where one wants neither to be too formal nor too informal (3) “Krama” is the polite and formal style. It is used between persons of the same status who do not wish to be informal. It is also the official style for public speeches, announcements, etc. It is also used by persons of lower status to persons of higher status, such as youngsters to elder people or subordinates to bosses (Keeler 1984: 1-3; 27-28; 45-46; 63-64; Wolff and Soepomo 1982: 13).

In addition, there are also "meta-style" words - the “honorifics” and “humilifics”. When one talks about oneself, one has to be humble. But when one speaks of someone else with a higher status or to whom one wants to be respectful, honorific terms are used. Status is defined by age, social position and other factors. The humilific words are called “krama andhap” words, while the honorific words are called “krama inggil” words. For example, children often use the “ngoko” style when talking to the parents, but they must use both “krama inggil” and “krama andhap” (Keeler 1984: 215-234; Errington 1988: 152). The impact of the Javanese language on Indonesian culture and society therefore should not be underestimated, particularly its influence with regard to the power orientation.

The orientation and natural conditions

Alongside religion and language, it is believed that natural conditions (geographic latitude) influence a society’s ranking in the power orientation. The logic of the relationship could be as follows: first of all, the societies involved have all developed to the level of sedentary agriculture (for the impact of geography on the wealth of nations, see, Landes 1998: 17-28). At lower latitudes (more tropical climates), agricultural societies generally have more abundant nature at their disposal. Survival and population growth in these climates demand relatively limited intervention of humans with nature: everything flourishes. In this situation, the major threat to a society is competition from other human groups for the same territory and resources. Those societies that have organized themselves hierarchically and in dependence on one central authority that keeps order and balance, have better chances for survival. At higher latitudes (moderate and colder climates), nature is less abundant. There is more of a need for people’s intervention with nature in order to carve out an existence. The first enemy to be resisted is nature rather than other humans. Societies in which people have learned to fend for themselves (without being too dependent on more powerful others), have a better chance of survival under these circumstances than societies that teach steep social hierarchies. The value system in this part of Asia has been, as literature shows, influenced by thousands of years’ tradition of wet-rice cultivation which has led to a societal formation in hamlets and villages which still impact social life today. Bellwood (1997: 146) argues in this respect for example: “Ranking in Indo-Malaysian small-scale traditional societies is based on a number of principles, the main one being that the descendants of the group that founded a settlement and first cleared the land will tend to preserve high status”. This leads to a “rise of inequality” (Bellwood 1997: 146). Bellwood (1997: 147) explains that standing and class exert less influence in many areas of Southeast Asia, for example, in Borneo, Sulawesi and the Philippines, where the population is scarce and agriculture is dominated by shifting cultivation. It is different however in regions with wet rice cultivation in Indonesia. Here there is a difference between nobility and commoners. Bellwood (1997: 147) notes: ”This is especially true for those societies that have had close associations with the Islamic sultanates and the networks of international trade“. The latter brought prestigious goods into today’s Southeast Asia, and with it, objects to display status.

Before discussion of the orientation’s implication on consumer behaviour, the following significant point needs to be mentioned. Although countries have, in fact, all moved to lower power distance levels (i.e. countries score lower in power distance today than in the 1980s) this has neither led to changes in their mutual ranking in due course (Hofstede and Hofstede 2005: 71) nor has it diminished the orientation’s consequence for consumer behaviour. The orientation’s stability reflects the perpetual existence of cultural elements which are considered to be constant over time und which reflect the inner layer of the structuralist culture model.

What is important for marketing is that, in large-power-distance societies, inequalities among people are expected and desired, whereas in small-power-distance societies inequalities should be minimized. This is true for more, as well as less educated persons who both show equally authoritarian values (Hofstede and Hofstede 2005: 57) although it is expected that improved education worldwide will lead to a decrease of power distance, but relative differences between countries are not expected to change. Interviews (MP, interview December 2004; HS, lecture October 2004) showed that increased levels of education have not led to a lesser degree of power distance, regardless of whether power distance levels in Indonesia, Malaysia, and Singapore were being investigated in the interviews (CCL, interview August 2005). Thus the picture of differences between countries with regard to power distance is a static one, despite an era of unprecedented intensification of international exchanges. Moreover, hierarchies and centralization are popular, privileges and status symbols are common, and competition accepted.

Results from interviews prove the following observations made during field research in Indonesia and experiences gained in connection with the status orientation. Facts support the assumption that there is a correlation between status and power orientation, i.e. countries with higher status orientation are also highly power oriented (shortly the analysis will be concentrated on status behaviour, which can be traced back to a high score on the power index). That is valid at least for the countries of Southeast Asia investigated. Indonesian consumers display social habits and customs (every greeting, every contact must indicate the kind and degree of social distance between individuals). One’s social status must be made clear so that counterparts can respond using the register appropriate to their power positions. It is generally believed that well-known global brands serve that purpose, i.e. to distance one from others by using status brands. It is a matter of fact that Indonesians who arrive in a luxury car at a hotel or visit a restaurant fashionably dressed receive much better service than someone who does not. Clothes make people, or brands make people; this is definitely true for Indonesia.

Indonesians are generally believed to be among the most status-conscious consumers in the world and nearly everything can be used to distance oneself from others (emphasis on distance – power distance) and receive respect from people of a lower social level (DM, interview December 2004; HaS, interview December 2004). This includes manners and language (verbal dexterity and style), personal appearance (some women’s hairstyles add status) and dress, as well as the number of people surrounding a person (for lifestyles and behaviour patterns of Indonesia’s wealthy, see for example, van Leuwen 1999: 339-359). In malls, mothers with kids are frequently accompanied by their nannies and other domestic staff. In hotel lobbies people who like to be called “boss” are surrounded by their entourage who listens obediently and attentively like the boss’s royal subjects. Power over people (subjects), an old tradition in Indonesian culture, bears status. To make clear who among them wield power, Indonesians who have the financial means put their employees (mostly nannies) in uniforms, with masks on their faces since the advent of SARS and avian influenza. But not only power over people bears status; even certain products do, too.

Figure C-66 Power distance in advertising campaigns

The orientation and products preferences

In Indonesia and Malaysia, some luxury alcoholic drinks have social status value as well, as observed in outlets in both countries. As de Mooij notes (2005: 60) there is a significant correlation between power distance and consumption of Scotch whiskey. Interviews in Singapore in 2004 confirmed this view, particularly the comments by the Senior Brand Manager of Riche Monde Sdn Bhd, Mr. Andrew Khan. He commented that a lot of alcohol is consumed because of reasons of “face” in Southeast Asia. HS replied that the fact that virtually all sales of alcoholic drinks occur in outlets (consumption in food and beverage F&B outlets) versus very low sales for home consumption show that one must doubt whether Asians really like to drink alcohol, for example wine or liquor or whether they consume it for purely status reasons in order to distance themselves from others. This phenomenon was observed in Jakarta’s clubs as early as 2002 (Willer 2003). This gives reason to believe that the current wine trend in Asia might be short-lived because it is popular only due to image reasons. It could lose popularity overnight if Asians substituted wine for other drinks whose image promised greater status and helped to assure superior social standing. This applies not only to alcohol consumption, but also to coffee consumption. The reality is that most Asians actually prefer tea, but coffee is consumed publicly in coffee shops such as “Starbucks” or “Coffee Bean” where the image of the foreign brand is designed to guarantee the consumer a certain lifestyle and can assure the consumer of who he or she is and the lifestyle he or she wants to portray. At home, other hot drinks are often consumed, such as tea or Milo (AK, interview October 2004). Since these product preferences belong to the so-called practices or the outer three rings of the structuralist culture model, and since these change in the course of time, it is correct to assume that wine consumption is nothing more than a trend. Wine consumption (practices) allows people to set themselves apart from other social groups who cannot afford it. The desire to be different, however, reflects the high power orientation (one of the ten orientations in the core of culture in the structuralist culture model) which is stable over time.

Purchasing decisions are generally highly influenced by external stimuli and reflect the consumer’s overall evaluation of the product in Indonesia (AS, interview November 2004). The consumer first develops a feeling for the product that arises from stimuli such as advertising, the brand name and others’ opinions (DM, interview December 2004). Based upon this feeling, the consumer forms an intention to purchase or not to purchase. This can be seen in the conspicuous consumption behaviour of many Indonesians. Products which communicate status are valued for their expressive ability, and attitudes towards such products will be formed based less on the individual’s personal beliefs and more on the overall image of the product communicated by brand and the opinions of opinion leaders. People who endorse products are important in advertising as their image and status spills over to the product endorsed.

Figure C-67 Product endorsements in Indonesia

Figure C-68 Product endorsements in Singapore

Another important impact of the orientation is that of being market leader and the image it brings with it. The “rightful place” concept implies that in high power distance cultures, being the “number one” brand is important (BR, interview November 2004). A brand that has entered markets early and is viewed as the number one brand will remain much more easily than it would in low power distance cultures where challengers are favoured with a “we try harder” approach. This attitude is reflected in the many brand rankings and brand awards being published in Asia every year (DM, interview December 2004; RD, interview December 2004).

Power distance, however, is not limited to the realm of brands only. In Indonesia, power distance is associated with many features. It is important for the feature which determines power distance to be visible, this means for example that non-descript brands have only limited success (BR, interview November 2004). Giorgio Armani, whose products are more understated than for example those of Louis Vuitton with its big logos, had to close its boutiques quickly (BR, interview November 2004). This was due to the fact that the understated Armani luxury did not live up to Indonesian’s expectations of what luxury should be like in order to rub off on its owner (BR, interview November 2004). Preference for ostentatious brands and logos (logo-mania) is apparent in all social strata (logo-mania brands, see Appendix 1, Figure 206-217). For those who are less well-heeled, there are fakes of all brands in the informal sector and to an extent in the formal sector (observation, Jakarta and Surabaya, September until December 2004). Nowhere else, it seems, are there as many Montblanc pens with their white logos sticking out of men’s breast pockets, as in Indonesia. Whether pens or sports shoes, jeans or leather goods, almost every brand is available as a fake in Indonesia – even brands which are not as yet available there (HaS, interview December 2004). This kind of democratic luxury (fakes) is all the more astonishing since, apparently there are not any no-name sport shoes or T-Shirts at all. “The bigger, the better” is the manufacturer’s motto as far as brand names are concerned, in order to meet customers’ expectations. Indonesia is one of the biggest markets for counterfeited products.

http://news.bbc.co.uk/2/hi/technology/4076982.stm (12 November 2005)

Figure C-69 Imitating European architectural styles in order to add status to buildings

Another important aspect relevant to high power distance cultures is the relationship between age and status, as well as respect connected with age. Not only are older people perceived and portrayed in ads as wise and experienced, but respect connected with age can also be understood as behaviour in which authority and relationships between individuals and groups are held in high regard. Indonesia’s social life, of course, reflects this attitude (which has its foundation in the significance of age) not only between family, friends and colleagues, but also in the salesperson-customer relationship which is considered important in Indonesia.

