金融服务贸易

The ?nancial services cultural orientation matrix

Deborah Stephenson a ,Steve Worthington b ,1,Rebekah Russell-Bennett a ,?

a School of Advertising Marketing and Public Relations,QUT Business School,Queensland University of Technology,Brisbane,Queensland,Australia b

Department of Marketing,Monash University,Melbourne,Australia

a r t i c l e i n f o Article history:

Received 24October 2011Revised 1June 2012Accepted 3July 2012

Available online 10October 2012Keywords:

Financial services Culture

Marketing strategies Market entry

a b s t r a c t

With saturation within domestic marketplaces and increased growth opportunities overseas,many ?nan-cial service providers are investing in foreign markets.However,cultural attitudes towards money can present market entry challenges to ?nancial service providers.The industry would therefore bene?t from a strategic model that helps to align ?nancial marketing mixes with the cultural dimensions of a foreign market.The Financial Services Cultural Orientation (FSCO)Matrix has therefore been designed,with three cultural dimensions identi?ed which in?uence preference for ?nancial products;preference for cash,aversion to debt and savings orientation.Based on a combination of these dimensions and their relative strength within a culture,eight different consumer segments for ?nancial products are identi?ed,and marketing strategies for each consumer segment are then proposed.Three cultural clusters from the GLOBE Project House et al.(2002)are used to highlight possible geographic markets for each of these con-sumer segments.In particular,this paper focuses on GLOBE’s Confucian Asia,Southern Asia and Anglo cultural clusters,as these clusters represent the most well established ?nancial markets in the world and the fastest growing ?nancial markets for the future.The FSCO Matrix provides the ?nancial services industry with an innovative and practical tool for addressing cross-cultural challenges and developing successful marketing strategies for entry into foreign markets.

ó2012Australian and New Zealand Marketing Academy.Published by Elsevier Ltd.All rights reserved.

1.Introduction

Corporations are facing an increasingly global business world (Javidan and House,2002)and Saturation in the domestic market and increased growth opportunities overseas are encouraging many ?nancial service providers to invest in foreign markets.As an example following China’s entry into the World Trade Organiza-tion in 2001,major United States (US)and European banks made inroads into the Chinese credit card market as part of their efforts to strengthen their retail banking business (Mollet,2004).With domestic growth stagnating in the early 2000s,Japan Credit Bureau (JCB),the largest credit card brand in Japan,has expanded into Chi-na by forming an alliance with the Bank of China (Mollet,2004).More recently,India has also started to open up its ?nancial sector to foreign investment.Credit Suisse recently received in-principle approval for a banking license in India,with other global players now lined up for entry,including Goldman Sachs,Morgan Stanley,ICBC and National Australia Bank (Leahy,2010;The Financial Express,2010).

However,entry into a new ?nancial market is challenging,as consumer culture in?uences the success or failure of speci?c prod-ucts (Solomon et al.,2007).Culture is the accumulation of shared meanings,rituals,norms and traditions among the members of a society and ‘‘consumption choices simply cannot be understood without considering the cultural context in which they are made:culture is the ‘lens’through which people view products’’(Solomon et al.,2007,p.468).However the whole area of consumer culture theory (CCT)is not,‘a uni?ed,grand theory,nor does it aspire to such nomothetic claims’(Arnould and Thompson,2005).Nonethe-less these authors claim that CCT researchers share a common theoretical orientation towards the study of cultural complexity,that links their research efforts.Furthermore CCT theorists study consumption in its contexts,in order to generate new constructs and theoretical insights.These research aspirations have high-lighted that the ‘real world’for any given consumer,is neither uni?ed,monolithic nor transparently rational.This research ‘lens’then leads to the proposition that cultural attitudes toward money,present challenges in marketing ?nancial products,within foreign markets.

In China,for example,negative perceptions of borrowing through formal channels have created a resistance to bank loans (Worthington,2010).Instead,Chinese consumers prefer to borrow through family and friends and tend to pay cash,even for ‘big ticket’items,such as cars and houses (Worthington,2010).More

1441-3582/$-see front matter ó2012Australian and New Zealand Marketing Academy.Published by Elsevier Ltd.All rights reserved.https://www.360docs.net/doc/375320138.html,/10.1016/j.ausmj.2012.07.001

?Corresponding author.Tel.:+61731382894;fax:+61731381811.

E-mail addresses:debluey@https://www.360docs.net/doc/375320138.html, (D.Stephenson),steve.worthington@https://www.360docs.net/doc/375320138.html,.au (S.Worthington),Rebekah.bennett@https://www.360docs.net/doc/375320138.html,.au (R.Russell-Bennett).1

Tel.:+61399032754;fax:+61399032900.

recent research(Worthington et al.,2011)into credit cards in a Chinese cultural context has focused on the attitudes of the young, af?uent Chinese,to the adoption and subsequent use of credit cards.This study highlighted the notion of guilt felt in China when using credit cards instead of cash.The research also introduced the term’future money’to describe the pay later facility that a credit card offers.Another aspect favoring the continued use of cash in this culture is that it is a means of signaling wealth,which is an important status aspect in China and this was thought to in?uence the relatively low level of credit card use in China.The research also revealed a generational issue that was believed to impede credit card adoption.Thus whilst most of the respondents in the qualitative phase of the research,felt that they belonged to a new generation,one that is different to that of their parents and grandparents,nevertheless,the young af?uent Chinese,still felt guilty using‘future money’and spending rather than saving.In-deed earlier research by Smith and Hill(2009),found that whilst there had been recent rapid socio-economic change within China, there was evidence to suggest strong value system continuity, hence the young,af?uent Chinese tend to gravitate towards the familiar,whilst generally resisting that which is unfamiliar.

