The World: Not Quite Flat Just Yet
In the introduction to their excellent new book, “All Business is Local — Why Place Matters More Than Ever in A Global, Virtual World”, authors John A. Quelch and Katherine E. Jocz set the stage for the discussion of the topic as follows:
“In the past few years, we’ve been given mixed messages about how the world is arranged. Some scholars and pundits tell us the world is flat while others insist it’s spiky. Some politicians and observers tell us that cultures and values are converging, while others point to cultural divergences that generate world conflict. Some praise globalization, while others point to its dangers. We’re told consumers want to live in a digital cloud but still value the importance of physical touch. Only one thing is certain: competing trends are pulling multinational firms in all directions at once.”
That nicely sums up the confusing and paradoxical landscape which confronts business leaders seeking to balance global and local strategies. As the book points out, failure to understand and embrace both — local and global dynamics — is becoming riskier in today’s environment.
The ongoing debate over the merits of standardized global marketing programs versus local adaptation is a fairly recent phenomenon, which began about 30 years ago with an influential article by Theodore Levitt, who advocated global standardization based on certain universal consumer needs. However, experience later showed that blind standardization without selective adaptation to local conditions was bound to fail.
An important message in this book is that “place” should not be the weak sister among the 4Ps which most business students are taught about: product, price, promotion, and place. The book sheds new light on the nuances of place in consumer psychology, in both the virtual online world and the traditional world of retail.
There are important lessons for managers and marketers here, since despite the phenomenal growth of online commerce, the bulk of economic activity remains local.
On social networking, the authors take the view that as the novelty continues to fade away, these sites will “increasingly be viewed as incomplete substitutes for the physical presence of friends and neighbors, or for the network of social, cultural and political institutions of an actual village, town or city.”
Maybe it’s a reflection of age, but that’s a view I can definitely identify with.
They cite Howard Schultz of Starbucks as an example of a global marketer who is intelligently local. He conceived of Starbucks as the third social place (the first being home, the second being the work place) where people could relax with friends or colleagues. Rather than reach customers through five thousand outlets, Starbucks aims to reach customers through one store five thousand times.
“By respecting local values and local tastes, by rooting themselves in the community, global brands broaden their appeal and build deeper trust with their consumers.”
The book examines the changing psychology of place, how the consumer’s sense of personal identity involves a many-layered sense of geographical place; and how successful marketers incorporate this knowledge into their efforts. It then builds on this, to explore the differences and parallels between online and virtual marketplaces.
The relationship between place and branding is a subject worthy of special attention among readers in China, because it is rich with unexploited potential.
How to balance global and local marketing is a challenge which MNCs have faced in the China market, and Chinese companies will increasingly face as they move into international consumer markets. A key factor in success is to develop home-grown marketers with local consumer knowledge who remain open to ideas from other countries in an effort to combine and synthesize the best of both worlds.
As some companies have learned the hard way, marketers must draw the line at undermining the core positioning of the global brand as they adapt and adjust to local market needs.
“All Business is Local” is very readable and filled with real-world examples. It is a reminder of just how recent the management dynamics of globalization really are, and the extent to which they are still a work in progress.
This is a very useful, thought-provoking read for anyone interested in marketing global or local brands in the newly emerging consumer landscape.
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