Although age (which translates itself into power distance) is an important feature of societal values and influences consumer behaviour, a new trend, i.e. that buying decisions are increasingly influenced by Asian children and teenagers, needs to be taken into consideration, too. In the past, this trend was much too often misinterpreted. It was and still is commonly believed that the youth in Southeast Asia imitate their Western counterparts by showing less respect for elders. However, what many marketers forget is that, although children increasingly influence purchasing decisions, this is neither tantamount to disrespectfulness nor to an assimilation of values between Asia and the West. Relationships between parents and children still vary with power distance and therefore between countries, but are as stable as the orientation itself, i.e. the disparities in status and power between them. In low power distance cultures, parents play with their children as equals, whereas in high power distance cultures children play more with each other. This explains why Lego (toys, building blocks) does not sell well in many high power distance societies as the concept is based on parents and children constructing buildings together (HS, lecture October 2004).

Finally the considerable influence of this power orientation on consumer behaviour in Indonesia becomes apparent. This was confirmed over and over by interviewees who were convinced that this orientation and the status orientation exert greater influence on consumer behaviour than all the other orientations. Therefore this can be considered a general characteristic of the average Indonesian consumer who on principle acts in a status oriented way.

The orientation, adapted from Hofstede’s dimensions of culture, can be labelled the “masculinity versus femininity dimension” or “gender orientation”. The question whether one interacts with others or for others is a common problem and responses are made on the basis of dominant value systems, which roughly correspond to male (assertive) and female (nurturing) roles. This orientation can be defined as follows:

“A society is called masculine when emotional gender roles are clearly distinct: men are supposed to be assertive, tough, and focused on material success, whereas women are supposed to be more modest, tender, and concerned with the quality of life. A society is called feminine when emotional gender roles overlap, i.e. both men and women are supposed to be modest, tender and concerned with the quality of life.” (Hofstede and Hofstede 2005: 120)

To summarise, it can be said that the dominant values in a masculine society are achievement and success; the dominant values in a feminine society are caring for others and quality of life. Other key differences between masculine and feminine societies are that both men and women should be modest and both men and women can be tender and focus on relationships (Hofstede and Hofstede 2005: 134-136). There is tendency to polarize in masculine societies, i.e. big and fast are beautiful, whereas feminine societies, those scoring low on the masculinity index, are more people-oriented, and small is beautiful. In typically feminine societies, such as Northern European countries, the welfare system is highly developed and education is largely free and easily accessible. In these societies, patience and helpfulness are shown to those in trouble. In typically masculine societies, whether individualistic or collectivistic, weaker people find, on average, less support from society at large. In the more masculine countries, sense of responsibility, decisiveness, liveliness, and ambitiousness were considered characteristics for men only, while caring and gentleness were seen as solely for women. In the more feminine cultures, all these terms were considered as applying to both genders. In this dimension Indonesia scores 46 (rank 41-42) whereas Singapore 48 (rank 38) and Malaysia 50 (rank 34-36). All three countries’ rankings reflect a rather feminine orientation, with Indonesia rating as the most feminine. The following section will explain the reasons for this score.

Figure C-70 Indonesia scoring rather femininely oriented

The issues related to the gender orientation are central to any religion. Whereas masculine cultures worship a tough God or gods who justify tough behaviour toward fellow humans, feminine cultures worship a tender God or gods who demand caring behaviour toward fellow humans (Hofstede and Hofstede 2005: 152). Outside the Christian world there are tough and tender religions. Buddhism in masculine Japan is very different from Buddhism in feminine Thailand, just as Islam in Saudi-Arabia is different from Islam in Indonesia. The same is true for Christianity which has always maintained a struggle between tough, masculine and tender and feminine elements (Hofstede and Hofstede 2005: 152). Sunni Islam is a more masculine version of the faith than Shia, which stresses the importance of suffering (Iran as predominantly Shiite, scores in a more feminine way than the predominantly Sunnite Arab-speaking countries) (compare rankings in: Hofstede and Hofstede 2005: 120-121). Although Islam is regarded as a tough, masculine religion and many Islamic countries score in a rather masculine way in Hofstede’s ranking (for example Arab countries rank 31-32 of 74), Indonesia, the world’s most populous Islamic country, scores as being more feminine (rank 41-42).

Another important aspect is related to Hofstede’s (2005: 120) definition of a feminine society: “A society is called feminine when emotional gender roles overlap: both men and women are supposed to be modest, tender, and concerned with the quality of life.” Islam’s being a religion which calls for modesty (Weber 2005, Schluchter 2001, 2005) explains why many Muslim countries, although Islam is perceived as a tough, masculine religion, tend to score in the middle region of the ranking. This is since religion demands modesty from its followers. Socialization in male-dominated Islamic countries seems to discriminate against women (men dominate social life) and therefore these countries appear to be particularly masculine (because of the inequality between men and women). The ranking is based on factors like ambition and gentleness, which are irrelevant to male-female inequality, at least in Hofstede’s view. Muslim countries seem to be less ambitious but more gentle. Since the rankings again take a look at religion in isolation, seeing a correlation between Islam and a high score on the masculinity index would be a false conclusion to draw.

Explanations stated elsewhere in this chapter on the cultural heritage and environment of Indonesia where pre-Islamic beliefs (whether indigenous, Hindu or Buddhist religions) still exert influence on the value dimensions, are valid in the context of the gender orientation, too. The assumption of a less masculine Islam in Indonesia is fostered by its description as moderate and liberal. A brief look at one of the many ethnic groups in Indonesia can vividly underpin this assessment. The “Minangkabau”, an ethnic group indigenous to the highlands of West Sumatra is strongly Islamic but its ethnic traditions (“adat”) make it the world's largest matrilineal society (Bellwood 1997: 143), in which properties such as land and houses are inherited through female lineage, unknown anywhere else in the Muslim world. Its culture is matrilineal, with property and land passing down from mother to daughter, while religious and political affairs are a male domain (although some women also play important roles in these areas).

Finally, this is one of the dimensions where no final assessment can be made as Indonesia is a diverse multi-ethnic society. Indonesians themselves agree that especially on this dimension, considerable variations between ethnic groups within the country exist, reflecting its multi-ethnicity. The Javanese, for example, take an extreme position toward the tender side of the orientation (IMP, interview December 2004). The Christian ethnic group of the Batak

Batak is a collective term used to identify a number of ethnic groups found in the highlands of North Sumatra, Indonesia. Their heartland lies to the west of Medan centred on Lake Toba. In fact the "Batak" include several groups with distinct, albeit related, languages and customs (“adat"). While the term is used to include the Toba, Karo, Pak Pak, Simalungun, Angkola, and Mandailing groups, some of these peoples prefer not to be known as Batak. Before they became subjects of the colonial Dutch East Indies government, the Batak had a reputation for being fierce warriors. Afterwards Christianity was embraced widely, and the HKBP (Huria Kristen Batak Protestan) Christian church is presently the largest Christian congregation in Indonesia. Batak societies are patriarchal. The Batak culture(s) stands out in weaving, wood carving and especially in its ornate stone tombs. Their burial cultures are very rich and complex, and includes a ceremony in which the bones of one's ancestors are re-interred several years after death (mangungkal holi).The Bataks themselves today are mostly Christian with a Muslim minority. The dominant Christian theology was brought by Lutheran German missionaries in the 19th century. One of the most famous German missionaries involved was Ludwig Ingwer Nommensen. Bataks speak a variety of (closely related) languages, all members of the Austronesian language family.

All things considered, it is interesting to note how Indonesia’s rather feminine score affects consumer behaviour.

Marieke de Mooij (2005: 65-66) who studied consumer behaviour data across sixteen European countries and found several significant differences related to the masculinity versus femininity orientation, is one of the very few researchers who has looked for a correlation between culture dimensions and consumer behaviour. She draws some interesting conclusions, which again however, as in the case of the society orientation (individualism versus collectivism), seem only to be valid for the countries she studied. De Mooij’s research provides her with data from which she concludes that status purchases are more frequent in masculine cultures where more expensive watches and more real jewellery are bought. However, when de Mooij’s research results were cross-checked in interviews in Indonesia, Malaysia and Singapore (2004 and 2005), the ethnocentricity of her approach and conclusion attracted attention. During a seminar at INSEAD Singapore, it was possible to speak to business leaders from around Asia. One of them, the country manager (KS) for the diamond group, De Beers

http://www.debeersgroup.com/debeersweb (10 December 2005); http://www.adiamondisforever.com/ (10 December 2005); http://www.dtc.com/ (10 December 2005);

Although most Asian countries score in a rather feminine way, showing off one’s success is important and accepted (as already elaborated on in the paragraphs on power and status orientations). In a detailed presentation on Thailand, one of the most feminine countries (rank 64 of 79 countries) (Hofstede and Hofstede 2005: 120-121)), KS described her countrymen’s aspirations for status and prestige (status orientation) as having a higher influence on consumer behaviour than the gender orientation. Other interviewees (HS, October 2004; JSWY, October 2004) have supported the author’s opposition to de Mooij’s conclusions by corroborating that her findings might be relevant only in the countries she included in her research, but that the findings are not transferable to the Asian market. In Asia, the correlation between masculinity and the sales of status products (jewellery and luxury brand products such as handbags) is invalid, except for Japan and Korea which both score in a masculine way. But especially in Indonesia, Singapore, Malaysia and Thailand, luxury goods (often with logos) are important to convey status although these countries praise modesty and score in a rather feminine way. Therefore, it must be concluded that orientations other than the gender orientation are more important in this context, for example rankings in the power and status orientations (where the aforementioned countries score highly, i.e. high power (distance) and status orientation) which might have a far-reaching impact on consumer behaviour. In a personal discussion with Bernhard Dahm (February 2006) he concluded that status orientation plays a more significant role in Indonesia than, for example, the culture behavioural effects of the gender orientation. As mentioned, in Asian countries, men and women show off their success with expensive goods and products, from jewellery and watches to cars and memberships etc. Although consumer expenditure for luxury items in Japan and South Korea reflects de Mooij’s correlation (both countries score as highly masculine and status products have high sales), the sale within product categories is extremely different and shows how important it is to take a closer look. Japan and the US score in a masculine way, both have high sales of status products (such as diamonds) but the diamonds sold, for example, are very different. In Japan big diamonds seem to be un-sellable on the mass market and the quality of the stone is more important to the consumer than size. In the U.S., the stone cannot be big enough (“Big is beautiful”) but the quality, however, of the stone is less of a concern in the buying decision (KS, interview 2004).

Similar findings were made in the case of luxury consumer goods, such as handbags clearly marked with brand logos. In Asian countries (whether they score in a rather feminine way as in Indonesia or in a masculine manner as in Japan and South Korea), consumers have the urge to show off what they can afford. Here again, informal interviews during the INSEAD Singapore executive education event as well as in Indonesia, Malaysia, Taiwan, Hong Kong and Seoul (mystery shopping) show that de Mooij’s assumptions are relevant only in Europe where she has done her research but that the findings cannot be transferred and implemented in Asia. The Louis Vuitton country manager for South Korea, Jean Sung-Wook Yang (JSWY), confirmed the importance of status in Asian markets and believes that other orientations presented to him might be more influential. HaS (interview December 2004) made it known, too, that the greatest factors of influence on the Indonesian consumer are the status and power orientations which outweigh the importance and impact of the gender orientation. Apparently, in Asia, the impact of this orientation on consumer behaviour might be less important than those of the power and status orientations. This reveals important insights into possible recommendations for action, i.e. the orientations exert differing degrees of impact in their influence on consumer behaviour depending on the cultural background.