As a basic marketing rule,?nancial service providers must under-stand the attitudes of their customers to better tailor their market-ing and communication programs(Kanyak and Harcar,2001). Different cultural attitudes toward?nancial products may therefore require changes to the marketing mix,such as new branding and positioning strategies,new product developments or new incentive schemes.Previous academic literature has explored the different cultural perceptions of money around the world(Al-Moharby and Khatib,2007;Bonsu,2008;Chui and Kwok,2008;Falicov,2001; Kwok and Tadesse,2006).However,few studies have addressed how the current state of?nancial services within a market has been in?uenced by the cultural attitudes towards money.A theoretical framework has also yet to be developed that explains what impact different cultural perceptions of money have on the consumption of?nancial products.This information would be useful for?nancial service providers looking to expand into new foreign markets.

Financial institutions need a strategic model that helps align their product offerings with the cultural dimensions of a foreign market.Cultural dimensions are a useful way of classifying behav-ior and identifying market segments.Three cultural dimensions have been identi?ed in this paper as relevant to the consumption of?nancial https://www.360docs.net/doc/375320138.html,ing these dimensions,this paper will pres-ent a conceptual strategy matrix for?nancial institutions,pro?ling eight consumer segments for?nancial products.The Financial Ser-vices Cultural Orientation(FSCO)Matrix will outline the?nancial preferences for each of the consumer segments and propose effec-tive marketing strategies for reaching them.

2.Literature Review

The purpose of the literature review is to present a conceptual background to the FSCO Matrix that will be presented.The FSCO Matrix has been designed using three major cultural dimensions identi?ed in the literature as having an effect on the consumption of?nancial products in foreign markets.These three cultural dimensions will help?nancial service providers to understand how cross-cultural in?uences can impact on their marketing strat-egies(Assael et al.,2007).Cultural clusters identi?ed in the GLOBE Project(House et al.,2002)are used to highlight possible geo-graphic markets where each consumer segment of the FSCO Matrix may be found.

The?nancial services industry is one that has evolved over cen-turies,from the clay tokens of Ancient Mesopotamia5000years ago,to the hedge funds of today(Ferguson,2008).This long history makes the?nancial services industry a mature market that needs to continuously expand in order to grow.Historically,western ?nancial institutions have undertaken this expansion,often through entry into eastern markets.The western?nancial model was?rst spread in the guise of imperialism and then through glob-alization(Ferguson,2008).However,‘‘the globalization of?nance has now...blurred the old distinction between developed and emerging markets,turning China into America’s banker-the Communist creditor to the capitalist debtor’’(Ferguson,2008,p.4).

The economic development of eastern countries has seen many eastern?nancial institutions now entering western markets.In 2009,China Construction Bank opened its?rst branch in the US, joining four other Chinese banks already present within this mar-ket(The Information Company,2009).The China Construction Bank’s entry into a western market demonstrates that the tradition of western?nancial institutions entering eastern markets is fast becoming obsolete and that,whilst cultural factors may in?uence consumer demand,foreign market entry is no longer bound by tradition.

The GLOBE Project(House et al.,2002)has been selected as a relevant theoretical framework to guide research into the cultural perceptions of money within two targeted cultural clusters.The GLOBE Project,the most recent global attempt to classify cultural differences,studied sixty-one nations and grouped them into ten cultural clusters based on their similarities along nine dimensions. GLOBE is considered by many academics to offer superior bene?ts

Table1

Nine cultural dimensions of GLOBE Project.

1.Uncertainty Avoidance The extent to which members of an organization or society strive to avoid uncertainty by reliance on social norms,rituals,

and bureaucratic practices to alleviate the unpredictability of future events

2.Power Distance The degree to which members of an organization or society expect and agree that power should be unequally shared.

3.Collectivism I Societal Collectivism re?ects the degree to which organizational and societal institutional practices encourage and reward

collective distribution of resources and collective action.Low scores re?ect individualistic emphasis and high scores re?ect

collectivistic emphasis by means of laws,social programs or institutional practices.

4.Collectivism II In-Group Collectivism re?ects the degree to which individuals express pride,loyalty and cohesiveness in their organizations or families.

5.Gender Egalitarianism The extent to which an organization or a society minimizes gender role differences and gender discrimination.

6.Assertiveness The degree to which individuals in organizations or societies are assertive,confrontational,and aggressive in social relationships*

7.Future Orientation The degree to which individuals in organizations or societies engage in future-oriented behaviors such as planning,investing

in the future,and delaying grati?cation.

8.Performance Orientation The extent to which an organization or society encourages and rewards group members for performance improvement and excellence.

(This dimension includes the future oriented component of the dimension called Confucian Dynamism by Hofstede and Bond,1988).

9.Humane Orientation The degree to which individuals in organizations or societies encourage and reward individuals for being fair,altruistic,

friendly,generous,caring,and kind to others.(This dimension is similar to the dimension labeled Kind Heartedness by

Hofstede and Bond,1988).

(House et al.,2002,p.6).

*The?rst six culture dimensions had their origins in the dimensions of culture identi?ed by Hofstede(1980).The?rst three scales are intended to re?ect the same constructs as Hofstede’s dimensions labeled Uncertainty Avoidance,Power Distance,and Individualism.

2 D.Stephenson et al./Australasian Marketing Journal21(2013)1–9

to Hofstede’s(1980)cultural factors(Javidan et al.,2006;Smith, 2006).GLOBE’s cultural clusters can provide useful information

to?nancial service providers,who may?nd it less risky and more pro?table to expand into similar cultures to their own,rather than those that are drastically different(Javidan and House,2002).The de?nitions of the nine dimensions are shown in Table1.

