Global Marketing: Consumer Culture and International Strategy

The Global Consumer Defined

According to Cleveland and Laroche (2007), the global consumer is characterized as someone who fits into a global consumer culture — a culture with certain characteristics that are consistent internationally, such that the global consumer can be the subject of global marketing. The global consumer is best understood in contrast to the local consumer. The local consumer bears strong characteristics of the local market in their tastes and buying patterns, whereas the global consumer trends more toward international norms. The global consumer is aware of, and has some preference for, international products, and displays similarities to international buying patterns. In essence, the global consumer in Shanghai will have tastes and characteristics that relate more closely to other global consumers in Vancouver, London, or Mumbai than to people in the local Shanghai market.

Global consumers have emerged as a result of two key trends identified by Czinkota and Ronkainen (2013): the globalization of goods and rising incomes. Rising incomes give global consumers greater ability to pay for global products, which are often more expensive than local alternatives. This is especially true in the developing world, where few people previously had such purchasing power. Rising incomes also give people the opportunity to travel and gain exposure to products from other regions, which in turn increases global demand for those products. Availability is facilitated by the processes of globalization — in particular the development of global logistics networks and the lowering of trade barriers. The combination of increased demand and increased availability has produced a distinct class of consumer: one with a taste for products from around the world and the means to acquire them.

Some of the main influences on the global consumer have already been mentioned — exposure to goods and services and rising income levels. Other influences are at work as well. A global culture is emerging in which broad influences are assimilated into local contexts. A wealthy businessperson in Lagos has roughly the same tastes as one in Mexico City with respect to certain consumer goods — clothes, cars, alcohol, and travel among them — but will still retain some local purchasing preferences, particularly in areas like food. The global hipster culture is roughly the same in Istanbul, Beijing, or Brooklyn, though local differences always persist. Media is a powerful influence: for younger global consumers it is the internet, and for older ones it is more traditional media. Interpersonal communication is also a key influence on the global consumer, as this is how ideas and norms circulate around the world. The peer group of the global consumer is more international than that of the more traditional, local consumer.

The drivers of the contemporary global marketplace build on the trends described above. Changes in trade policy, rising income levels, improved transportation, and improved communication all drive growth in demand for global goods. Freer trade in particular has given the world greater opportunity to take advantage of comparative advantage, increasing overall trade volumes. This in turn increases overall wealth levels, such that lower trade barriers both stimulate demand for global goods and improve the supply of those goods simultaneously.

Drivers of the Global Marketplace

The rise of global goods does not, however, sound the death knell for local goods. Even in the most globalized markets, local products and producers retain relevance, as the persistence of country-of-origin effects demonstrates. The interplay between global supply and local demand continues to shape the structure of consumer markets around the world.

Researchers identify country-of-origin effects as a byproduct of consumer ethnocentrism — the tendency of consumers to hold biases either toward or against foreign products (Balabanis & Diamantopoulos, 2004). This framing is, however, somewhat parochial. Country-of-origin effects are not always related to perceived quality. That was a more pressing concern in the 1960s, when world trade was just beginning to accelerate and the concept was first being studied. Fifty years later, the idea requires updating to reflect the realities of the global consumer.

Ethnocentrism does not relate strictly to quality perceptions — it relates to the degree to which local producers understand the subtle nuances of the local market. Starbucks did not fail in Australia because Australians distrust Americans or doubt their ability to brew a decent cup of coffee. It failed because it did not understand the nuances of the Australian coffee market, which demands higher-quality coffee, a stronger emphasis on espresso, and a better café atmosphere. The differences were subtle enough that Starbucks failed to notice them until it was too late, yet local consumers noticed them immediately. The notion that country-of-origin effects stem from bias is outdated — they stem from genuine differences in the ability of local firms to recognize and meet local market needs.

Country-of-Origin Effects and Consumer Ethnocentrism

The industrial buyer presents a different set of challenges from the individual consumer. Industrial buyers exhibit lower levels of country-of-origin effects, especially when they themselves operate in global markets. Industrial buyers work to specifications, but for the seller it is important to recognize that ethnocentrism, in this context, relates less to biases about quality and more to preferences about which cultures a buyer is comfortable working with. Westerners, for example, often find it easier to conduct business with other Westerners due to fewer cultural and linguistic barriers.

Andersson and Servais (2010) have examined the portfolio characteristics that bring together international industrial buyers and sellers. These factors can influence the industrial buyer, who seeks not only a trustworthy partner but one capable of fulfilling its needs over the long term. Facilitators are another important factor in enabling international business among industrial firms. Platforms such as Alibaba.com and other online marketplaces can significantly lower the information barriers that might otherwise lead industrial buyers to prefer local suppliers. In many cases, it is not country-of-origin effects that persuade industrial buyers to deal locally, but pragmatic concerns about information access, transportation costs, tariffs, and intercultural communication.

With increasing globalization, a natural strategic response from the business community has been the development of global customer relationship management (CRM). CRM is a well-established concept, but its application in a global context is relatively recent. The underlying principle is that buyers who operate globally want suppliers who do so as well, and they expect a consistent experience when dealing with those suppliers. Global CRM is therefore defined as "the strategic application of the processes and practices of CRM by firms operating in multiple countries or by firms serving customers who span multiple countries." It combines presenting a unified face in terms of branding, products, and policies, while also accounting for residual local business practices, differences in the competitive landscape, and differential regulatory environments (Ramaseshan et al., 2006).