Furthermore, the correlation between this orientation and sales of gold and diamonds in Europe could well be coincidental in de Mooij’s research. However, one can conclude that this orientation influences Indonesian and Asian consumers in different ways than consumers from other parts of the world. In Asian countries, such as Indonesia, it is not a problem for men to wear jewellery, such as diamond rings and watches (as can be observed at the meeting places of Jakarta’s rich). Swiss luxury watch makers, such as the “maisons” of the Richemont Group

http://www.richemont.com/ (13 August 2005)

Cultural decoding of the gender orientation and its supposed effects on consumer behaviour and international marketing lead to the following important findings. The gender orientation exerts a very specific impact on societies in individual countries and regions and therefore also on consumer behaviour. This, however, was not the case for the orientations discussed so far. This shows that de Mooij’s comments on the effects of the orientation on consumer behaviour in European countries are not transferable from country to country or region to region. Actually, the orientations are ascertainable worldwide, since they are basic societal premises. Nevertheless the effects on society are different and mirror heterogeneity (which was already discussed in the chapter on the global consumer). This heterogeneity reveals itself in practices, rituals and heroes. Particularly since these can reflect short-lived trends, a correlation of practices, to which undoubtedly consumption practices belong, is possible with the orientation. Additionally, it must be mentioned that the correlation demonstrated by de Mooij could possibly be coincidental. Furthermore, when dealing with a correlation of this kind, micro-data is to be used (for example a comparison between a certain group of diamonds or a specific product, rather than macro-data which only considers the overall quantity purchased (for example the total number of diamonds rather than the size and quantity). Implementing macro-data can create misleading results, as clearly shown and confirmed by industry representatives. Furthermore, in certain countries, gold is purchased for completely different reasons from those in Western countries. Thus, it demands a careful approach and interpretation. To conclude this orientation it is relevant to note that even researchers from Hofstede’s circle can be victims of ethnocentricity.

The orientation and product design aspects

One further aspect of interest in connection with this orientation is car design. The figure below speaks for itself. The link between the brand of car’s country of origin and design is evident. Automobile companies in somewhat feminine oriented countries develop rather round (globular) cars, whereas in masculine countries (for example the USA) powerful, angular cars are developed. Advertising language is similarly masculine in these countries (”Built Tough“, see figure below).

Figure C-71 Car design and the gender orientation (images, courtesy of Citroen, Ford)

In masculine cultures, male choice prevailed in matters of family size and led to (too) large families in poor countries and to small families in wealthy countries (Hofstede and Hofstede: 2005: 160). Family planning programs’ success in Indonesia may be attributed to the rather feminine orientation of its society in general. This relationship is important to know for marketing managers as the average Indonesian family is smaller in size than its Malaysian counterpart (scoring in a more masculine way) and therefore expenditure per child in Indonesia (which has a lower birth rate) can be higher than in families with more children in Malaysia.

The orientation and advertising campaigns

As shown, the masculine/feminine dimension discriminates between cultures particularly with respect to values related to winning, success, and status, which are much used in advertising appeals. It is therefore an important dimension to understand as it leads to differences in marketing-communication styles. In Indonesia comparative advertising is seen as inappropriate and is even forbidden (Indonesian Advertising Agency Society, The Power Breakfast at Le Meridien Jakarta). Discussions with a representative of the Indonesian and Thai advertising agencies at a Power Breakfast of the Social Marketing Circle again revealed that here practices depend not only on the orientations, such as that of gender, but more on local laws, regulations and customs influenced by culture. More caring roles and groups are often assigned to the visual language of print, TV and online advertising as the following examples, with which the discussion of this orientation comes to an end, articulate. The examples reveal how important the orientation is, especially in advertising.

Figure C-72 Watch makers and their campaigns in Indonesia. What might be the more appropriate approach?

Figure C-73 Caring in advertising campaigns in Indonesia

The risk orientation deals with another common problem faced by people in any society: namely how people deal with risk. “Uncertainty avoidance”, as Hofstede (2005: 163-206) originally named the orientation, is “the extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations” (de Mooij 2005: 67). Ways of handling risk are part and parcel of any human institution in any country. All human beings have to face the fact that they do not know what will happen tomorrow (Hofstede and Hofstede 2005: 165). However, one can differentiate between societies’ reactions to unpredictability (i.e. risk). The risk orientation measures the extent to which people in a society tend to feel threatened by uncertain, ambiguous or undefined situations. Rather than leading to risk reduction, risk avoidance leads to ambiguity reduction. Generally, it is believed that people in societies scoring highly on the risk avoidance index (high risk avoiding cultures) search predictability and truth. This search for truth is closely connected to religion. In the following section, culture elements which account for Indonesia’s low risk avoidance score are looked at. Furthermore, high risk avoidance is expressed through nervous stress and in the need for predictability, such as the need for written and unwritten rules. Aggression and other emotions are not to be shown in these societies: people who behave emotionally or noisily are socially disapproved of. This means that stress cannot be released through activity, it has to be internalized. Anxious cultures, i.e. cultures scoring highly on the index, tend to be excessive cultures. They are the places where people talk with their hands, where it is socially acceptable to raise one’s voice and to show one’s emotions. There are basically two ways to react: the first is based on the assumption that people have to deal with risk, because it is in the very nature of the situations they face. The future is uncertain, but one has to live with it, and extreme ambiguity creates intolerable anxiety which every human society has developed ways to alleviate. These ways belong to the realms of technology, law and religion. Religion is a way of relating to the transcendental forces that are assumed to control man’s personal future (Weber 2005). Religion helps to accept the uncertainties one cannot defend against, and some religions offer the ultimate certainty of a life (Weber 2005) after death. The other extreme is marked by risk aversion, which results in the assumption that risk is bad and everything in society must aim to reduce it.

A medium to low score on the uncertainty index is common for all Asian countries other than Japan and South Korea with Indonesia scoring 48 (rank 60-61), Malaysia 36 (rank 65) and Singapore 8 (rank 74) on the index (Hofstede and Hofstede 2005: 169). In weak risk avoidance countries, anxiety levels are relatively low (Hofstede and Hofstede 2005: 171).

Figure C-74 Indonesia’s rather low score on the risk orientation

Religion was previously mentioned as one of the ways in which humankind avoids anxiety and searches for truth (Hofstede and Hofstede 2005: 197). Religious beliefs and rituals help to accept the uncertainties one cannot defend against, some even offer the ultimate certainty of life after death (for example Islam). The grouping of countries in Hofstede’s ranking according to a risk avoidance index score is associated with their dominant religion. In establishing a relationship between risk avoidance and religious belief, it makes sense to distinguish between religions. Some religions, such as Protestantism, Catholicism and Islam share the assumption that there is an absolute truth that excludes all others. According to Hofstede (2005: 198), the difference between strong and weak risk lies in the amount of certainty one needs to have this truth. In strong risk avoidance cultures, the belief that there is only one truth is more prevalent. Eastern religions, such as Buddhism and Hinduism, which influenced Indonesian society before the arrival of Islam (Klokke 2003: 17), are less concerned with one truth (Becker 1993: 23-45; Schluchter 1984: 41-44, 50-59). The assumption, according to Hofstede (2005: 199) that there is one truth man can possess, is absent from their thinking.

Muslim countries tend to score in the middle, and Buddhist and Hindu countries, medium to very low on the uncertainty avoidance index. Indonesia and Malaysia have the lowest score of all Muslim nations (Hofstede and Hofstede 2005: 168-169, 187, 191). While in Malaysia the reason for this low score is probably the high proportion of Buddhist Chinese and Hindu Indian citizens (although Muslims are in the majority) who were included in the interviews and biased Malaysia’s score in that it is much less risk avoiding than other Muslim countries, where the proportion of Muslims in the entire population exceeds 60 percent. Malaysia’s score in the ranking therefore reflects its multi-ethnic and multi-religious background, which leads to its obtaining a relatively low score on the risk avoidance index.

On risk avoidance, Chinese-speaking countries Taiwan, Hong Kong, and Singapore scored lower, as did countries with important minorities of Chinese origin, like Indonesia and Malaysia. Across these countries there is a strong correlation between the percentage of Chinese in the population (as opposed to Muslims) and the country’s score on the risk avoidance index. However, Indonesia’s low score on the risk avoidance index is not attributable to its multi-religious background but rather to pre-Islamic influences of Hindu and Buddhist religions, a fact which was already highlighted in the context of the previous orientations. Furthermore, Indonesia’s brand of Islam can be regarded as moderate and tolerant. According to Hofstede, tolerance indicates low risk avoidance. The orthodox Islam found in Saudi-Arabia and Pakistan which is much less tolerant than the Indonesian kind, fosters a higher risk avoidance orientation, when one interprets the figures from Hofstede’s standpoint. In Islam there is clearly a visible conflict between more and less risk avoiding factions, the first dogmatic, intolerant, fanatical and fundamentalist, the second pragmatic, tolerant, liberal, and open to the modern world (Hofstede and Hofstede 2005: 200).

This indicates that the difficulty in classifying countries by religion is that the great religions of the world are all internally heterogeneous. A country with an Islamic majority does not of necessity display the risk avoidance with which the society’s existing religion is generally associated, as is demonstrated in Indonesia for example. It is evident that religious conversion does not cause a total change in cultural values. Indonesian (Javanese) mysticism has survived Hindu, Buddhist, Muslim, and Christian conversions. Key differences between weak and strong risk avoidance societies are that in the latter, there is more ethnic prejudice and high risk of violent inter-group conflict. Furthermore there is a propensity towards religious, political and ideological intolerance where there is only one truth. The aforementioned statements about the influence of the culture element religion, its origin, character and repercussions (which were already analyzed in the context of the discussion of cultural influence on individual orientations) will not be repeated here. With the aid of the findings related to how Indonesia’s cultural heritage affects risk avoidance in today’s society, an analysis of the extent to which the orientation determines consumer behaviour and international marketing will follow.

The risk orientation is connected to two aspects of consumer behaviour; the first is perceived risk and the second, consumer involvement. Perceived risk is an important variable in consumer behaviour, and differs according to its breakdown into various components: physical risk, financial risk and social risk. Whereas people in certain cultures may be more susceptible to physical risk, others may be more sensitive to social risk.

The orientation and perceived risk

As stated, most Asian cultures rate medium or low on the risk avoidance orientation (Indonesia ranks 60-61 of 74 countries evaluated) (Hofstede and Hofstede 2005: 168-169). Nonetheless, surprisingly, Indonesian consumers, like Asians in general, exhibit consumer behaviour which shows high-brand-name consciousness, brand loyalty, a greater insistence on quality, the active use of reference groups and opinion leaders, group shopping and a slower acceptance of new products, although their score is low on the risk orientation. Behaviour of this kind would normally be associated more with a high risk avoidance score. Although all consumers are concerned to a greater or lesser extent, depending on individual circumstances, with monetary, functional, physical, psychological and social risks, it is believed that in high risk avoidance cultures this perceived risk is higher and therefore more brand name products are sold in these countries. Low risk avoidance, as it is measured in most Asian countries, is equated (in consumer behaviour research) with a degree of willingness to take risks to buy products which are new, from unknown manufacturers, or no-names. This however is not the case in Indonesia where consumer behaviour which complies with the conventional standards of a society with high risk avoidance can be observed. How does this deviation come about?