This paper will focus on the expansion of?nancial institutions in Anglo countries into foreign markets belonging to GLOBE’s Southern Asia and Confucian Asia cultural clusters(see Table2). These two clusters offer some of the greatest future growth oppor-tunities in the world for both eastern and western?nancial service providers.The Indian credit card market,for example,is growing at an annual rate of35%(Euromonitor International,2010b).Many ?nancial institutions from GLOBE’s Anglo cluster are therefore increasing their presence within this market.Recently the,Australian and New Zealand(ANZ)bank received approval for a banking licence in India,with other global names also lined up for entry, including Goldman Sachs,Morgan Stanley and National Australia Bank(Leahy,2010;The Financial Express,2010).The growing importance of these two cultural clusters to the?nancial services industry makes it essential to understand their cultural orientation in order to succeed within them(Gupta et al.,2002a).Henry (2010),makes the point in his review of consumer rights and responsibilities in the credit card setting,that this requires con-stant trade-offs that mirror the struggle between liberal and liber-tarian political positions,that dominate the GLOBE‘s Anglo cluster. In the Southern Asian and Confucian Asian clusters,there may well be other political positions that need to be understood and dealt with,if market entry is to be successfully achieved.

3.Cultural dimensions that in?uence the consumption of

?nancial products

From the literature and industry evidence,three important cultural dimensions have emerged as having a signi?cant in?uence on the consumption of?nancial products(refer to Fig.1).These dimensions are preference for cash(Worthington,2005;Euromon-itor International,2010b),aversion to debt(Shintani,2000;Euro-monitor International,2010b)and the overall importance placed upon saving(savings orientation)(Terpstra and Sarathy,2000; Beck&Webb,2003).These three dimensions are relevant to the consumption of?nancial products across all cultures and are not limited to the speci?c cultural explorations of this paper.Thus cultures that possess high and low levels of each dimension are shown in Table3.

The literature and industry evidence for cultural perceptions of money and the impact on?nancial service offerings are shown in Table3.An analysis of this research revealed three dominant ultural dimensions relevant to?nancial services;preference for cash,aversion to debt and savings orientation.Culture can be used to explain the cross-country variation of life insurance consump-tion.Kwok and Tadesse(2006)?nd that individualism has a posi-tive effect on the consumption of market-based life insurance, whilst collectivist cultures are more likely to rely on the support of their social networks.The low uptake of life insurance in the Philippines,classi?ed within GLOBE’s Southern Asia cluster,which scored high on group collectivism,further supports these?ndings (Valerio,2010;Gupta et al.,2002a).The strong collectivist culture of China has meant that many consumers often seek?nancial support through informal channels,such as family and friends, resulting in a very underdeveloped tradition of credit,with banks seen mainly as a place for saving(Worthington,2005).

Other literature discusses the role of cash within cultures and the over-riding preference for this payment method over others. Worthington(1998)compares the?nancial payment preferences of Japan and the UK,?nding that whilst the UK has become one of the most card-centric countries in the world,cash still remains the predominate mode for transactions in Japan.Strong prefer-ences for cash are also still prevalent within China,where consum-ers will always carry enough cash with them to avoid losing face if their credit card or debit card is rejected(Worthington,2005).The cultural perception of money in China has led to an aversion to debt and borrowing,with a strong emphasis placed on saving and living within ones means(Worthington,2005;Thompson and Worthington,2010).Negative perceptions of debt have pre-sented similar obstacles in Japan to the widespread use of credit cards(Shintani,2000).Other examples of how the perception of money impacts on?nancial product offerings is presented in Table3.

3.1.Dimension1:Preference for cash

One of the predominant cultural in?uences affecting the con-sumption of?nancial products is the preference for cash(payment through the physical forms of money,such as notes or coins)within a culture.In some cultures there is still an over-riding preference for cash over other forms of payment,which has negatively in?u-enced the uptake and use of more advanced?nancial products such as credit cards(Worthington,2005;Worthington,1998;Shapiro, 1993).Preference for cash appears to be driven by a trust in this commodity,or perhaps a lack of trust in the alternatives or institu-tions(Euromonitor International,2010c;Thompson and Worthing-ton,2010;Worthington,2005).Cultures that demonstrate a high preference for cash also appear to have high uncertainty avoidance (Worthington,2005).A preference for cash may manifest a reliance on social norms,rituals,and bureaucratic practices to alleviate the unpredictability of future events(House et al.,2002).

Trust in cash,and its historical presence within a culture,means that its relevance may remain strong.Many older Iranians,for example,are still attached to cash and seeing the physical transac-tion of money(Euromonitor International,2010c).Furthermore, many Chinese consumers will always carry enough cash with them to avoid losing face if their credit card or debit card is rejected (Worthington,2005).Financial service providers need to be aware of an underlying cultural preference for cash,as this may dictate what?nancial products will be accepted in the market.

3.2.Dimension2:Aversion to debt

An aversion to debt is a signi?cant cultural factor that can affect the consumption of?nancial products.Negative perceptions of

Table2

GLOBE Project’s cultural clusters.

Cultural cluster Countries

Southern Asia India,Indonesia,Philippines,Malaysia,Thailand,Iran Confucian Asia Taiwan,Singapore,Hong Kong,South Korea,China,Japan Anglo England,Australia,Canada,New Zealand,Ireland,USA.

Source:House et al.(2002).Preference for

cash

Aversion to

debt

Savings

orientation

Consumption of financial products

D.Stephenson et al./Australasian Marketing Journal21(2013)1–93

debt can hinder the acceptance of products that are designed to accumulate debt,such as loans and credit cards(Gong,2003; Thompson and Worthington,2010;Shintani,2000;Worthington, 2005).Cultures that demonstrate high aversion to debt may also a strong humane orientation(House et al.,2002).Cultures that have a strong humane orientation encourage and reward individu-als for being generous,caring and kind to others(House et al., 2002).This humane orientation may therefore lead to consumers lending and borrowing from one another,rather than through for-mal channels.

