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Theodore Levitt, the world and consumers in particular are moving towards having similar likes, preferences, and tastes and these have caused people to prefer the same products the world over. These products that are given preference are those that are liked by everyone else. "Everyone in the increasingly homogenized world market wants products and features that everybody else wants." Levitt, 1984.
This statement is true in the world that we currently see, and this should be the focus of all marketing campaigns whether they are aimed at building brand awareness, changing the attitudes of consumers, or just trying to increase sales of a product. By simply creating a product that will become the preference of many, it is remarkably easy to capture and penetrate the market and thus boost sales by a large margin.
Levitt also argues that "different cultural preferences, national tastes and standards, and business institutions are the vestiges of the past." Levitt, 1984.
It can be deduced that Levitt agrees that the way the current consumer needs are shaped is hugely different from the way the market was five or even ten years ago. In the past, consumer needs were shaped by several factors some of which were complex in nature. These factors include social, political, culture and economic factors. However, in the current market, the element which profoundly influences the behavior of consumers is what others are buying. Levitt suggested that there is a convergence of patterns through which consumers make the decision on which products to buy. This convergence is influenced by several factors such as pricing, modernity of the product also brand recognition Levitt, 1984(, Levitt, 1986)
Pricing can be seen in a recent publication where it is found that consumer behavior as a result of the recession has markedly changed from being one of brand loyalty to one of purchasing items that are cheapest off the shelves Miller and Washington, 2012(, Levitt, 1986)
. This shift is not just one person or a bunch of people rather it is followed by the majority of the population. Modernity of the product comes in different ways. One is that there is a shift towards green products. Everywhere in the TV, radio or other forms of advertising, people are being encouraged to go green, and this is one of the factors influencing consumer behavior. Another factor under modernity is that of innovation and technology. With new forms of technology being innovated daily, we find that people are shifting towards embracing the new technology or fashion and this becomes a fad which catches on as quickly as a bush fire. Lastly, there is brand recognition. When a person sees several people purchase or use a particular brand of products, they tend to swing towards the same brand. All these are prime examples that reiterate the theory that was put forward by Levitt.
Though currently there are still some differences which remain between consumers, these differences are easily ironed out in the fact that the products created by these differences are found the world over. Levitt continues to state that there are some differences between consumers which die off with time and others persist. Those which endure are the ones which become the mainstream global preference Levitt, 1984.
One excellent example of this is the ethnic markets. A good example of the ethnic markets is Chinese food, pizza and country music. These markets do not contrast Levitt's firm stance on global homogenization. Rather, they prove it to be a true notion through the global acceptance of these market segments in all populations. You can find pizza being served all over the world. Whether in a third world African country such as Egypt, South Africa or even Kenya or in a developed country such as Italy, which is the origin of the pizza, Russia or even Brazil. Similarly, you will get country music being listened to all over the world. Another good example of this phenomenon is Nokia. Nokia has a more consumer-led basis for innovation rather than a technology-led one Hollis, 2009.
This can be presumed to come from the company's realization that Levitt's statement is certainly true.
These consumer differences which exist in the world are the premise under which multinational corporations such as Coca-Cola, Shell, Nestle, Nokia and more have come to build their empires and to establish their consumer analysis and product differentiation. A good example of this can be seen in the head to head competition between Coca-Cola and Guarana Antarctica in the Brazilian Market. The only factor which has led to Coca-Cola being able to stay in line with the competition is that they embraced local culture, and this significantly strengthened their market position in Brazil Hollis, 2009.
This was published in a 2008 survey conducted by Millward Brown. Another classic example of this can be seen on the Internet front where many companies are embracing local content. A good example of this is Google and Yahoo which are strong consumer brands that have embraced the concept of local content and they have seen tremendous growth as a result.
McDonald's is also an example of this phenomenon of embracing global differences. Though McDonald's have different menus in different countries, the production process is much similar, and they offer the highest quality food at an affordable price. This is what has led to the success of McDonald's. McDonald's learnt this the hard way. They had a restaurant store in Altamura, Italy which lost all its customers to a local bakery simply because they did not attempt to localize their product and understand the preferences of the local customers. They had attempted to promote the image that McDonald's had built in the U.S. so hard that it came rushing back at them in the same hard way. Revlon also felt this same failure when they attempted to venture into the Japan market without heeding the consumer's preferences Sachdeva, 2010()
Komatsu was a colossal competitor of Caterpillar in Japan. However, Komatsu developed a global strategy that was centered on their success in Japan. They did not distinguish any products. All operations were handled in Japan and only complete machinery could be shipped to their markets in the other countries. On the other side, Caterpillar embraced each market the same way and made their products identical in other markets and invested in manufacturing facilities but on a lesser scaled. They centralized the manufacture of the main parts or components of the machinery but build assembly plants in all major markets. They also differentiated the produces based on how the locals responded to them. This helped Caterpillar soar to encroach into a larger market while Komatsu was left trailing behind Sachdeva, 2010()
Any organization that attempts to challenge tradition or to change the unified position of customers is bound to fail. This is one of the outcomes that arise from Levitt's outline of a "homogenized" consumer behavior.
According to Levitt, there is a difference between a multinational and a global corporation. Multinational corporations have come to learn a lot about consumer differences and how consumers behave, and have therefore adapted their strategies and products to these differences in order to capture the market. On the other hand, global corporations have mastered the art of being competitive worldwide and at a national level too. Levitt suggests that companies should leave the multinational strategy and adopt a global strategy in the spirit of embracing globalization Levitt, 1984()
Levitt suggests that the companies adopting the global strategy should have fewer standardized markets rather than have many markets customized to their individual markets Levitt, 1984.
A perfect example is Coca-Cola. Coca-Cola products are the same the world over. Coke in Swaziland and that in Switzerland is all the same. In this way, they have standardized their product for the global market rather than just concentrating on the Swaziland or Switzerland markets. Levitt also talks about the need to market products which are standardized to be of high quality but which enjoy the benefits of economics of scale in the supply chain from the production of the products, storage, distribution, and marketing. Same can be noted for Coca-Cola. The world over, Coca-Cola products have pocket friendly prices and, in most cases, you find the currency conversion will give you roughly the same price the world over. Levitt argues that price is the ultimate bargaining tool in the current market and thus providing the cheapest alternative wins the market and not just a small percentage of the market, rather a humongous chunk of the market. Levitt continues to assert that "nothing is exempt" from this simple rule. Consumers demand the highest quality product at the lowest possible price.
From these real world examples, we can see that Levitt's view is extremely relevant and is a practical philosophy that gives us an understanding of the current consumer behavior and the changes that we may see. It is not just a simplistic view. Though Levitt's case was placed in the year 1983 when most…[continue]
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