With the help of interviews, it was ascertained that risk avoidance is not the decisive factor for Indonesian consumers, since consumers are extremely status oriented (Indonesia scores highly on the status and power orientation) and therefore social risk bears enormous influence. In the context of risk avoidance, status orientation has therefore to be included. The following explanation will reinforce this. Basically when analyzing consumers, one has to distinguish between physical, functional and social risks that lead to different consumer behavioural patterns. Asians on the whole tend to be more sensitive to social risks than Western consumers. This sensitivity (as well as economic constraints that increase monetary and functional risk) leads consumers to a greater hesitancy when trying out new products and thus to a different rate of diffusion of innovation from that in the western context (HS, lecture October 2004). This aspect will be dealt with in depth in the next section. Additionally, in the Asian context, brand loyalty may sometimes be more due to “inertia” than to “brand loyalty” as defined in a Western context, in which a conscious decision to continue buying the same brand is involved. Brand loyalty arises chiefly from the psychological comfort provided by avoiding social risk through sticking to the brand chosen by reference group norms. The focus on quality and brand-name consciousness that most Indonesian consumers exhibit therefore is partly a reflection of risk aversion since a recognized brand name serves as a substitute for quality. This suggests that non-branded or generic products, particularly intended for social-use consumption, meet with a less than favourable response. In social-use situations, the quality of a product demonstrates not only the level of living standard, but also the sensibility and taste of the persons who buy or own the product. In Western cultures, risk aversion is most likely to be oriented towards monetary or functional risk, depending on the product type, cost, complexity and less so towards social risk. Such risk aversion in a Western context would typically lead to extended problem-solving. The consumers collect as much information as possible, from both internal and external sources, evaluate each product alternative carefully, consider the attributes of each brand and finally select the brand to purchase based on this evaluation. This can be seen, for example, in Germany in the high reputation of “Stiftung Warentest“ (German consumer testing association) an independent organization, which actually wants to reduce buying risk. However, social risk (which plays a lesser role in Germany than in other societies) is not taken into consideration.

Figure C-75 Perceived risk in Indonesia and Germany

More importantly however, is that while risk aversion leads to active involvement of the Western consumer in the search process, it leads to …”a more passive, conformist behaviour in the Asian consumer” (HS, lecture October 2004). The Asian sense of status propriety plays, as mentioned, a part in fostering adverse behaviour towards new products which have not been adopted by one’s reference group.

Bao et al. (2003) studied risk aversion and face consciousness and their impact on decision-making styles with students from the United States and China. They found that the Chinese were more risk averse and face-conscious than their American counterparts. Further, risk aversion was positively associated with being confused by too many choices and negatively associated with fashion-consciousness and novelty, as well as recreational and hedonistic characteristics of the shopping experience. These results found in the context of the Chinese consumer, are believed to be transferable to the Indonesian consumer.

The orientation and consumer involvement

Furthermore a correlation exists between risk avoidance and consumer involvement. The involvement of the consumer in product purchase or consumption varies across cultures. The Indonesian consumer is in a low-involvement situation when it is a matter of private consumption goods. In this case, Indonesian consumers are likely to adopt a rather simple cognitive stance, favouring the physical functions of the product and being mostly concerned with price and quality. Conversely, there is a high level of purchase involvement when Indonesian consumers buy products for their social symbolic value. These consumers greatly value social harmony and harmonious relationships with the extended family, therefore the social significance of a product is very important because it may express status, gratitude, approval or disapproval. Additionally, de Mooij (2005) established the following correlation between risk orientation and consumer behaviour. In shopping for food and beverages, higher risk avoidance stands for valuing purity and basic products. Risk avoidance cultures used mineral water rather than tap water (even where tap water was of good quality) and they ate more fresh fruit. Risk accepting cultures valued convenience rather than purity: they consumed more ready-made products, such as ice cream, frozen foods, etc. Risk avoiding cultures believed more in cleanliness. On the other hand, risk accepting cultures valued looks more than cleanliness; they used more beauty products, such as cosmetics, lipsticks, body lotions, deodorants, etc. This behaviour is recognizable in Indonesia where physical attributes are extremely important. There is hardly a place in the world with as many adverts for shampoo as in Indonesia (IS, interview December 2004; Synovate 2004: 131). They were slower in introducing electronic communication tools, even if eventually they may use them as much as people in risk accepting cultures. Advertising campaigns, in print and TV, for risk avoiding cultures frequently feature experts, such as doctors in white lab coats, who recommend the product. At this point de Mooij (2005) has to be contradicted since this correlation is not applicable to Asia, for example China. China’s score is very low on the risk orientation, but endorsements by experts are nonetheless favoured.

Now that differences in behaviour have been explained, companies can decide which course of action is to be taken. To what extent the orientation affects a marketing concept which is closely connected to the customer’s willingness to take risks, needs to be analyzed. This will be dealt within the next section.

The orientation’s impact on concepts of consumer behaviour and international marketing

Risk aversion, expressed in high uncertainty avoidance orientation leads to a distinctly different rate of diffusion of innovation among Asian consumers compared with consumers from less risk-aversion cultures. In traditional diffusion theory, consumers are categorized in relation to other consumers in terms of when they adopt a new product. The five adopter categories frequently cited are: (1) innovators, (2) early adopters, (3) early majority, (4) late majority and (5) laggards (see exhibit on the last page of this section). In a Western context, these categories are generally depicted as a normal distribution curve with innovators, early adopters and laggards accounting for 2.5 percent, 13.5 percent and 16 percent, respectively. The early and late majorities each account for 34 percent of the total population which ultimately adopts a product (HS, lecture October 2005). The figure below depicts the correlations described.

Figure C-76 Diffusion of Innovation

In Indonesia, however, very few consumers are prepared to take the social risk of being innovators and trying a new product first. The discomfort of being left behind, however, induces them to follow suit if they think that others have tried a new product. Trials by early buyers thus soften the perceived risk for followers, who are then inclined to “pile in” in their haste to buy. This suggests that the percentage of both innovators and laggards (which form the two tails of the distribution curve) is much higher among Indonesian consumers, resulting in a steeper distribution curve. Additionally, the curve will no longer be symmetrical, the left tail of the curve will be longer, reflecting the hesitancy to try out a new product, whereas the right tail of the curve drops off sharply as consumers are ready to switch brand once the normative standards of their reference group change.

Diffusion of innovation in the Indonesian context reflects the fact that referral is a highly powerful way of expanding product trial by the first wave of consumers (Yan 1994: 66-74). Thus the most effective way of reducing risk and winning acceptance for an innovative product lies in access to the Indonesian consumer’s referral network and utilizing positive word of mouth (HS, lecture October 2004). Once a brand has gained acceptance among early adopters, the rate of diffusion will proceed rapidly. Being an innovator also reflects an active, or “doing” orientation, which is more characteristic of Western than Asian cultures. The marketer should try to use social interdependence and reliance on informal communication channels for Indonesian consumers to his advantage. A popular and effective way of generating positive word of mouth is to conduct consumer promotions at retailer venues. Sampling encourages trial and builds consumer knowledge about particular brands. Attracting the attention of potential customers, educating them and encouraging brand loyalty are key objectives, particularly in Indonesia where consumers are not affluent enough to experiment with brands and social risk is perceived as high. Thus, although a high level of social risk aversion among Indonesian consumers poses challenges, innovative ways can be found to overcome risk aversion, stimulate interest and trial, and eventually establish brand loyalty.

The introduction, presentation, derivation, and explanation of the integrative analytical diagram is now at an end. The model will conclusively be evaluated in the next chapter.

The economic expansion in recent years in the ASEAN countries has allowed enormous growth in status-seeking conspicuous consumption throughout the region (Gerke 2000: 135-158; Chua 2000: 183-201; Finkelstein 2000: 225-240; Robison and Goodman 1996: 1-18; Kahn 1996: 49-78; Robison 1996: 79-104; Pinches 1999: 1-55; Young 1999: 56-85; Heryanto 1999: 159-187). Robison and Goodman (1996: 1) observe:

“In recent years the imagination of the West, and indeed, of the East as well, has been captured by the dramatic emergence in East and Southeast Asia of a new middle class and a new bourgeoisie. On the television screens and in the press of Western countries, the images formerly associated with affluence, power and privilege in Asia – the general, the princes and the party apparatchiks – however outmoded in reality, are being increasingly replaced by more recognizable symbols of modernity. Western viewers are now familiar with images of frustrated consumers in Bangkok and Hong Kong traffic jams, Chinese and Indonesian capitalist entrepreneurs signing deals with Western companies; white-coated Malaysian or Taiwanese computer programmers and other technical experts at work in electronics plants; and above all, crowds of Asian consumers at McDonalds or with the ubiquitous mobile phone in the hand.” (Robison and Goodman 1996: 1)

Bright new shopping centres sporting expensive boutiques and flagship stores can be found throughout Southeast Asia (Finkelstein 2000: 225-240). Among consumers with the financial means, conspicuous consumption is the rule rather than the exception and is distinctly motivated by the pursuit of status (HS, lecture October 2004). As economic growth progresses, families feel compelled to display their increasing wealth and status. Lavish spending on consumer goods is common (HaS, interview December 2004). The pursuit of status is the leading determinant of such consumer behaviour and it is Western brands that often connote status. Indonesian consumers are eager to be “modern” and so adopt Western consumption habits, buying French perfumes, German appliances, Swedish furniture and Swiss watches, which unlike local products are interpreted as modern (Hoffmann 2006: 53). Products intended for display are regarded as an important vehicle for self-enhancement (HS, lecture October 2004) and imports of apparel, cosmetics, and automobiles have seen enormous increases over the past few years (Hoffmann 2006: 53). While many West Europeans appreciate understated luxury and purchase pieces only recognizable to those in the know who realize their true value, Indonesians adore blatantly obvious logos which clamour “Look here, I’m rich!!”, something which can be observed everywhere in Indonesia or in these groups’ shopping destinations in Singapore and Hong Kong.

Although such spending may seem incongruous in view of the still relatively low incomes in many Southeast Asian countries, the pursuit of status is so important that some of these consumers have shown themselves willing to go into debt to buy products (IS, interview September 2004). For example, it is not just the small number of Indonesian and Malaysian millionaires who partake in conspicuous consumption, but also middle-level managers on shopping sprees. Even teenagers in rural towns sport expensive running shoes and office boys the latest mobile phone (AS, interview November 2004; TS, interview October 2004). Southeast Asian governments regard this development from two standpoints. From an economic standpoint, the governments have grown increasingly concerned about the current account deficit (trade deficit). From a cultural standpoint, they are concerned about the strong growth in consumerism and its apparent opposition to many of the values, attitudes and behaviours associated with their traditional cultures. Even in Vietnam which only instituted “Doi Moi” (the policy enabling partial reform to a market economy) as recently as 1986, there has been a rapid movement towards consumerism in urban centres (see, for example: Carruthers 2004). In Indonesia, the relatively low income level precludes all but a small minority of “orang kaya baru” (OKB) (nouveaux riches) from being able to afford the luxury of status-seeking consumption through top luxury brands (Shamsul 1999: 86-110). Only a few thousand Indonesians can afford European luxury goods such as cars, clothing, watches and jewellery, however, most Indonesians aspire in general to Western brands because they have an image of higher quality compared with national brands (HaS, interview December 2004). True perfection in Indonesia is not expressed through refined and subtle luxury, with discreet symbols, but (as previously mentioned) through purchasing garish, gaudy articles decorated with flashy, showy logos. Part of the attraction lies in status-seeking, as can be seen in the tendency to leave tags on sunglasses and labels on the sleeves of suits or in general in the preference of “logo-mania” goods. However, this trend has not yet reached levels like in Japan where a dangerous and disturbing side to such consumerism is, for example, the recent spate of schoolgirl prostitution. High-school girls have realized that a means of financing their taste for expensive brands such as Chanel, Fendi, and Prada is to sell sex. One 16 year-old girl says:

“If I want to buy Prada and Vuitton bags that cost $600 to $700, I have to have this kind of job. Everybody wears them. I feel like a more valuable person if I have them.” (Schütte and Ciarlante 1998: 107)

Although most Indonesians claim not to have a lot of money, the desire for social status has motivated the contemporary phenomenon of competition to possess, display or consume whatever is the most modern or most famous item of its type.