In India,for example,a high humane orientation,together with an overall negative perception of debt,has impacted on the?nan-cial services sector.Debt has traditionally been associated with poverty and poor money management.Many Indians have there-fore preferred to borrow through informal channels,such as family and friends,rather than?nancial institutions(Euromonitor Inter-national,2010b).

An aversion to debt can also affect the traditional use of?nan-cial products(Cards International,2007;Shintani,2000;Worthing-ton,1998).For instance,the way in which credit cards are used in Japan is substantially different to how they are used in western countries.Japanese consumers tend to use their credit cards for larger,less frequent purchases and are more likely to pay off their credit card in full(Shintani,2000;Worthington,1998).Australians, however,are more likely to use their credit cards in place of cash, with70%of cardholders regularly using revolving credit(Cards International,2007;Euromonitor International,2010a).

An aversion to debt can in?uence both the adoption of?nancial products as well as the way in which?nancial products are used. Financial service providers may therefore need to adapt their marketing strategies.For example,Japan’s low use of revolving credit may alter the way in which revenue is generated within this market(Shintani,2000;Worthington,1998).

3.3.Dimension3:Savings orientation

The importance of saving within a culture impacts on the con-sumption of?nancial products.An individual who has a strong preference for saving may also have a strong future orientation (House et al.,2002).Individuals in countries such as Japan and Chi-na engage in future-oriented behaviors,such as planning,investing in the future,and delaying grati?cation(Terpstra and Sarathy, 2000;Beck&Webb,2003).A high savings orientation is antici-pated to be related to a preference for products that encourage saving or the spending of one’s own money(Clemes et al.,2010; Worthington,2010).

External motivations,such as cultural traditions and future uncertainties appear to in?uence an individual’s preference for saving(Worthington,2010).This is most evident in China,where the cultural pressure to climb the‘three mountains’-education, accommodation and healthcare-has led to a personal savings rate of around25%(Euromonitor International,2010e;Worthington, 2005).A strong savings orientation has led to the acceptance of debit cards and in China and in2010,there were2.1billion debit cards(also known as bankcards)in circulation,many of them based on a savings account held by a Chinese individual,in a Chinese bank.(Worthington et al.,2011).

A low emphasis on saving within a culture can also impact on the adoption(or non-adoption)of?nancial products.In the Philip-pines,only1in10people regularly save a suf?cient amount of

Table3

Cultural perceptions of money and impact on?nancial service offerings.

Cultural Dimension Financial product Country Financial consumption impact Reference

Aversion to debt Credit cards China Borrowing money is perceived as a sign of being incapable to provide,a sign of

living beyond one’s means-avoidance of formal loan options Worthington,2005; Gong,2003

Aversion to debt Credit cards Japan Credit cards seen as debt and thus used for larger,less frequent purchases.

Consumers more likely to pay off credit card in full,rather than use revolving

credit.Credit cards used to withdraw cash Shintani,2000; Worthington,1998

Aversion to debt Other loans China Borrowing money perceived as a sign of being incapable to provide,a sign of

living beyond one’s means.More likely to borrow through informal channels

such as relatives Worthington,2005; Gong,2003

Aversion to debt Life insurance Various Countries high on individualism purchase more market-based life insurance,

rather than relying on fellow kinsmen to provide?nancial support

Chui and Kwok,2008

Aversion to debt Mortgages UK(Islamic

sub-culture)Accumulation of interest forbidden under Islamic law.Development of new

interest-free mortgages,where rent,as opposed to interest,is paid back to the

lender,in addition to monthly mortgage repayments.

Casciani,2002;

BBC Online,2003

Aversion to debt Other loans UK(Islamic

sub-culture)Development of new product offerings compliant with Islamic law that avoid

accumulation of interest(e.g.car insurance)

Pigott,2009;

Brignall,2008

Preference for cash Credit cards China Consumers prefer to borrow through‘informal’channels either at low or no

interest rate,borrowing relies on pre-established and trustworthy relationships

(Guanxi)

Worthington,2010 Preference for cash Credit cards UK One of the world’s largest card-centric countries,increasing cashless society Worthington,1998

Preference for cash Cash Japan Cash still the predominate mode of payment.High amount of ATMs and high

withdrawal limits reinforces consumer preference for cash Worthington,1998; Shapiro,1993

Preference for cash Cash China Consumers always carry enough cash with them to avoid losing face if their

credit card or debit card is rejected

Worthington,2005

Preference for cash Cash China Most common method of payment for online purchases is cash upon delivery-

impacts online business transactions

Bin,Chen&Sun,2003

Savings culture Life insurance Japan favorable:favourable attitude towards saving and providing for the future.One

of the largest insurance markets in the world,90%of households have life

insurance coverage.Policies protecting against cancer growing in popularity Terpstra and Sarathy, 2000;Beck& Webb,2003

Savings culture Savings accounts China High personal savings due to uncertainty about long-term welfare.Financial

products encouraging saving are popular(e.g.savings accounts,debit cards)

Worthington,2005

Savings culture Life insurance UK High uncertainty avoidance means increased planning for the future.British

citizens invested more than40%in life insurance from1986–1990

Beck&Webb,2003

Savings culture Life insurance Philippines Low uncertainty avoidance has resulted in a low uptake of life insurance as

‘‘fate will provide’’

Valerio,2010

Savings orientation Savings accounts UK(Islamic

sub-culture)Development of new product offerings compliant with Islamic law.Savings

account with no overdraft or credit card facility,no interest generated

BBC Online,2003

4 D.Stephenson et al./Australasian Marketing Journal21(2013)1–9

their income(Euromonitor International,2010d).As a result,the insurance market has struggled to take off,with a2008Citibank survey revealing that32%of respondents had no insurance policy whatsoever(Euromonitor International,2010d;Valerio,2010). The low level of acceptance of insurance products in the Philip-pines has impacted on the product offerings of?nancial institu-tions,such as ANZ,which has cut insurance from their portfolio in this region(ANZ,2010).

