Consumer Behavior - Hofstede's Cultural Dimensions Theory

The world is a big playground. Since the time of the Silk Road, different people from different cultures have traded with each other. With the advent of science and technology, we are now living in a more integrated society where organizations do business with each other that transcends geographical boundaries. We know this phenomenon as 'Globalization'. With changes in trades that happens on a global scale, cultural aspect remains one of the major variable that is still pegged with specific demographics at a particular 'physical space'.

One of the framework that is proven to be useful in analyzing your target market is the Hofstede's Cultural Dimensions Theory. He is an influential Dutch social psychologist and an anthropologist. He came out with this systematic framework to allow organization to assess and differentiate national cultures and organizational cultures within the nation boundary. Here is what he has to say about cultural aspects forces in play in the market:

'Culture is more often a source of conflict than of synergy. Cultural differences are a nisance at best and often a disaster' - Prof. Geert Hofstede, Emeritus Professor, Maastricht University

Hofstede's Cultural Dimensions Theory describes five dimensions of value propositions within a nation's Culture. They are:

Power Distance
- The degree of power inequality that exist in a culture. Distinguished by High PD or Low PD. High PD means that there are unequal distribution of power in the culture/systems. A low PD means that the power is shared equally.
Individualism vs. Collectivism
- The degree of strength of relationship/ties people have to one another in the community. Distinguished between Individualism and Collectivism.
Masculinity vs Feminity
- This refers to how much a society view and act on their values. Masculinity means that people are tough, assertive and strong (traits of a traditional men) and Feminity means that people are more sociable, caring and work together (traits of a traditional woman)
Uncertainty Avoidance
- This refers to the level of anxiety a member of a particular culture will behave in terms of uncertainty. It is distinguished by High UA and Low UA. High UA means that people will avoid ambiguous and being on uncertain terms. High UA is the opposite of High UA.
Long-term Orientation vs Short-term Orientation
- This refers to how much the society value and make decision in terms of the short- and long-term orientation. Long-term orientation means that people make long term plan and deem them important. Short-term orientation means that people are only looking to fulfil short-term goals and are usually self-oriented.

Example of the Australia's Cultural Dimension Graphs:

Cultural Dimension's Graph for Australia from http://www.geert-hofstede.com

This is a framework that is very practical and useful to organizations that conducts their business on a world-wide scale. They can use this framework to better understand their demographics at large, and indeed there are major differences in other culture's consumer behavior and attitude.  The dimension will give us insights into the culture and understand the target market. This knowledge will be useful for developing strategies.