Western consumer goods have been a mass phenomenon since the beginning of the 1990s, however the desire to distance oneself from others via certain symbols, is culturally motivated and can be traced back to high power and status orientations. Consumption, possession and showing-off of certain cultural wares are thus means of differentiation. During the late 1990s, as Indonesians took the leap towards conspicuous consumption, the items chosen to communicate status were typically Western brands. This awakening in Indonesia, produced by contact with the West in the early 20^th century where goods imported from the west were available only to very well-heeled Indonesians at the top of the social hierarchical pyramid, and were therefore considered to be status symbols. Western or imported goods (except for those from China) even today continue to qualify as status symbols although their number has increased dramatically and these are affordable (at least in the fast moving consumer goods [FMCG] sector) to all Indonesians. The desire to possess goods such as these is astonishing upon closer inspection since Western culture and material objects have come to represent (to the Indonesians) qualities of the West which most contrast with Indonesian culture: individualism, freedom of expression, Western modernity and so on. This assumption is flawed and is based on the belief in globalization (and its resulting homogeneous global consumer) and not in glocalization and its resulting glocal consumer, in whose tradition, consumers act locally (purchase, choose, use and interpret locally). In Indonesia the motivation to possess Western goods such as these is not to express freedom via consumption; rather it is the compulsion to expose one’s own status through the medium of consumption. Indonesians do not seem to use Western brands to express the meanings of individuality, rather they try to express worldliness and status. Young people in particular are very brand conscious, but are more selective when it comes to brand consumption (IW, interview November 2004; G, interview December 2004). No longer will just any new Western brand sell (IW, interview October 2004). The results of interviews conducted with experts reveal that the status and power orientations (which both lead to status-aware conduct) can be seen as characteristic of Indonesian society and thus as behavioural patterns which influence consumer attitude. Bernhard Dahm, the doyen of Southeast Asian studies in Germany confirmed this opinion in an interview conducted with him in February 2006.

Generally, social stratification is based on somewhat different criteria across cultures, even though social classes consistently appear across cultures. It is not the existence of social classes that differs, but the degree of emphasis placed on social stratification that varies across societies. In countries where the emphasis on power and status orientation is strong, people in higher classes see themselves as being substantially different from others in lower classes. This can extend to speaking the language differently, prohibiting inter-class marriages, and distinguishing oneself by specific tastes and lifestyles unaffordable for other social strata. Indonesian society which figures an extremely high power distance and a high power orientation, avails itself of a multitude of status symbols. Behaviour on the part of middle and upper classes appears to be intensely driven by the pursuit of exclusiveness (Gerke 1995: 7-11). Symbols of exclusiveness include the appropriate clothing, jewellery and other possessions not to mention cultural goods such as the command of a foreign language (Gerke 1995: 8-13).

The immense status-motivated behavioural patterns are especially apparent in Java, and have over time, extended to the whole of Indonesia thanks to the media and migration. According to interviewees, the prerogative of the “priyayi“ (the educated Javanese upper class, who, according to their religion are predominantly followers of syncretistic religion “agama kejawen“) way of living, became a behaviour and style forming phenomenon aspiring to social strata. In many respects they display a patriarchal and in this sense autocratic social structure (Markham 1995: 83; Berman 1998: 6-17; Errington 1998: 1-21). A person’s social standing depends on his/her belonging to one of the two prime social echelons of Indonesian society which differentiates between white collar workers with desk jobs and blue collar workers with manual labour jobs. Members of the lower strata (farmers, labourers, manual labourers and servants) must show respect to members of the upper classes (higher ranking employees and well-heeled self-employed people) by means of language register and posture (Markham 1995: 83; Berman 1998: 6-17; Errington 1998: 1-21). The “priyayi” distinguish themselves from the remainder of society with their way of living. The expression priyayi denotes the bearer of courtly culture which peaked at the courts of Surakarta and Yogyakarta. In priyayi-view of life, differences in standing are deep rooted and find their expression in sophisticated etiquette as well as different Javanese language register according to rank. Socially “priyayi” are on a par to nobility, “ndara“, with whom they share lifestyle and philosophy. They only have contact to people of the same social class.

The priyayi continue to command the greatest respect today. It is impossible to belong to this stratum with wealth: rather you belong to it because of ancestry and lifestyle, and more recently because of academic achievement, too (Geertz 1969: 9). The “priyayi” are set apart from the others since they generally live in cities, and never exercise manual labourer positions (BR, interview November 2004). They are civil servants, employees and intellectuals. The lifestyle and realm of imagination of both strata are coloured by “agama kejawen“ and frequently are connected to Javanese mysticism, “kebatinan“ which places emphasis on order at all levels of existence (Mulder 1978: 106). The priyayi, in contrast to the “wong cilik” (who earn a living as farmers, manual labourers or workmen), emphasise their connection to courtly arts of bygone days such as Gamelan music (Gramich 1995:3-4; Becker 1980: 1-10), dance, puppet plays and literature and display their “alus”-nature. Order means the control of every aspect of their very existence (Magnis-Suseno 1981: 115). Markham (1995: 83) explains: “Status is determined inter alia by wealth, provenance or education“. Poedjosoedarmo (1972: 6) differentiates social groups, too, between physical constitution, economic and political power, relatives, age differences, sex, magic abilities, and psychic peculiarities etc. According to Javanese hierarchical order, everyone who submits to those people who are worthy subordinates the source of life, respects moral wisdom and the proximity to power (Mulder 1990: 31). Harmonious coexistence can only be achieved when all members of society are aware of and assume their social role and thus their rights and duties. On the subject of Javanese status behavioural patterns, Mulder (1990: 139) sums up: This imaginary world is concentrated on an individual level on the yearning for status and hankering after prestige.

Since status has become the only real thing in the world, people identify with it, and self-satisfaction is wholly dependent on status recognition on the part of others. In this way each moral issue or problem is concealed behind the satisfaction with one’s own ego. The greatest threat to this ego is posed by losing, i.e. by being humiliated or by being insulted since they would “rather die than be humiliated”, and they believe it is preferable to lose money than status. As a result, status (that was held on to just for the sake of not losing it) obscured one’s view of the objective consequences and furthermore led to negligence for all worldly and material living conditions. To a certain extent it led to somewhat narrow-mindedness and obstinacy to the point where status satisfaction overrode everything else. Mulder (1990: 139) adds: “In matters of status, Javanese are irreconcilable“. For this reason people are often obstinate and uncompromising, wanting to protect their status at all costs (which on the other hand can be traced back to the fear of losing). The end justifies the means as far as protection of status is concerned: even lying is justified. Mulder explains (1990: 140): The external life must be pushed aside; it is best to invent one’s own truth. Confrontation with the real world is avoided by means of escapism into a fantasy world –“wayangan“- filled with status symbols, self-deception, and the superciliousness of a personal truth in the process of development. How this observation in today’s consumer is made apparent, will be revealed in the following paragraphs. The significance of status in Javanese society in particular and in Indonesian society in general cannot be more demonstratively expressed.

When one visits a well-off Indonesian one gets the impression that their visible, domineering edifice is a meaningful symbol of their holiness and their right to be respected. Concrete proof of the worth of a person deserving of respect is the arrangement of rooms which visitors, supplicants or clients have to go through in order to reach that person. Ante-chambers ritually segregate distinguished people from the common people. Thus on a visit to a high-ranking Indonesian individual, the tea was placed at the other end of the table to ensure the ceremonial distance between the distinguished person and the deferential visitor. After the author had to wait in three different places to be taken to the room where the interview was to be conducted, he was seated at a befitting distance from the interviewee. As previously mentioned, interviews and meetings with Indonesians were conducted in a manner which respects Indonesians’ extreme status orientation. Premises were looked for which were appropriately decorated for extraordinary and worthy people. These rooms had to make people feel that they were something special, and to revere them with suitable politeness. Visitors had to be enabled to show symbolically to outsiders that they belong to the elite in society. Private office rooms in the business centres of the Four Seasons Hotel, Grand Hyatt and Shangri-Là in Jakarta apparently met these criteria, and were therefore chosen to conduct interviews in an environment where the interviewees felt at home. In this manner the interviewees were made to feel that their social status was recognized and respected.

It was obvious that behaviour in public situations is apparently of the utmost importance for these people’s identity. By particular behaviour consisting of being surrounded by a host of people, characterized by slow and quiet speech, people attempt to prove to others that they are especially noble, honourable and holy. How one wants to be seen and as whom one wants to be seen is perceivable through certain symbols in Indonesia, which are not merely limited to physical symbols (for example clothing) but which are also visible through certain behaviour. This behaviour, especially apparent at high-tea in international hotels, requires leisure time which not everyone has at his or her disposal. Another element which is absolutely de rigueur in Indonesian social circles, is that people should be greeted with great discretion and reserve. It is advisable to avoid becoming overly familiar with those individuals who did not benefit from a noble upbringing. In Indonesia one avoids establishing too close a relationship with people in menial positions. The latter would not want this kind of relationship either. People in menial positions are often not even treated like human beings. Seemingly courtly behaviour is supposed to reveal elevated status. What is considered to be crude in Europe, is not necessarily considered in the same way in Indonesia despite their lifestyle’s emphasis placed on the subtleties of life. It is perfectly acceptable to discuss the cost of having watches made, the value of jewellery, clothing and cars, all in an endeavour in order to set oneself apart from others. Everyone is constantly trying to impress, it seems. When strolling through the malls it appears that besides consumption, leisurely strolling is characteristic of people’s life. The pursuit of a noble lifestyle is typical of the new middle and upper classes and becomes especially obvious in malls – the spare-time destination, where well-heeled families are accompanied by a host of subordinates at a respectful distance.

The car

Many readers will have their attention drawn for the first time to the enormous status-driven behaviour of Indonesian consumers, and will be able to compare it with their own society’s wealthy people’s behavioural patterns. For many people in Indonesia who are the proud owners of cars, there is yet another way to show off their exclusiveness and social power: an exclusive number plate. A considerable number of Indonesian car owners are interested in distancing themselves from the crowds of ordinary drivers by choosing a certain unusual, rare or lucky number for their license plates. This is by no means limited to members of the Sino-Indonesian minority. Furthermore, extremely expensive cars are bought as collectibles rather than as a means of transportation. Anyone who purchases a Ferrari or similar car (for example at the luxurious “AutoMall”

http://www.agungautomall.co.id/aam-contact.html (17 November 2005)

The credit card

Someone from a noble background would never come directly in contact with money. Nobility is demonstrated by means of another person than the consumer paying the bill. Especially in particularistic societies, owning and showing off a credit card reinforces the worth of a person and exposes him as a member of the upper-middle and upper classes in front of hoteliers and business people etc. The person is deemed to be someone trustworthy to the institution, and as someone who has money at his disposal without his necessarily having it on him at the time. Moreover, credit cards are instantly visible to all and sundry when the wallet is opened.