These three dominant cultural dimensions therefore provide a framework to the development of the FSCO Matrix.A combination of these dimensions and their relative strength within a culture lead to a predisposition for certain?nancial products.By under-standing these cultural preferences,?nancial service providers will be able to introduce more relevant products to the marketplace.

4.Proposed FSCO Matrix

The three cultural dimensions previously identi?ed can be used to develop marketing strategies for entering foreign?nancial markets.The FSCO Matrix(see Table4)can used by any?nancial service provider seeking to enter a foreign market that is culturally different from their own.The FSCO Matrix is therefore applicable to both eastern and western?nancial institutions.Different combi-nations of the three cultural dimensions are used to develop eight consumer segments for?nancial products.The application of this matrix involves two steps;step one,diagnose current attitudes and step two,select consumer segments.

5.Step1:Diagnose current attitudes towards money and pro?le foreign market

In order to develop effective marketing strategies for a foreign market,?rst,the cultural disposition of this market must be mea-sured.To do this,a sample of consumers in the target country should be assessed for their preference to cash,aversion to debt and savings orientation.Based on their responses,individuals should be classi?ed into one of the eight consumer segments in the FSCO matrix.

Once all respondents have been assigned to a consumer segment, the organization can then identify the most attractive target mar-kets within the foreign market and conduct a survey of these poten-tial customers.Based on their scores for the three dimensions,all respondents would be assigned to a consumer segment and the proportion of consumers in each segment calculated.The most attractive segments of the Chinese market would then emerge. For example,if35%of respondents were classi?ed as free-spirited spenders this may represent the largest segment of the Chinese market.This segment may be an attractive market if the organiza-tion has products that appeal to this market which offer competitive advantage.Financial institutions seeking to enter the Chinese mar-ket would therefore focus their marketing efforts on this segment.

6.Step2:Select consumer segment and develop targeted marketing strategy

This paper proposes that each combination of cultural dimen-sions requires a different marketing strategy for?nancial products.For each of the eight consumer segments,we de?ne the character-istics based on prior research and suggest?nancial services marketing strategies that may appeal.We then conclude the sec-tion with a summary of suggested marketing strategies for each consumer segment.A summary of the suggested marketing strate-gies for each consumer segment of the FSCO Matrix is shown in Table5.We also suggest in which of the GLOBE’s cultural cluster the majority of each consumer segment might be found.

6.1.Free-spirited spenders

Free-spirited spenders have a low preference for cash,a low aversion to debt and a low savings orientation,thus they like cred-it,are comfortable with debt and prefer to spend rather than save. They are therefore open to sophisticated?nancial products that may lead them into debt,such as credit cards and personal loans. Free-spirited spenders may generally belong to GLOBE’s Anglo cul-tural cluster(refer to Table1).The GLOBE Project found this cluster to score high on power distance,meaning that a high emphasis of consumption is placed on status and authority(House et al.,2002).

A free-spirited attitude towards spending and accumulating debt may be a symptom of the need to demonstrate status or an inabil-iyy to control spending.

Financial products that appeal to this category include those that allow consumers to borrow money at a low interest rate,as low savings may inhibit the ability to pay back debt quickly(Euro-monitor International,2010a).Such products include debit cards with overdraft facilities and credit cards with revolving credit. However,as a result of the economic downturn,free-spirited spenders are increasingly curbing their spending and attempting to pay off their debt.Many?nancial service providers have there-fore introduced credit cards with balance transfers that allow consumers to consolidate their debt onto one card.HSBC,Citibank and ANZ are just some of the banks that have introduced these cards,competing on low interest rates or longer interest free repayment periods(Credit Card Offers,2010).Free-spirited spend-ers are also increasingly using debit cards in place of credit cards. This has led to the introduction of debit cards with e-commerce capabilities that consumers can use in place of credit cards for online purchases.The success of the Visa debit card highlights the popularity of this new technology,with more than741million cards in worldwide circulation(Visa,2010).

Financial products that will succeed amongst free-spirited spenders include those that offer the ability to consolidate debt or pay off debt quicker.Price will become an increasingly impor-tant factor to this segment,with?nancial institutions competing on interest rates or longer repayment periods.Free-spirited spend-ers may also respond to reward schemes,such as bonus shopping points and gift vouchers,in return for using their debit cards.

6.2.Plastic fantastics

Plastic fantastics have a low preference for cash,low aversion to debt and a high savings orientation.They are considered to be‘fan-tastic’by?nancial service providers because they are open to mod-ern?nancial products that may generate debt(e.g.credit cards), but have the?nancial capabilities to repay what they owe,as they have being culturally conditioned to save.Plastic fantastics are

Table4

Financial Services Cultural Orientation Matrix.

