Innovations: A view across nations

A multi-country study on similarities and differences in consumers´ reception of new products

Mark Vroegrijk
Senior Specialist Data, Science & Analytics

Many of today’s leading brands do not limit themselves to only doing business in their country of origin. While some of them have primarily expanded to a few countries in close geographical proximity, others instead operate on a truly worldwide scale. That contributes to an increasing globalisation of consumer culture. Selling products across different markets means that brands face a larger and more diverse set of competitors, underlining that it is important to sustain competitive advantage over them. One way of doing so is through continuous innovation through the frequent development and launch of new products that meet consumers’ ever-evolving needs.

To no surprise, there are differences in the adoption of new products and innovations in consumer behaviour. In this research study, we decided to focus on the geographical aspect of the innovation´s acceptance rate in relation to cultural differences based on Hofstede´s cultural dimensions. Are individualistic countries more prone to accepting new innovations than collectivistic cultures? What is the situation in the masculine societies? And what factors of innovations are detrimental to succeed in specific cultural dimensions? How does it influence marketing communication of the new products? Our research provides answers to this unknown.

One world, hundred types of consumer behaviour

As mentioned above, the adoption of innovations does not necessarily follow the same path in each country. Differences may exist in how soon sales of new products “take off” after their launch, or how many consumers will be converted into buyers. These differences are important for brand managers as they may require new products to be supported with varying degrees of marketing support across countries – be it in intensity or the amount of time campaigns are running.

While some factors influencing this cross-country variation (in how consumers behave towards new products) may be beyond the control of managers (like differences in economic wealth and access to information; Tellis et al., 2003; van den Bulte & Stremersch, 2004), there is more room to influence another underlying source – how consumers in different countries perceive and respond to new products.

In this study, our focus is therefore on gaining more insight into how innovations come to be accepted across different countries, and whether any differences can be attributed to variation. In this way, we shed more light on how marketers can best account for cross-country differences when launching a new product, so as to increase their chances of success in as many markets as possible.

A cross-country model of new product acceptance

We wanted to find out how countries differ in their perception and response to product innovations, and whether these differences can be linked to the countries’ cultural profiles. Hence we analysed a data set constructed from our concept test benchmark database. This data set contains a total of 411 product innovations, all tested among a broad consumer audience. These innovations come from multiple categories and countries, as displayed in Table 1 below.

Table 1: Number of product innovation cases covered by each category and country

The first analysis aims to determine whether consumers from different countries differ in their willingness to accept new product ideas, as measured by the “Accepter score” for each innovation in our data set. This metric is based on the “Accepter-Rejecter” model that is included in each of our concept tests and reflects the degree to which consumers can identify with the new product, see it as a refreshing and worthwhile idea, and ultimately are interested in buying it.

We are mainly curious about how the level of this Accepter score varies across countries. However, not every country in our data set has the same case distribution across product categories which includes both low-risk (FMCG) and high-risk (financial) products. This can also affect the average rate of acceptance observed in each country.

Furthermore, consumer judgements of the appeal and quality of the various products in our data set will drive the response to them, which will not necessarily be the same for each country. As a result, we estimate a regression model that accounts for differences across categories and countries and also controls for the evaluation of the innovations (across different dimensions). For more details on the exact estimation, see the text in the frame.

Figure 1 below displays the “base” accepter scores for the 7 countries (as estimated from the model) and shows the following pattern. When we control for differences in category composition and/or concept quality, product innovations have a ±10 percentage-point higher chance of being accepted in countries such as Germany and the United Kingdom compared to Denmark. The other four countries then remain “in the middle” and score around the average of 50%. The differences across countries remain relatively modest but still may explain why an innovation that is tested in multiple countries may show slight differences across nations. That is why identifying potential drivers of this variability remains intriguing.