Clothes

Stringent dress codes are supposed to signify the lifestyle of these people. Fashion is characterized in a two-fold manner. Firstly their intention is to imitate others who have a role model effect. These role models include first and foremost people who wield social power and those from the social elite, and secondly they represent an endeavour to be distanced symbolically from those people with whom they do not want to be associated. Above all shoes are apparently an important symbol. Shoes in Indonesia today which inhibit movement such as high heels or leather shoes, are designed to demonstrate that the wearer is liberated from the need to perform physical or manual labour, as opposed to those who can only afford slippers.

The statements are summed up in the following figure (C-81). It demonstrates the consequences of a high power and status orientation in Indonesia, and how they will change over time. Start at the top left “practices” and read clockwise.

Figure C-81 Status and power orientations over the course of time in Indonesia

The following quotes are excerpts from an article which was published in the Australian Financial Review (27 February 2004) and which shall explain pictorially the status-conscious behaviour of some leading examples of Indonesian society.

“By his own reckoning, Hotman owns 60 houses and 15 luxury cars, including a new-model Porsche, Jaguar and Mercedes-Benz. Around his neck is a glistening diamond he bought for US$150,000. Oversized opal rings adorn his fingers and a gold-encrusted watch and bracelet cover his wrists… Of his fleet of vehicles – which require the services of six full-time personal drivers – Hotman says his favorite is a new SL 500 silver Mercedes-Benz that set him back a cool Rp3 billion (US$470,000) [imported cars are subject to special import taxes which leads to the fact that foreign luxury cars are more expensive than palatial-like mansions in Indonesia].” (Financial Review 27 February 2004)

Hotman has accumulated almost all of his extraordinary wealth since 1999, when he left a leading city law firm to start his own practice, aiming to capitalize on the new legal framework set up after the 1997 financial crisis. “Yes, it is a good life”, he smiles, sitting in his luxurious office on the 18th floor of the Summitmas Tower in central Jakarta. “The crazy thing about people in Jakarta is that they believe the most expensive is also the most luxurious, so they just buy it”, says Hotman, “But I work hard, I don’t corrupt anyone. It’s my sweat, so if I like it I just buy it – it’s entertainment for me.” And in that Hotman Paris Hutapea is anything but exceptional. In fact, he is only the most obvious example of Jakarta’s new rich – a breed of 20, 30 and 40-somethings which has boldly rewritten the rules for wealth in the six years since Indonesia was plunged into economic and political chaos. As the country’s economy edges towards recovery, the super-wealthy are now free to flaunt their affluence in a style unimaginable a decade ago – even though half of the country’s 220 million people still live in poverty. The trend towards ostentation owes much to Indonesia’s new political landscape; post-Soeharto governments have brought freedoms that were unimaginable under the dictator’s 32-year reign.

“Before 1998, nobody was allowed to appear wealthier than the Soeharto family. It just wasn’t acceptable… Now there are no restrictions like that, and you can see that the rich in Indonesia are comfortable to show it off.” (Financial Review 27 February 2004)

Nowhere in Indonesia is this new face of wealth more evident than in the steamy, swarming capital of Jakarta. Luxury apartments in Jakarta are selling as fast as they can be built, many for more than $US1 million. The overseas-educated children of the elite are opening Manhattan-style hip bars, and glitzy new shopping malls are opening at a cracking pace, catering to the eager-to-spend middle and upper classes. One of Indonesia’s leading economists, Chatib Basri (speech, December 2004), says that while Indonesia’s upper and upper-middle classes comprise only about 5 percent of the population that means that the country still has 11 million people with extremely high purchasing power. Perhaps the clearest sign, however, of the resurgent spending power of Indonesia’s upper-middle and upper classes is the booming popularity of shopping malls, the staple of Jakarta entertainment and a favourite hangout for Indonesian to see and be seen. At least six giant shopping centres have opened in recent months.

After having described status behaviour in depth, the next paragraph is dedicated to understanding culture not simply as an element or factor of international marketing (as is the case in literature), but as the concrete context of all dealings, actions and thinking.

Based on the understanding that culture is the context of all action, it has now to be decided which strategy a company should follow in order to minimize the risks of an overseas operation.

Figure C-84 Between standardization and differentiation

It has been shown that companies have the opportunity when dealing internationally to standardize (standardization strategy) or differentiate (differentiation strategy), i.e. either to establish a global marketing mix and to adhere to it, or to customize it to local requirements. The strategy of choice which actually exists, will in time be denoted as a contingency perspective, i.e. the possibility to adapt exists, but is not an absolute necessity (opportunity and at the same time lack of urgency), but in order to maximize success rate, a strategy of differentiated standardization should be strived for. The following figure (C-85) will highlight this strategy. The variables of a perspective such as this are arranged on different levels, whereby one can differentiate between the following four: firstly a macro-economic level, which arises due to local economic developments, legal regulations, physical features and demographics. Secondly, the micro-economic level consisting of consumer particulars, the competition, and the structure of intermediaries (distribution system). Thirdly, on an internal-company level, where strategic basic orientations (de- or centralization of decision-making, relationship between parent company and overseas subsidiaries), property structure, knowledge of the market, experience with business overseas - are condensed. On the fourth level, described as product or branch specific level, product type, product life-cycle, culturally bound specifics of the product, the uniqueness of the product, how the product is used, and the foreign buyer’s product knowledge can be found. All of these levels are embedded in the cultural level (culture as the context), which in turn affects all the other levels. This is depicted below:

Figure C-85 Differentiated standardization (adapted from chartbook, Müller and Gelbrich)

Many global companies have become aware of the fact that people are not the same across countries and that they are not becoming the same either. Currently, in Southeast Asia one can see pan-Southeast Asian advertising campaigns slowly turning into local campaigns (implementing a strategy of differentiated standardization) (for example: Mercedes-Benz and Me)

http://www.asiadma.com/adma/resources/newsitem.asp?NewsID=100064 (17 November 2005); http://www.mercedesbenzandme.com/global/index.php (12 November 2005)

Figure C-86 Regional (Asia-Pacific) campaign Mercedes-Benz & Me (online campaign of the year)

In Part C the reasons for the failure of these global marketing campaigns were elaborated in detail. Even Marlboro, the quintessential global advertiser, has localized its brand portfolio with the take-over of Sampoerna since its own brands were not able to penetrate the Indonesian market successfully. Coca-Cola, for example, localized its product development and marketing communications. Anyone who is familiar with the Coca-Cola vending machines in Japan and South Korea would have to admit to what extent Coca-Cola has adapted to local challenges in these markets. The traditional Coke is frequently unavailable in vending machines operated by Coca-Cola there, besides a variety of chilled teas, coffees and lemonade beverages. Marketing and advertising are basically about consumers, and not producers. Markets are people, not products, one can reasonably summarize. There may be global products, but there are no global people. There may be global brands, but there are no global motivations for buying those brands. Research revealed that the reasons for young people buying global sports brands for example, differ a great deal worldwide (see for example: Holt, Quelch, Taylor 2004; Quelch 2003; Raman, Thompson, Aaker, Manwani, Clift, Kotabe 2003; Yankelovich and Meer 2006).

To return to the integrative, multidimensional analytical diagram of intercultural marketing, these trends can be illustrated in the following way (Figure C-87). In the middle of the following figure (C-87), the known structuralist model of culture (whose outer layers [rings] distinguish visible elements of culture and the innermost layer [values]) differentiate the ten orientations) (researched in the case of Indonesia) can be found. The latter are pictured on the right and denoted as steady over the course of time. On the left hand side, i.e. depicted as unstable over the course of time, are the visible elements of culture, also described as practices (symbols, heroes and rituals). For example music styles, fashions, celebrities or various lifestyles can be subsumed to these practices. These change over time - an unquestionable fact. A clothing style which is considered to be modern today may be outdated a year later. Owing to this, the outer layers of the culture model are to be understood as unstable, i.e. as variable. Outer changes in the visible layers of culture do not reflect changes in the innermost layer, values or value orientations, since they are stable.

Figure C-87 Variable versus steady elements of the structuralist model of culture

In an extremely status-oriented society, which, for example, has a high power and status orientation, there will always be the desire from the consumer to be separated and distanced from other social strata. The means of distancing oneself, for example by purchasing certain goods, may change over time, but the desire to be different will remain the same, as reflected by the high status orientation. It may be true that consumers use goods in many transitional or developing societies to symbolize modernity or their ability to participate in an apparently global consumer society but which has a rather glocal conformation. However, the idea that consumers’ conspicuous consumption of status symbols is a frequent by-product of economic development, does not appear plausible. This is because conspicuous consumption, the acquisition and visible display of luxury goods and services to demonstrate one’s ability to afford them, is first and foremost a sign of high status and power orientation in a society where the need to be different from others exists permanently. If this need did not exist, then people would refrain from buying certain status goods (these would not even occur to someone owing to the low status orientation). If status orientation were pronounced, then more status goods would be purchased. This observation is also the reason why European luxury concerns target in particular the strongly status-oriented Asian societies to make the most turnover, as can be seen in the figure below (C-88).

Figure C-88 Turnover by selected luxury goods companies by geographic region

It may be true that many of these countries are less developed than the USA or many European countries, but the latter’s score is rather low on the status orientation. The decisive differences can all be traced back to cultural reasons and show that the concentration, expansion, and internationalization of the consumer goods industries, the growth of affluent consumer segments in every nation, democratization, loosening of class boundaries, and a quickened flow of information through the commercial media, all contribute to global market expansion but that these developments have not led to the development of a globally homogenous consumer culture. With this ascertainment this discussion will now proceed to the practical section, Part D.

The social groups, often known as “The New Rich in Asia“, “bourgeoisie“, or “middle class“, which have benefited from the process of economic transformation in many parts of Asia, and thus expanding in scope, have aroused the interest of various scientific disciplines since the 1990s (for example: Becker, Rüland, Werz 1999; Gerke 1995; Gerke 2000; Gerke and Evers 1999; Horstmann 1997; Robison 1995; Sen and Stivens 1998; Robison and Goodman 1996; Chua 2000, 2003; Loh 1998; Pinches 1999; Tanter and Young 1990). What is conspicuous is the focus of many of these works, namely their preoccupation with how this social group finds a way to create a lifestyle and a stratum-specific identity with the aim of distancing itself from other social groups. One of these methods is the consumption of goods, the use and display of which are designed to manifest lifestyles and to invent identities.

In the 1990s the Indonesian population found themselves in the midst of radical transformation processes, caused by high economic growth and its accompanying changes (employment structure, level of urbanization) (Wie 2002: 194-242). For the first time the proportion of the population in the primary sector fell to below 50%, whereas employment in the especially profitable secondary sector rose rapidly (Robison 1996: 79) as a result of direct foreign investment. This created wealth was apparent outside the economy, e.g. in the construction of luxurious apartment buildings (Appendix 1, Figure 253-285) and huge shopping centres (Appendix 1, Figure 288-297) (Dewanto und Uning 2003: 52-53), as well as the registration figures of motorbikes and automobiles (Robison 1996: 80). Owing to the economic upturn and the induced social metamorphosis, in the 1990s various means of creating an identity had emerged, which, owing to the economic, political and social crises in Indonesia underlay a further transformation, which endowed religion and its symbolism a greater role in the construction of identity and process of distinguishing oneself from others.