Low preference for cash High preference for cash

Low aversion to debt High aversion to debt Low aversion to debt High aversion to debt

Low savings orientation Free-spirited spenders Cautious optimists Optimistic laggards Back to basics High savings orientation Plastic fantastics Sensible savers Cashed-up sensible spenders Cashed-up sceptics

D.Stephenson et al./Australasian Marketing Journal21(2013)1–95

most likely to belong to the growing middle class of GLOBE’s Con-fucian Asia cluster(e.g.China,Hong Kong or Japan).In China alone, the middle class market represents around17million households and is expected to grow to55million by2013(Worthington, 2010).Plastic fantastics have a strong savings orientation that stems from their cultural heritage,but have also been exposed to western in?uences and are therefore open to plastic replacements to cash that may lead them into debt.They essentially have all of the spending habits of a western consumer,without the same default habits(Muhlbacher et al.,2006).

The emergence of plastic fantastics is likely to have been in?u-enced by overseas travel into western markets.An exposure to western?nancial in?uences has,in particular,impacted on the demand for plastic payment cards amongst this segment(Euro-monitor International,2010c,f;Thompson and Worthington, 2010).For plastic fantastics,‘‘there is a status and prestige in hold-ing plastic.Plastic is a payment instrument,but it is also a lifestyle product’’(Muhlbacher et al.,2006,p.465).Further,for this con-sumer segment,obtaining a branded card is like gaining admission into a club(Muhlbacher et al.,2006).

As the middle class of Confucian Asia continues to grow,the ?nancial services sector is likely to see an increase in the adoption of plastic payment cards.Promotional efforts that focus on creating demand for branded payment cards would be a successful market-ing strategy in the future.New pricing strategies that can address current consumer dissatisfaction with fees will also be effective (Euromonitor International,2010f).Many banks have begun to address this by offering debit cards with no ATM withdrawal fees and credit cards with no annual fees(Euromonitor International, 2010f,k).

6.3.Cautious optimists

Cautious optimists have a low preference for cash,high aversion to debt and low savings orientation.They are open to modern ?nancial products,however,are highly cautious of accumulating more debt than they already have.Cautious optimists may generally belong to GLOBE’s Anglo cluster(e.g.England,Canada or Australia),which places a greater importance on individual accomplishment,rather than group collectivism(Assael et al., 2007;House et al.,2002;).In striving to achieve this individual accomplishment,many cautious optimists have found themselves in debt and are highly vigilant to not accumulate any more.

Cautious optimists are focused on paying off their credit cards and reducing their housing repayments.Financially concerned Canadian consumers are making a concerted effort to manage their debt,with two thirds of credit card holders paying off their credit cards all or most of the time(Euromonitor International,2010g). Australian consumers are also retrenching,with stalling property prices encouraging many consumers to either pay down their debt or boost their precautionary savings(Euromonitor International, 2010a).

Cautious optimists display many of the same qualities as free-spirited spenders,who will gradually move into this category themselves.Financial products that allow consumers to consoli-date their debt,such as credit cards with balance transfers,may therefore also succeed amongst this market.Incentives that encourage the voluntary repayment of debt,such as reduced bills, may also be effective.Insurance products that would help avoid debt in the future may also appeal to cautious optimists.

6.4.Sensible savers

Sensible savers have a low preference for cash,a high aversion to debt and a high savings orientation.Whilst they are open to modern?nancial products(e.g.plastic payment cards),they are still very cautious about accumulating debt,instead preferring to spend what is they already have and save for the future wherever possible.Sensible savers may generally belong to GLOBE’s Confu-cian Asia cluster,which scores high on group collectivism(Li et al.,2010;House et al.,2002).This collectivist worldview plays a signi?cant role in the high aversion to debt and high savings orientation of this segment.Sensible savers are more likely to avoid borrowing money through formal channels,and will instead turn to informal channels,such as family and friends,for?nancial support(Gong,2003).Their collectivist orientation also places a cultural expectation on them to save in order to be able to provide for their families in the future(Worthington,2010).

Sensible savers are focused on saving for a purpose,whether it is for their children’s education,their parent’s healthcare or for their own retirement(Worthington,2010).Financial products that encourage long-term saving are therefore widely accepted amongst this segment.Around90%of Japanese households have life insurance,with a relative contract value much higher than the US,making it one of the largest insurance markets in the world (Terpstra and Sarathy,2000).

In China,a general decline in birth rates,together with Chinese government’s one-child policy,has resulted in an inverted triangle, whereby two married adults now need to care for four parents and possibly eight grandparents,without being able to share this?nan-cial burden with other siblings(Euromonitor International,2010e). There will therefore be an increased need in the future for?nancial products that offer consumers a greater opportunity to save(e.g. insurance products,term deposits,trust funds).Financial institu-tions will also need to develop attractive incentives for customers in exchange for their long-term investments.

6.5.Optimistic laggards

Optimistic laggards have a high preference for cash,low aver-sion to debt and low savings orientation.They are open to the idea of credit but have not yet progressed to this stage and still rely on cash-based transactions.Optimistic laggards generally belong to GLOBE’s Southern Asia cluster(e.g.India,Philippines,or Indonesia). This cluster scores high on power distance,resulting in the unequal distribution of power and a distinct set of socioeconomic classes (Gupta et al.,2002b).Optimistic laggards generally embody the growing middle-class of the Southern Asia cluster,which still oper-ate in a highly cash-centric environment and have only recently begun to adopt plastic payment cards into their way of life(Euro-monitor International,2010b,h,i).

Cash still represents81%of consumer payment transactions in the Philippines.Financial products that assist in the distribution of cash,such as ATM cards and debit cards,have therefore gained popularity.In2009,there were42million ATM cards in circulation in the Philippines(Euromonitor International,2010i).New multi-purpose cards are also starting to make headway in this market. These cards have a debit,pre-paid and ATM function rolled into one(Euromonitor International,2010i).The Philippines’Rizal Commercial Banking Corporation(RCBC)pioneered this innovation with the development of the MyWallet card,which allows card-holders to make withdrawals,bill payments,balance enquiries and pay for shopping without the need to maintain a minimum balance(Euromonitor International,2010i).

