The furniture brand IKEA puts Swedish words on their product labels around the world. The Chinese video game Black Myth: Wukong doesn’t translate words such as “Wukong” and “Jingu Bang” in its international release. And some high-end Japanese restaurants in the United States serve meals without forks and knives. Why would businesses hold on to features that feel unfamiliar to international markets?
A new study suggests an answer: even when a product's foreignness no longer brings novelty or a brand premium, and localization would cost very little, a global firm may still benefit from deliberately maintaining, or even increasing, its brand's cultural distance.
In a recent study published in the journal Marketing Science, Distinguished Global Professor of Business Chen Yuxin and his research team find that a product’s cultural distance — the unfamiliarity and inconvenience that foreignness creates in the consumption experience — may actually benefit a global firm. This happens when a firm places more weight on long-term profits and when the cost for consumers to learn about the foreign culture is low. With the rapid development of AI and the internet, the cost of cultural learning has dropped sharply, making this outcome more likely, they argue.
How firms cope with cultural differences is typically framed as a trade-off between standardization and adaptation. If localization is affordable, adaptation is generally the favored strategy — and reducing cultural distance is usually seen as the better choice when a brand goes global.
But the study finds that cultural distance can also prompt consumers to engage with, and learn about, the foreign culture behind the product. Learning more about espresso may lead to a greater appreciation for Italian culture in general, for example. Once consumers complete this cultural adaptation, which improves their long-term consumption experience and increases their willingness to pay for the product in the future, they also gain “cultural benefits” beyond consuming the product itself. These benefits can be further amplified by how a brand or business engages in cultural promotion.
So how much foreignness should a firm retain, and how much should it invest in promoting its home culture?
The researchers examined the strategic implications of culture-commerce interactions by building an analytical model. A global brand sells its product in an overseas market and decides how much cultural distance to keep in the product, how to price it, and whether to invest in cultural promotion. Consumers, in turn, decide whether to incur the learning cost of adapting to the foreign culture associated with the product.
The results show that when consumers have sufficient incentive and ability to adapt culturally, a firm does not necessarily need to minimize cultural distance to generate higher long-term profits.
The study also finds that product strategy and cultural promotion reinforce each other: a more culturally distinctive product gives the firm a stronger reason to promote its culture of origin, while effective promotion makes it easier to keep that distinctiveness.
Even if cultural promotion does not directly increase consumers’ willingness to pay, it can benefit both consumers and the brand by allowing consumers to learn more about another culture. Using cultural promotion to support a culturally-rooted brand’s global expansion can therefore have a win-win outcome.
“That relationship between culture and commerce has long been examined in sociology, anthropology, and cultural studies, often with an emphasis on the potential negative effects of commerce, particularly consumerism. Yet marketing, as a major force behind modern consumerism, has rarely been part of the conversation,” remarked by Chen Yuxin, “It shows how firms can, through product design, pricing and cultural promotion, induce consumers to undergo cultural adaptation. The corresponding marketing strategies can deliver a win-win for firm profits and consumer welfare, and reflect a positive interaction between commerce and culture.”