Innovation acceptance across Hofstede´s cultural dimensions

As a follow-up, we therefore would like to study whether these cross-country differences in the acceptance of product innovations, small as they are, can be traced back to the countries’ cultural profiles. We replaced the cross-country random effect component (see frame) with the countries’ scores on Hofstede’s model of national culture. The estimated parameters for each of these six dimensions are shown in Table 2, reflecting their (relative) impact on the likelihood that product innovations will be accepted by consumers.

Figure 1: “Base” accepter rate per country (inferred from regression model’s intercepts)

Table 2: (Standardized ) regression coefficients for Hofstede cultural dimensions on accepter rates

As can be seen from the table, five out of the six cultural dimensions are significantly related to the acceptance of product innovations and will be discussed from most to least important:

        – Uncertainty avoidance: Consumers in countries that score higher on this dimension tend to experience more anxiety towards and are less trustful of anything that is unknown to them – which will apply at least to a certain extent to new products. As such, the higher a country’s uncertainty avoidance, the less consumers will be inclined to accept a product innovation.

        – Indulgence: At first glance, the negative link between this dimension and the acceptance of new products might not be obvious. However, in less indulgent societies, the gratification of desires and needs is more controlled, and consumers are required to rationalise their purchase decisions more often (Heydari et al. 2021). Since product innovations tend to offer new benefits and improvements that couldn’t be obtained before, these might be valid reasons for less indulgent countries to accept an innovation.

        – Individualism: In more individualistic countries, consumers make many of their (purchase) decisions purely for themselves, instead of for a larger group of people. It follows that this fosters the adoption of new product innovations, as the product then mainly needs to meet the needs of the consumer himself, instead of those of people in his social circle (Ram & Sheth 1989).

        – Long-term orientation: This is the dimension with the clearest conceptual link to the acceptance of new products. A long-term-focused society sees the world as ever-evolving, making it necessary for consumers to prepare for such changes. By adopting more improved and innovative products, new needs and requirements that arise over time can still be met (Rogers 1976).

        – Masculinity: A masculine society is more competitive in nature, and attaches great importance to material rewards. Possession and/or usage of new products can then provide people with social status (Brown & Venkatesh 2005), leading consumers in such societies to be more receptive to product innovations.

Identification of key acceptance drivers between countries

Now that the first results indicated that countries differ, albeit modestly, in their intrinsic likelihood of accepting new products, we shift our focus to identifying which innovation attributes are most essential in driving acceptance. And, following the main topic of this meta-study, whether these attributes play more or less the same role across different countries, or differ in this as well.

We start again with a regression model with each product’s accepter rate as the dependent variable, and the product’s scores on eight evaluation dimensions as predictors. However, we now estimate this model separately for each country in our data set to find the relative importance of the dimensions per country.

Table 3 below displays the relative importance values for the eight evaluation dimensions, resulting from each country’s regression model. These values represent the degree to which each dimension drives innovation acceptance. When it comes to the role played by these attributes, considerable variability exists across countries. For example, the most important success factor in getting a new product accepted by consumers is that these consumers are actually willing to talk about the product with people around them, as the average importance of willingness to share is 25%.

However, the relative weight of this willingness-to-share differs across nations – 32% in the Netherlands but only 13% in Germany. The second most important element is relevance with 16% on average, followed by good addition to current offerings with 13%. Also for these evaluation dimensions, we see substantial differences across countries. The largest variation in importance is actually found for brand fit, where the difference between the country putting the most importance on it (Belgium; 21%) and the country putting the least importance on it (Netherlands; 1%) is 20%.

Table 3: Relative importance values for concept evaluation dimensions concerning acceptance

We can conclude that the key success factors of product innovation vary significantly across countries. To understand why certain attributes are more or less important in some countries than in others, we will again explore the role of national culture as a possible explanation. Therefore, our final analysis aims to link the country-specific relative importance values from Table 3 to the countries’ scores on the six Hofstede dimensions by correlating these two types of variables.

