If people's needs, wants and desires are becoming more similar, then marketers can engage new consumers with little need to adapt either the brand or its marketing communication. But this assumption may well be incorrect. Marketers who assume that the world is becoming more similar risk undermining their chances of success on the world stage.
The world has, in some ways, shrunk. One only has to look at how the sub-prime meltdown in the U.S. and subsequent financial turmoil have affected people from Beijing to Barcelona and from Sydney to Santiago to realize that we live in a global economy. But while the financial ramifications of current events may affect people around the world, they experience the effects locally.
Most people's frame of reference is still very local. They shop in the local stores. They support the local team, visit the local bar, listen to local radio stations and read the local newspaper. Many of the brands they buy are local, not global--even if those brands are often owned by multinational corporations.
The fact that most people rarely experience a world other than that in which they were brought up has important ramifications for brands. In a survey conducted earlier this year by Millward Brown comparing global and local brands across five product categories and eight countries, we found that being seen as part of a country's national culture was a significant driver of purchase intent for all brands.
Local brands, however, scored higher on average than global ones. Local brands, therefore, have an inherent advantage that global brands must seek to counter by becoming as close to local culture as possible.
Successful global marketers recognize this fact and adapt their offering appropriately. The Coke you drink in Mexico is not the same as the one you drink in the U.S.; it is made with cane sugar, not corn fructose. The advertising you see for Dell in India is different from that elsewhere, designed specifically to appeal to small and medium businesses in that country. These brands have become successful by embracing regional and cultural differences, not ignoring them.
Many brands have learned at their expense that what works in one country does not always work in the next. Home Depot has been incredibly successful in North America, including Mexico, but failed to establish its presence in Argentina and Chile. Strong local competition and a failure to understand and adapt to local needs and culture resulted in the sale of the company's operations in those countries in 2001. And there is good reason to believe that in the future it will become more important to adapt global brand offerings to meet local preferences, not less.
While Western brands remain aspirational to consumers in developing economies, rising incomes will not only allow people to indulge their desire for a more Western lifestyle, but will also enable them to celebrate their own culture and identity. For instance, in developed economies as diverse as France, the UK and New Zealand, minority languages such as Breton, Welsh and Maori are undergoing a revival as people seek to re-establish their cultural identities.
Trends in Internet consumption also support the case that the world is not becoming homogenized. As the number of people with Internet access grows ever greater, the international share of Internet traffic is reported to be decreasing. This trend is driven in part by well-known global sites like YouTube and Facebook, which are seeking to localize their offering, but also by the increase in sites and blogs designed to address local issues with a local audience.
While the Japanese and English battle it out as the most popular blogging languages, Farsi entered the Top 10 list in 2007 with 1% of the posts measured. Although the Internet allows brands to reach out to people with common interests that cut across geographies, mass-market brands will still need to localize their appeal using both new and traditional media.
Global Target Group Index data confirm that higher incomes do not lead to homogenized cultural values or brand affiliation. We observe similar values between rich and poor within a country, but major differences between people with relatively high standards of living across countries. It is the minority of people who have both higher incomes and the experience of international travel that are most likely to buy global brands.
The dynamics of building a strong brand on a global basis are complex and challenging, and there is good reason to believe that it may become more so, not less. Rather than becoming more homogenous, the world is fragmenting. For some product and service categories, a strong, local brand may be far more profitable than a global one. Critical to success, whether global or local, will be a good understanding of how a brand needs to adapt its offering to meet local preferences and values.