In 2006, almost a decade after the end of the Soeharto regime and the induction of democratization and liberalization of the country, it can be observed that Unilever’s target group is the members of the new Indonesian middle class. This middle class was partly robbed of its material wealth as a result of the Asian crisis; it relies heavily on religion and no longer shows its belonging to a social level exclusively through western consumer goods, fashion and brands. This transformation in evaluative behaviour, and the need for extreme piety, do not exclude the profane world of consumption, media and advertising. Even globally-operating companies, so often accused of myopia when it comes to cultural differences, respond to this increased piety among the Indonesian middle class with Islam-customized products and advertising campaigns. An analysis of lifestyles in the new Indonesian middle class and its comparison in the course of time, enable crucial societal diagnostic statements to be made which intercultural marketing can fall back on when deciding on strategies.

Globalization, the Asian crisis and its repercussions on the Indonesian middle class

Diverse globalization processes have influenced the Indonesian middle class and its life planning since the mid-nineties and culminated with the 1997-98 crisis (for example: Anata 2000: 3-27; Schwarz 1999: 49-70). On the one hand, market internationalization and increased domestic local competition in Indonesia led to transfer of production to cheaper countries such as Vietnam and China (Nguyen und Richter 2003: 1-14). Furthermore the foreign direct investment (FDI) which had improved the employment situation waned significantly (Trinh 2005: 2-38). Pressure on Indonesian working class society increased and rapidly escalating unemployment in the well-educated middle class led to crises. Booth (2000: 147) explains:

“… the middle-classes in urban areas had taken the brunt of the crisis, and that young, relatively well-educated workers had suffered far greater income declines than the least educated and poorest workers in rural areas.” (Booth 2000: 147)

Booth (2000: 154) continues: “By mid 1998, it was frequently being asserted that krismon was primarily a crisis affecting urban Java, …, the outer Islands … were actually benefiting from the effects of massive Rupiah devaluation“. The often university-educated middle class did not have the option of returning to their villages and looking for agricultural employment, as did the less well-educated migrant labourers who had become unemployed in the crisis (Jellinek 1999: 2, 6). Jellinek (1999: 2) resumes: “While the lower middle classes in Depok

District in Jakarta.

Furthermore the general worldwide interconnectedness of institutions, countries, companies and individuals via information and communication technology leads to social alienation due to resulting dependence and acceleration of social exchange (Beck 1997: 61-114). During the crisis, the new middle class realized increasing volatility of circumstances due to social, political und economic events which were difficult to predict. Besides the increasing uncertainty, the Asian crisis destroyed the financial basis of the new middle class (Manning and van Diermen 2000: 143-144). Jellinek (1999: 6) explains: “The middle classes who have lost their jobs in advertising agencies and mega-malls are copying the survival strategies of the poor”. In the end the former winners of globalization, i.e. the members of the middle class, became victims of globalization. They were robbed of their material clout. Jellinek (1999: 2) adds: “Good solid houses, once stocked with consumer goods, are now empty. Most possessions have been sold“.

In this new fragile social and economically volatile situation which disillusioned the middle class, the Muslim members in it lent heavily on religion, which increasingly became an identity indicator of the new middle class (Heryanto 1999: 173-176), a phenomenon which was avidly followed by the Indonesian press. Heryanto (1999: 175) reports the following:

“Collective prayers, Ramadan-dining in fancy restaurants and Islamic education among top business executives, state bureaucrats, rock singers, movie stars and other celebrities have become regular cover stories in today’s media industry.” (Heryanto 1999: 175)

The Asian crisis, with its accompanying scarcity of material means necessary for consumption, led to the middle class turning increasingly to other symbols (outer layer of the structuralist model of culture). The community spirit, constructed as a result of consumption, disappeared since consumer goods had to be sold owing to a shortage of money, and were not able to be replaced. The symbols of belongingness (consumer goods) which had previously been affordable, ceased to be so for the new middle class. The marginalized middle class tries to inoculate itself via an idealized lifestyle against social transformation processes with the aid of religion. Evers (1991: 99) points out that religious renaissance is often a mechanism to reduce the fears provoked as a result of the social and economic pressure and distress originating in modernization.

Crisis experience and religious renaissance

Religious adherents aim to avoid or conquer crises (risks, dangers) whenever they arise. Riesebrodt (2001: 47) sums it up thus: “Crises pose a major impetus to carry out religious work” („Krisen stellen einen wesentlichen Antrieb religiöser Arbeit dar”, translation by author). Here it implies less natural catastrophes or physical human breakdowns: rather it means social relationship crises or identity crises (Riesebrodt 2001: 42). The urge for significance and sense of purpose on the part of mankind is abundantly apparent in times of crisis, the breakdown of social, moral and cognitive structures, and when people are confronted with their helplessness and impotence, as was the case in the multidimensional 1998 crisis in Indonesia. Indonesia has suffered a great deal of disillusionment with democratic liberty since the fall of the Soeharto regime. Furthermore, in politics, characters with integrity are scarce, and that is why those with charisma are extremely popular, such as Abdullah Gymnastiar (Diederich 2003: 53).

Religious armoury allows coping with life’s disappointments in an unknown, modern, pluralistic world, when everyday control is removed and thus, supra-human power is required. As in many countries, a renaissance of Islam is perceivable in Indonesia as well (Evers und Siddique 1993: 1; Hefner 1998: 1-40; Rahardjo 1992: 248-273; Schreiner 2001: 157-179; Stauth 1996: 7-9; Ufen 2004: 15-21). Ende (1983: 6) explains that since the seventies, a process of re-Islamization has been observable in social, cultural and political regards. Houben points out that (2003: 162-164): “… Islam became more publicly visible and articulate as the societies of Southeast Asia went through an era of rapid modernization.” Modernization did not, as originally expected, lead to a decline in religion. Evers and Siddique (1993: 1) elaborate:

“Social scientists long assumed that religion would fall victim to the process of rationalization and modernization… Evidence against these interpretations is the dramatic development of religious and primordial movements world-wide.” (Evers and Siddique 1993: 1)

The reverting to Islam had already set in owing to political motives in the early 1990s (Houben 2003: 164), i.e. long before the Asian crisis in 1998. The crisis did, however, accelerate the trend. A reverting to Islam nowadays is not apparent in religious circles; rather it leads to a change in lifestyle on the part of Muslims within the new middle class. Islam today appears to play a far greater role in many areas of life. Additionally, a renaissance of ethnic identity is generally perceivable in Indonesia (Hoon 2004: 13).

The new middle class, with its lifestyle and consumerism habits imported from the west and from industrialized East Asia, changed evermore in the direction of Islam and has extended to date to a lifestyle based on consumption. As early as in the 1980s, interest in Islamic teaching in Indonesia was spreading, since the Soeharto regime saw itself required to co-operate increasingly with Muslims in order to stabilize its own power (Houben 2003: 158-159; Dahm 1999: 248). With the introduction of a parliamentary democracy and the founding of Islamic parties and organizations after Soeharto stood down, Islam has become a significant political power (Ufen 2001: 181).

Repercussions of Re-Islamization on the target group’s consumer behaviour

This change to Islamization is not only visible in religious or political life but also in everyday consumption. For example goods which respect Islamic instructions are being bought more (Halal food) or Islamic services are being enlisted (Islamic Banking). Furthermore, the demand for goods which reflect and document one’s own (partly new) religious piety is on the rise. Here, short life cycle consumer goods are meant such as special shampoos for women observing Islamic clothing regulations (Appendix 1, Figure 239-253) or the so-called Mecca cola (Appendix 1, Figure 23) (which is placed in opposition to American Coke) or alcohol-free beer intended for Muslims (Appendix 1, Figure 16). Furthermore, technological products such as mobile phones equipped with software specially designed for Muslims, and which, for example, have prayer reminder tones or electronic compasses, are enjoying great popularity. Architects who design shopping centres or residential complexes also include Arabic stylistic elements. (Appendix 1, Figure 292). Even consumerism (conspicuous consumption) and the often extremely wasteful pseudo-Islamic behaviour of the Indonesian elite (for example van Leeuwen 1997: 339-359) are rather justified with the virtue of “ibadah“ (love, humility to God in the sense of embellishment of the world for example via consumption (MP, interview December 2004).

Re-Islamization or reverting to Islam is, however, especially apparent in choice of clothing (Champagne 2004: 14-23). The “jilbab” (Indonesian name for the Islamic veil worn by women) is a case in point. It has spawned a whole fashion industry since the reverting to or revival of Islam. Champagne (2004: 15) explains: “The jilbab, the most visible part of a complete Muslim outfit, is a relatively recent phenomenon in Indonesia“. This phenomenon will shortly be elaborated on in light of product development at Unilever Indonesia.

The Jilbab: initiating link to product development

Stereotypical images of Muslim women covered from head to toe in black have been replaced in Indonesia by images of fashionable ladies clad in bright, opulent colours. In Indonesia, Islamic clothing is considered by the new middle class to be chic (Appendix 1, Figure 239-252). Indonesian women, especially members of the new middle class are starting to choose to complement their apparel by wearing a veil or a tunic (Champagne 2004: 15; Kompas 2004: 56). The afore-mentioned, however, is colourful, in vogue and frequently very figure-hugging. Many expensive stores (for example Pasaraya Grande, Blok M)

http://www.pasarayagrande.com/ ( 12 August 2005)

Figure D-2 Islamization trends in product development

Although Indonesians opt for a relatively liberal form of Islamic clothing regulations, more and more women are wearing veils, even if tailored to local peculiarities and preferences (Raleigh 2004: 1-12; HP, interview December 2004; RS, interview December 2004). The same applies to men, with Islamic-looking, often decorative tunics becoming ever more popular, even if worn mostly during Ramadan, and being considered as hip since they are even worn by “MTV Indonesia” hosts. Wearing Islamic clothing is a new development and had negative connotations associated with the stigma of militant opposition during the Soeharto regime. The veil in particular was seen by city dwellers as old-fashioned, antiquated and linked to rural living at that time. Soeharto tried to have dominion over the influence of Islam in a multitude of respects. Clothing was paid particular attention as was the veil, which was mentally associated with the Iran revolution and which became a symbol of local Indonesian resistance to the Soeharto regime (AS, interview December 2004). Furthermore wearing a Jilbab was forbidden in public service or schools till the 1990s although it was of course seen as a religious symbol. This ban was only lifted when Soeharto, at the beginning of the 1990s started to co-operate with Muslims, with a view to stabilizing his own power (Houben 2003: 164). Soeharto even began to manipulate religious symbols, forms and ceremonies. For one, Soeharto attempted to confront the problem of a too small power-base, and secondly to confront growing criticism, which was the reason behind his pursuit of closer contact with Islamic clerics (Dahm 1999: 248; Houben 2003: 158) Houben (2003: 158) explains:

“Around 1990, a turnaround in state policy occurred, and against the opposition from army circles, Soeharto began to court Islam to strengthen his own power base”. (Houben 2003: 158)

Furthermore, at the beginning of the 1990s Soeharto and his family gave the impression of having converted themselves into a religious, pious Muslim family, participating in Islamic rituals and ceremonies. At its peak, this façade included the first family making the pilgrimage to Mecca, which was observed with keen interest by the media and the Indonesian people.

