Carlos in your professional experience, do you have any examples of a product needing to adapt itself to fit the local cultural norms and expectations? Yeah. There are several example, but there's one that is one of my favorite ones. When I work at Citibank, you think about financial products as things that are very, very stable, and boring. You think about the faucets, credit cards, and loans, etc. You think, well, nothing to really be adapted here. Standard. Standard. But in Venezuela, we found some dynamics in which there was a product that actually we adapted to the local market, it's a product that had existed in many other countries. It's a revolving line of credit, but that it's managed through checks, which is way before credit cards were widely accepted, checks where more commonly used. Then you could borrow but using the check instead of just borrowing by processing, swiping your card. What's the advantage to having a revolving line of credit linked to your checking account? Well, that's the thing that like in countries where there is high inflation cash is the king. You want to pay cash because merchants want to get cash, because if they get cash, then they can reinvest that or transfer it to some other accounts or convert it into other hard currency that doesn't lose value. Then you get advantage of paying in cash, but with a credit card, that's all cash. Credit cards actually charge a fee. Yes. Then they typically settle in a longer cycle. Then at the end of the day or at the end of the week, you process all transactions that goes to the processing bank, processing bank sends to the other bank that then distributes the fund. It takes a while for those funds to be in the merchant side. In Venezuela, it was very common for businesses to advertise deep discounts if you paid with cash. But of course, when people wouldn't carry tons of bills around, they would pay them with checks. Right. But if you didn't have the funds, then how would you take advantage of that opportunity? Voila, then you have this line of credit that you can then borrow money using checks, take advantage of the cash discount, and then eventually, the interest rate might be higher, but you would have certain period of time to pay, and if you really didn't finance yourself for long, you would really reap the benefits of the cash discount. Interesting. This idea that sometimes mundane products can be really adapted to the local market, is something that we need to be very aware that can happen, and then can give you a slight edge. Really interesting, and you don t think about how economic differences between societies can make certain products or brands have different features, and benefits or shortcomings. Really interesting. Yes, and now we're seeing it a little bit here in the United States. That inflation is starting to pick up a little bit. People are starting to be more cognizant of the value of money. How much you really want to protect your money, because you see the needle is just losing purchasing power in a month or a year. Absolutely. Sharon, do you believe that you get what you pay for and does culture play any role in how people view this idea? That's a great question. The obvious answer is yes, you get what you pay for. I believe that, you believe that. I think everybody believes that. But that doesn't mean that culture doesn't play a role. This idea that if you pay more you think you're getting something better and higher quality, this is called the price-quality heuristic, and it's so well known in marketing research that it's labeled a universal, everyone believes that to some extent. But in research that we did here at Illinois, we found that there can be differences by culture. That for some cultural groups they believe this even more than other cultural groups, and in particular cultures that have a more collectivistic orientation, and I think about things in terms of holistic connections. They tend to believe that price and quality go together more tightly. Would that mean that then I should increase the price so I make the product more appealing in certain cultures? Maybe, at least if the reference price is higher people who are from East Asian backgrounds or Latin American backgrounds, we find that they're more likely to spontaneously use that higher price to infer that the product is higher quality. That was especially true for functional things, things like paper towels or a calculator, stuff that's very utilitarian. The more people thought holistically, like if they were from a Latin American background or an East Asian background or a South Asian background, they were more likely to see the price as a marker of quality, that if we showed them a product that was higher price, they inferred higher quality. Very interesting. Carlos, do you have another example of a product needing to adapt itself or its pricing in order to fit a local culture? Yeah. I have a very interesting example. It's something that I experienced when I was also working in Venezuela, but at a consumer goods company. I also worked for a while in consumer goods, and I was working in the mayonnaise department of that company. We always knew this idea that people are looking for quality and they're willing to pay higher price for that, what we just talked about that in a minute, but what happens when you don't have the purchasing power to afford the higher priced item? In many cases what sometimes happens is that you can try to reduce the size of the product, the amount of product that you sell to people so they can afford it. We noticed when I was in Venezuela working with this company, that in the shanty towns of Caracas and many of the other big cities, they have these small grocery store called bodegas, in which the dynamics of how people sell things is very different. They acquire products not necessarily in larger quantities as in regular grocery store, larger quantities that they would get at home, and then they would sometimes open the products and sell them by smaller items, like you would get a pack of cigarettes and then you would open the pack of cigarettes, and if you had 20 cigarettes there then you would sell them. One by one. One by one, or pockets of legal four cigarettes. Of course, the unit price of those cigarettes was a lot higher than of the box, but people could still afford the better brand of cigarettes by trying to pay for smaller quantities of things. We saw this dynamic with many different products, but there are products that by definition they're very hard to just unbundle and sell it in smaller quantities, so mayonnaise for instance. How do you then take a jar of mayonnaise and sell mayonnaise in smaller quantities? That was really difficult to do. Then we realized that and thought, well, could we offer a product to those retailers that could fulfill that need? We noticed that we had this product that we really didn't use much, which is we mostly use it for free sampling or to sell to restaurants, which are the small sachets nine grams packets that you get at McDonald's to use as a condiments. Although, in Venezuela it wasn't common that you could grab whatever packets you wanted if you go to McDonald's, they will give you one. It was more limited, and sometimes what you have was also dispensers in bulk. It wasn't as popular to have that in that channel, but we use it a lot for free sampling. When had events, we would try it, then you take it home you try it, hopefully you're going to buy the product. We realized, well, what if we sell this product through the bodegas and then you have the little mayonnaise containers that people can then buy? It became actually a every successful product, and the unit price was very high because this little packets as per nine grams it will be a lot more than would be under the big jar, but that was what people could afford, and still that notion of people wanting to look for quality even at a higher price, but just making it affordable can really make a huge difference. Sometimes adjusting the packaging can be one solution to address these issues. That's a really important insight.