Large branch or ATM networks that assist in the distribution of cash are also a major source of competitive advantage amongst this segment(Euromonitor International,2010h).In2009,Indonesia’s Bank Mandiri introduced the Mandiri Mobile service,a?eet of cars that function as mobile ATMs that allow customers to access cash in locations where conventional ATM’s may not be found(Euro-monitor International,2010h).Financial products that appeal to optimistic laggards include cards that can distribute cash quickly

6 D.Stephenson et al./Australasian Marketing Journal21(2013)1–9

and be used in a variety of locations.However,in order to ensure their widespread use,?nancial service providers must also develop strong distribution networks.

6.6.Cashed-up sensible spenders

Cashed-up sensible spenders have a high preference for cash, low aversion to debt and high savings orientation,thus,whilst they like cash and saving,they are also comfortable with debt.They rep-resent one of the most attractive market segments for?nancial institutions as they are open to the accumulation of debt,but have the?nancial capabilities to repay what they owe.Cashed-up sensi-ble spenders may generally belong to GLOBE’s Confucian Asia clus-ter(e.g.China,Hong Kong or Japan).The concept of‘face’is particularly salient amongst this segment,with proper living, social consciousness and self-control being stressed(Gong,2003).‘Face’is about meeting the expectations of others and maintaining a consistent and respectable image to the outside world(Gilbert and Tsao,2000;Gong,2003).

Maintaining‘face’has had a signi?cant impact on the use of plastic payment cards and the persistence of cash within this seg-ment.Chinese consumers will always carry enough cash with them to avoid losing‘face’if their credit card is rejected(Worthington, 2005).Cash is also considered to be the strongest sign of af?uence amongst Chinese consumers.This therefore encourages its contin-ued use in place of credit cards(Thompson and Worthington, 2010).

The importance of maintaining‘face’may also impact on the selection of?nancial service providers.In particular,China’s economic growth has made consumers more quality and brand conscious,encouraging banks to become more brand-orientated in order to differentiate their products and services from compet-itors(Bandy,2006).Many banks have started to create con-sumer-oriented slogans,such as CITIC Industrial Bank’s‘service starts with sincerity’(Bandy,2006).

The concept of‘face’is deeply entrenched within the Confucian Asia culture and unlikely to disappear any time soon(Gong,2003). Therefore,?nancial products that are likely to succeed amongst cashed-up sensible spenders include those that can dispense cash quickly.Despite their limited use amongst this segment,there is a growing status and prestige in holding plastic payment cards (Muhlbacher et al.,2006).Financial service providers should there-fore also focus on building a strong brand image for their cards in order to drive consumer demand(Clemes et al.,2010).

6.7.Back to basics

Back to basics have a high preference for cash,high aversion to debt and low savings orientation.Cash still remains the predomi-nant method of payment,as most consumers do not qualify for more sophisticated?nancial products.Back to basics may gener-ally be the low-income earners of GLOBE’s Southern Asia cluster (e.g.India,Philippines or Malaysia).This segment makes up the vast majority of the population in this region and has had little exposure to modern?nancial products(Euromonitor International, 2010c,h).

Financial service providers in Southern Asia still mostly exclude many lower income earners from accessing credit due to these cus-tomers’lack of adequate collateral,such as proof of dependable in-come(Euromonitor International,2010d;Lafferty Group,2010). Complex paperwork also appears daunting to customers with limited?nancial literacy(Lafferty Group,2010).The challenge for

Table5

An Overview of the suggested marketing strategies for each segment.

FSCO Matrix segment Marketing mix elements

Product Price Place Promotion

Free-spirited spenders Debit cards with overdraft facility

Credit cards with revolving

creditCredit cards that consolidate

debtDebit cards with e-commerce

capabilities Low interest ratesLonger

interest-free repayment

periods

Anglo cluster markets(England,

Australia,South Africa,Canada,

New Zealand,Ireland,USA)

Promotion of interest free

periodsReward schemesGifts or

incentives for using debit card

Plastic fantastics Credit cardsDebit cardsOther

plastic payment cards(e.g.gift

cards)Eliminate annual

feesReduce or eliminate

ATM withdrawal fees

Middle class of Confucian Asia

markets(Taiwan,Singapore,

Hong Kong,South Korea,China,

Japan)

International travel modes e.g.

airlinesBranding

campaignsPrice

promotionsBonus gifts or

rewards

Cautious optimists Credit cards that consolidate

debtDebit cards with e-commerce

capabilitiesAccounts with direct

debit functionsLife insuranceOther

insurance products Lower interest ratesLonger

interest-free repayment

periods

Anglo cluster markets(England,

Australia,South Africa,Canada,

New Zealand,Ireland,USA)

Incentives for repaying debt

quickerReward schemes with

discounts on everyday items

(e.g.groceries)

Sensible savers Savings accountsTrust funds(e.g.

education funds,retirement

funds)Term depositsLife

insuranceOther insurance products High interest rates on

savings accountsLow

weekly contributions for

insurance policies

Confucian Asia markets

(Taiwan,Singapore,Hong Kong,

South Korea,China,Japan)

Incentives that reward

patronage(e.g.special

discounts and services)

Optimistic laggards ATM cardsDebit

cardsMultifunctional cards Low or no ATM withdrawal

feesCompetitive annual

feesCompetitive‘top-up’

fees

Middle class of Southern Asia

markets(India,Indonesia,

Philippines,Malaysia,Thailand,

Iran)

Large ATM networks to

accompany productsMobile

ATM’s

Cashed-up sensible spenders Credit cards or debit cards with

cash-out capabilitiesBranded

plastic payment cards

Low or no ATM withdrawal

fees

Confucian Asia markets

(Taiwan,Singapore,Hong Kong,

South Korea,China,Japan)