After the pilgrimage to Mecca, Soeharto’s eldest daughter Siti Hardiyanti Rukmana (Tutut) in particular, took to wearing a kind of headscarf in public. This headscarf, which served as a kind of loose veil, contributed to the veil’s status as a fashion item. Her decision to wear a Jilbab became a role model for the entire nation (Champagne 2004: 19). Indigenous fashion designers

http://www.thejakartapost.com/review/feat11.asp (3 December 2005)

The Indonesian Jilbab increasingly became an integral part of Indonesian clothing, and an absolute must. It must be noted here, however, that the Jilbab that became popular in Indonesia was a colourful, often bejewelled veil, and not the sombre, black, conservative Arabic equivalent (the “Jubbah“). Firstly, the latter was associated with Saudi Arabia, and secondly with the migrant work force, with which the new Indonesian middle class did not want to be associated. Another form of the Indonesian veil is the “Jilbab gaul“ or the “hip Jilbab“, which is far removed from the idea of veiling for religious reasons. The aforementioned veils are eye-catching, colourful and sometimes transparent scarves, which can be worn as a kind of hat. In this way, a kind of selective adaptation took place, which can, in this context, be described as hybridization. Yamashita, Din and Eades (1997: 5) explain:

“In the present era of globalization we observe that translocal phenomena have been developing in almost every dimension of our lives and have resulted in the ‘creolization’ or ‘hybridization’ of culture’ ...” (Yamashita, Din and Eades 1997: 5)

The Islamic veil entered the fashion arsenal of many Indonesian women in its local, hybrid adapted form. More and more women are today deciding to choose to wear veils, even though the reasons for doing so are not always religious, but often fashion-motivated. Amrih Widodo explains that the contemporary Islamic Jilbab has become a symbol of lifestyle, and part of the consumerism trend, through which one’s own identity can be constructed as a result of purchasing (Champagne 2004: 18). She adds:

“They are part of the consumerist trend of defining or displaying one’s identity though what one buys or wears; they reflect a desire to express religious identity while also being cosmopolitan and modern.” (Champagne 2004: 19)

Those women who purchase one would like to express their religious identity with the aid of the Jilbab, but at the same time want to express their fashion sense and their pertaining to a social stratum. The veil thus becomes the expression of taste and class, but however loses religious significance. The decision to wear a veil is situation-dependent, i.e. it is discretionary and elective rather than being mandatory, and depends on what the wearer wishes to present (AS, interview November 2004).

Figure D-3 Examples of “Feysen Busana Muslim”

The increasing trend to veil doubtless reflects a reverting to Islam. Without it, the trend would never have come about. The decision to be veil-clad is, however, for many women a question of the desire to express religion, fashion and, in Indonesia, lifestyle too. It is both a symbol of differentiation and religion. Additionally, Indonesian women show three disparate directions with their clothing: to Indonesia, the west and the Arabic world (MP, interview December 2004). This new way of dressing enables women to experiment and to create a new hybrid identity in a country in which Islamic clothing was long considered to be antiquated and backward.

The use of the veil, observance of religious symbols and the pilgrimage to Mecca are powerful means by which Indonesians present their authenticity as Muslims. It can also be understood as an experimental way of dealing with one’s own modern identity. It becomes clear that global transformation processes do not produce exclusively culturally homogenous consequences, but instead they produce very locally influenced results (selective adaptation) and lead to the phenomenon of glocalization. Additionally, it becomes apparent that over time, symbols and modes of distinction alter, but not necessarily the pronounced need in Indonesian society to distance oneself from other social groups or strata (status and power orientation).

The following figure (D-4) will summarize the previous statements and will clarify them pictorially. The core of the structuralist model of culture (shaded black), i.e. the values or value orientations, comprises two orientations deemed significant in the Indonesian context which determine Indonesian cultural and consumer behaviour definitively. These are the status and power orientation. The noticeably high score on both orientations leads to status-conscious behaviour, in which the need to set oneself apart from others dominates. This need has proven constant over time. The means by which one can be set apart from others is reflected in the structuralist model of culture in the three rings shaded white (practices), but are, however, unstable (variable) over time. Two examples (shaded grey in the diagram) show this clearly. In the 1980s and early 1990s this need to be distanced from other social strata was expressed primarily via consumption of western products and brands. Over time, however, this trend changed. The end of the Soeharto regime and the entry into the multi-dimensional crisis situation in 1998 meant that intensified religious symbols, even in the form of consumer goods, were used to satisfy the need to be distanced from others. Intercultural marketing has to absorb these trends and translate them into the development of worlds of products and brands in order to operate successfully.

Figure D-4 Orientations and practices over the course of time (1)

The second model processed in this context is the following. It is to be read clockwise and starts at the top left with practices. It is a recapitulation, included for reasons of simplification and completion.

Figure D-5 Orientations and practices over the course of time (2)

As demonstrated, the veil has come to play a greater role in modern Indonesian society for a multitude of reasons. For personal care product manufacturers such as Procter & Gamble or the Unilever Group which market their goods under the names of global umbrella brands, this can lead to threats and opportunities in the market. Threats arise because wearing a veil leads to less consumption of shampoo and hair products, since hair under the cover of the veil is less exposed to the public, or is simply not visible. This fact could lead to heavy turnover losses for shampoo manufacturers, if, for example, the female population reduced its daily use of shampoo to two or three times a week. Generally, Indonesians wash their hair at least twice per day because of the heat and pollution. A change in the usage frequency would cause shampoo sales to be more than halved immediately, which in a volume market such as Indonesia, would lead to massive losses. Shampoos offered to date would no longer be able to satisfy the needs of the consumers, who could demand shampoos with other stronger conditioning ingredients since they were wearing veils. In this case, loss of market and turnover share would be the result, too. A further threat could be the growing feeling in society that Islamic or Islamic-leaning products should be bought from manufacturers who appear to respect Islam, religion and the culture of the market and not from manufacturers considered to be foreign and un-Islamic. A company with an un-Islamic profile would have to face great loss of image, which in turn would lead to market share and turnover loss. The aforementioned threats are also to be seen as opportunities or challenges. Thus, a shampoo specially designed for veiled women’s needs could be a unique selling proposition (USP). Furthermore, the creator of a shampoo like this would be the first to offer a shampoo of this kind worldwide, and the concept developed in Indonesia could be transferred to many other countries where veiled women influence everyday life. Even the image of the company and the brand name under which such a product was operated would develop, and the image of a company reacting to local, social trends would arise (increased credibility).

Unilever is one of the world’s leading suppliers of fast moving consumer goods (FMCG) across foods, home and personal product categories and includes a portfolio of some of the world’s best known and most loved brands. Unilever’s worldwide mission is to “add vitality to life”, “to meet everyday needs for nutrition, hygiene, and personal care, with brands that “help people feel good, look good, and get more out of life”.

http://www.unilever.com/ (12 October 2005);

Figure D-7 Unilever’s mission

The company has extensive experience of working in economies with low-income consumers and its enormous diversity of products has historically served people’s everyday needs. In 2005 its business could be broken down into three categories: foods, detergents, and personal care products. Food brands include such well-know names as Lipton, Knorr, Hellman’s, Bertolli, Magnum, Cornetto, Flora/Becel, Rama, Blue Band and Iglo/Birds Eye/Findus. Home and personal-care brands include Dove, Rexona, Lux, Omo, Surf, Domestos, Pond’s, Signal, and Sunsilk. Besides these global brands, Unilever’s portfolio includes many locally important brands.

Figure D-8 Some of Unilever’s brands

Unilever like other FMCG companies focuses on developing and emerging markets, where, owing to high population growth and sky-rocketing growth figures, important markets are springing up. Rising per capita income gives disproportionate growth in per capita consumption for Unilever categories. Already 35 percent of Unilever turnover is in developing and emerging markets where it has a long-established presence. The introduction of products, brands and certain ranges is targeted at different income levels in the respective countries and is strongly localized accordingly (this strategy is similar to the suggested strategy of differentiated standardization put forward in this thesis). The following figure (D-9) summarises Unilever’s viewpoint concerning developing and emerging markets.

Figure D-9 Unilever in D&E markets

By using improved distribution systems and with the possibility (for example in Indonesia, after the liberalization of the economy as a result of the demise of the Soeharto regime), to distribute its own products even as a foreign company (which obviates the need for cost-creating intermediaries), Unilever has managed in almost every region to expand its presence. Thus, Unilever can even be found in many very remote parts of Southern Kalimantan (own observation, March 2004). Additionally, some important Unilever projects in Indonesia can be mentioned at this juncture. Unilever Indonesia tries to empower Indonesians to found their own business, or to work for Unilever as a sales person by issuing micro-credits. This can take the form of buying a bicycle from Unilever, which is specially designed for them to pedal their wares throughout the neighbourhood in an economic and environmentally friendly manner with the help of Unilever credits. Furthermore, Unilever almost exclusively employs local management who has an intimate knowledge of the local peculiarities and idiosyncrasies. Drivers of Unilever’s growth in developing and emerging markets are affordability and consumer intimacy. This means that Unilever products are available in various packaging sizes, and are thus affordable to almost every member of Indonesian society. Thus shampoos and washing liquid are offered in sachets enabling every Indonesian to purchase high quality products cheaply whenever the product is required. The personal care market is the priority for growth, as emerging markets are less fragmented, lower private labels penetration is evident and strong personal connections and emotional connections between consumers and their brands can be established. The main competitors in this market are: Procter & Gamble

http://www.pg.com/company/who_we_are/worldwide_operations.jhtml;jsessionid=O21OXDYDLYCHTQFIAJ4S0IWAVABHOLKK#I (17 August 2005)

The different brands of the Unilever concern are managed from different countries. Lux, for example, is managed from Sao Paulo, Brazil. Global responsibility for a brand (seen in the Lux example) (Figure D-10) enables certain processes such as product improvement to be transferred quickly to every production site and to markets. Furthermore, the managers responsible for a brand on a country level always have a central contact person when it comes to local issues concerning product innovation or marketing. The objective is to devolve as much power and to give as much freedom as possible to the local people in charge, since they know the market intimately, but not to neglect global synergy effects. This approach meets the differentiated standardization strategy as favoured in this thesis. In the case of Unilever, this strategy has frequently led to success.

Figure D-10 Lux and Lifebuoy and their local executions

In this sense, the company bears witness to the fact that a strong corporate identity can go with cultural sensitivity. Unilever describes itself as a “multi-local multinational“, which highlights the corporate strategy, i.e. to emphasize the local element. This “multi-local” strategy is embedded in the history of the company founded in 1930 when Margarine Unie of the Netherlands and Lever Brothers of the UK merged. Unilever is often described by outsiders as an international or multinational company, but never as a global concern, since the decentralized corporate strategy prevents all markets from being supplied with standardised products and brands. The company believes that a local view is often necessary, especially when it comes to food. The people closest to each market have the power to make decisions and can therefore respond quickly to local trends and needs. Hence, Unilever has become more responsive to local differences than many of its more centralized competitors, such as Procter & Gamble. The following figure (D-11) will highlight additional elements of its global commitment.

Figure D-11 Geographic reach and turnover

2001

2002

2003

2004

Home and Personal Care

22,739

20,801

18,368

17,404

Foods

28,155

26,937

23,971

22,530

Unilever Group turnover

51,514

48,270

42,693

40,169

Table D-1 Worldwide Unilever turnover in million US$

The noticeable fall in turnover between 2001 and 2004 was attributable to the sale of some parts of the company and brands (divestment).