The correlations (positive and negative) explain how different aspects of a country’s culture can affect the importance of certain factors when it comes to accepting new product innovations. For instance, it was found that in countries with high uncertainty avoidance, credibility becomes a more critical factor. Conversely, in more masculine societies, understanding plays a less significant role.

To better understand these patterns, we’ve transformed these correlations into measures of association strength. We did this by setting the most negative and most positive correlations to 0 and 100, respectively, and scaling the rest of the correlations accordingly. These measures were then used in a correspondence analysis, resulting in the perceptual map displayed in Figure 2.

Figure 2: Correspondence map of correlations between the relative importance of evaluation dimensions and Hofstede cultural dimensions

Taking a glance at this map, we can immediately identify two “clusters” that have strong interrelations between the elements. We discovered that in countries with high power distance and uncertainty avoidance, people tend to attach more value to “rational” aspects of new product ideas. These aspects include how clear and credible the products are, and how well they fit with the brand. Consumers in countries with high power distance tend to rely more on authoritative sources in their decision-making, so when an innovation is seen as highly credible, these consumers will be more likely to accept it (De Meulenaer et al. 2017).

Consumers in societies with high uncertainty avoidance tend to seek ways to reduce the perceived risks they associate with adopting a new product. An innovation scoring high in clarity is able to communicate its benefits to consumers well – making them better informed on what they will actually be buying (Ulianchenko 2017). When consumers find these benefits of a new product credible, consumers perceive them as more likely to be achieved when they adopt the product (De Meulenaer et al. 2017). Moreover, if a product innovation fits the brand, this also reduces uncertainty for consumers. They can assume that the qualities they already associate with the existing brand, such as good performance, reliability and/or reputation, will also apply to the new and unknown product innovation (Erdem et al. 2006).

On the other side of the map, we see the second group of elements with strong connections. This group links countries’ degrees of individualism and indulgence to the significance of more “emotional” aspects of product innovations. These emotional aspects include how distinctive the product is and whether it’s seen as a valuable addition to the brand’s current portfolio. Consumers in more individualistic countries tend to be more appreciative of products that offer something unique compared to existing offerings, as this uniqueness can provide them with a means for self-expression (Eastman et al. 2021).

In countries where indulgence is high, and (solely) buying products for one’s own joy is widely accepted, there’s likely a greater interest in distinctive innovations because they offer something fresh and exciting (Sharma et al., 2010). Furthermore, in these societies where improving one’s quality of life is encouraged (Vidas et al., 2021), consumers may be particularly drawn to innovations that clearly enhance the current product lineup, as they fulfil unmet needs and desires.

Innovate globally, communicate locally

Nowadays consumers are faced with thousands of new product introductions each year. The outcomes of our analyses provided us with more insight into how consumers from different countries respond to such innovations.

– The countries in our study are not drastically different from each other regarding the likelihood of a new product idea being accepted. While academic studies have shown that new products do not necessarily achieve the same degree of financial success in each country they are introduced in, these differences likely stem more from other factors (such as economic conditions) than dissimilarities in consumer receptiveness to these products.
– Still, we saw some discrepancies between countries, which could be linked to their cultural profiles. If anything, innovations are slightly more likely to be accepted in countries with more individualistic or masculine cultures, and that are more oriented towards the long-term.

– When it comes to the key drivers of acceptance, we found more prominent differences. The key attributes for the successful reception of new products may differ by country.

– In more individualistic and indulgent societies, the unique benefits and improvements offered by a new product should already be sufficient to persuade consumers. This can be put at the forefront of marketing communication as consumers in such countries are primarily seeking products that are distinctive and worthy additions to what is already available on the market.

– In countries where power distance and uncertainty avoidance are high, consumers may first need to be convinced of the trustworthiness of the product itself or the brand behind it, before any believable claims on the advantages that the new product offers can be made.

The findings demonstrate the benefits of highlighting different aspects across different countries in marketing campaigns aimed to support innovation, so as to maximise the chances of the new product becoming a truly international success.

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