Branding campaigns for

?nancial service providers

Back to basics Recharge cards(topped up with

income)Mobile phone bankingM-

PESA equivalent product Implementation must be

low cost

Low income earners of

Southern Asia markets(India,

Indonesia,Philippines,

Malaysia,Thailand,Iran)

Live demonstrations on how to

use recharge cardsWord of

mouth campaignsPartnership

with mobile phone providers

Cashed-up sceptics ATM cardsDebit cardsCredit

cardsWidespread ATM network Low or no withdrawal

feesHigh cash withdrawal

limitsLow or no annual fees

Confucian Asia markets-

especially China

Price promotionsLoyalty

programs with credit

cardsBonus gifts for using

credit card

D.Stephenson et al./Australasian Marketing Journal21(2013)1–97

?nancial service providers is to develop products that can meet the needs of low socioeconomic consumers.

In2007,Barclays overcame similar challenges in Kenya by launching the M-PESA program for low-income earners(Lafferty Group,2010).M-PESA allows customers to transfer and receive money using their mobile phones,without the need for a bank account–an important factor in Kenya where millions of people do not have access to formal banking services(Lafferty Group, 2010).Financial service providers could potentioally launch a sim-ilar program in India,where mobile phone ownership is high,even amongst low-income earners.Furthermore,the Indian mobile phone market continues to grow at a rate of six million customers per month(Euromonitor International,2010j).Mobile phone bank-ing products have the ability to service the back to basics market, which may not have direct access to bank branches or ATMs. Financial products that are likely to succeed include those that can cater to the limited infrastructure and consumer capabilities of this market and which can be implemented at a relatively low-cost(Euromonitor International,2010j).

6.8.Cashed-up sceptics

Cashed-up sceptics have a high preference for cash,high aversion to debt and high savings orientation.They are somewhat sceptical of western?nancial products that may generate debt, preferring to uphold their own?nancial tradition of using cash. Cashed-up sceptics generally belong to GLOBE’s Confucian Asia cluster,in particular,China.There is a culturally perceived neces-sity within this country to both save and yet simultaneously accu-mulate products to show wealth to the outside world(Thompson and Worthington,2010).For many Chinese consumers,cash still remains the strongest signal of wealth.‘‘A businessman with many cash notes in[his]wallet shows that he is af?uent’’(Thompson and Worthington,2010p.6).

Cash also still remains the most trusted method of payment amongst cashed-up sceptics.‘‘Although the adoption rate of credit cards is steadily rising,cash is still king,suggesting that Chinese consumers perceive themselves to have greater control over their spending when using cash,rather than when using credit cards’’(Thompson and Worthington,2010,p.2).Chinese consumers are still very conventional,preferring to use cash that they know is theirs,rather than‘future money’that they have not yet earned (Thompson and Worthington,2010).

Financial products that generally appeal to cashed-up sceptics include those that give consumers quick access to cash,such as debit cards and ATM cards.Credit cards are also likely to continue to grow amongst this market.However,as this segment is highly debt-averse,credit cards that offer no revolving credit line may be the most appealing.Marketing strategies for credit cards should also include a‘savings’aspect that appeals to this segment’s high savings orientation(Thompson and Worthington,2010).Financial products may include loyalty programs,promotional discounts and additional‘free’product offerings that encourage consumers to use their credit cards more often(Thompson and Worthington, 2010).

7.Limitations and further research

The FSCO Matrix is conceptual;it is a strategic model that helps align?nancial services marketing mixes with the cultural dimen-sions of foreign markets.However it lacks evidence.Empirical re-search is needed to validate which cultural clusters represent each segment and the appropriate marketing mix.The FSCO Matrix also does not consider any cultural differences that may exist between countries grouped within the same cultural cluster.There may be signi?cant discrepancies between societies that share the same language,religion and ethnic traditions(Li et al.,2010).The success of a?nancial product in one country may not achieve the same success within another simply because they are grouped within the same cultural cluster.The FSCO Matrix only provides a general guide as to what products may work based upon cultural similarities.

Further research should explore whether any other cultural dimensions,other than the three outlined in this paper,may have an effect on the consumption of?nancial products.If so,the FSCO Matrix may be expanded to include more consumer segments.The FSCO Matrix should also be applied within an industry context to test the effectiveness of its application.Moreover,it would be ben-e?cial to track the success of some of the proposed marketing strategies from this paper over time.A systematic review of the ac-tual strategies currently being undertaken by?nancial institutions entering foreign markets should also be conducted to help build a strategy resource set for the?nancial industry.

8.Conclusion

This paper has presented a conceptual strategy matrix for?nan-cial institutions to help combat cross-cultural challenges and de-velop marketing strategies for successful entry into new?nancial markets.The FSCO Matrix pro?les eight consumer segments,using three cultural dimensions relevant to the consumption of?nancial products.These dimensions were preference for cash,aversion to debt and the savings orientation of a culture.The paper suggests that a combination of these dimensions,and their relative strength within a culture,leads to a predisposition for certain?nancial products.The?nancial preferences and potential marketing strat-egies for each segment were then outlined.Cultural clusters from the GLOBE Project(House et al.,2002)were used to highlight pos-sible geographic markets where consumers of each segment might be found.In particular,this paper focused on GLOBE’s Confucian Asia,Southern Asia and Anglo clusters,as these markets represent some of the most well-established or greatest growth opportuni-ties for the?nancial services industry in the future.Further re-search is now needed to test the FSCO Matrix within a real-world industry context.

Acknowledgements

We would like to thank the Service Innovation Research Program at at QUT for assistance.

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