Global Marketing According to Cleveland and Laroche Essay

Global Marketing

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

Global consumers have emerged as the result of two key trends, identified in Czinkota and Ronkainen (2013). These trends are the globalization of goods and rising incomes. The rising incomes give global consumers greater ability to pay for global products, which are often more expensive than local products. Rising incomes are especially a trend in the developing world, where few people previously had such incomes. Rising incomes also give people the opportunity to travel and gain exposure to the products of other regions, and this increases demand for those products around the world. 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 resulted in a distinct class of consumer arising, one with a taste for the products of the world and the means by which to acquire those products. This is the global consumer.

Some of the main influences on the global consumer have already been mentioned -- exposure to goods and services and rising income levels. There are other influences as well. A global culture is emerging, where 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 some consumer goods -- clothes, cars, alcohol and travel among them -- but will still retain some local purchasing elements, especially things like food. The global hipster culture is roughly the same in Istanbul, Beijing or Brooklyn, but there will always be some local differences as well. Media has a strong influence -- for younger global consumers it is the Internet and for older ones more traditional media. Interpersonal communication is also a key influence on the global consumer, as this is how ideas and norms pass around the world. The peer group of the global consumer is more international than the peer group of the more traditional, local consumer.

The drivers of the contemporary global marketplace have already been mentioned 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 provided the world with more opportunity to take advantage of competitive advantage, increasing overall trade. This in turn increases overall wealth levels, such that lower trade barriers both stimulate demand for global goods and allow for supply of global goods to be improved as well.

The rise of global goods does not sound the death knell for local goods. Even in the most globalized markets, there are country-of-origin effects. Researchers identify country-of-origin effects as a byproduct of consumer ethnocentrism, that consumers have biases either towards or against foreign products (Balabanis & Diamantopoulos, 2004). This concept is perhaps a bit parochial in its framing -- country of origin effects are not always related to perceived quality. That was an issue in the 1960s when world trade was just beginning to pick up steam and country-of-origin was just being studied. Fifty years later the idea needs updating to reflect 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 didn't flop in Australia because Australian hate America and don't think Americans can brew a decent cup of coffee. It flopped because it did not understand the nuances of the Australian coffee market, which demands higher quality coffee, emphasis on espresso and better atmosphere in the stores. The differences are subtle to the point where Starbucks did not notice them until it was too late, but local consumers noticed them immediately. The idea that country-of-origin effects owe to bias is outdated -- they owe to genuine differences in the ability of local firms to meet local market needs.

The industrial buyer is a different issue altogether from the consumer. Industrial buyers have lower levels of country-of-origin effects, especially when they themselves market around the world. Industrial buyers still work to specs, but for the seller it is important to remember that ethnocentrism again relates less to biases about quality and more to biases about what cultures the seller wants to work with. Westerners find it easy to do business with other Westerners, because there are fewer cultural and linguistic barriers.

Andersson and Servais (2010) have done some work on identifying the portfolio characteristics that would bring together international industrial buyers and sellers. These factors can affect the industrial buyer, who seeks not only a trustworthy partner but one that can fulfill its needs over the long run. Facilitators are another factor that can help facilitate international business among industrial firms. Facilitators like Alibaba.com and other online marketplaces in particular can lower the information barriers that might otherwise convince industrial buyers to work with local suppliers. It is not country-of-origin effect that persuades many industrial buyers to deal with local sellers, but pragmatic concerns about information, transportation, tariffs and intercultural communication.

With increasing globalization, a natural response from the business community has been global customer relationship management. CRM is a longstanding idea, but the application of CRM in the global context is relatively new. The underlying principle is that buyers that operate globally want suppliers who do so as well, and they want a consistent face when dealing with their suppliers. Global CRM is therefore "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." Global CRM combines presenting a unified face in terms of branding, products and policies, but taking into account residual local business practices in the partner organization, local differences in the competitive landscape and differential regulatory characteristics (Ramaseshan, et al., 2006). Firms doing business globally prefer to do business with other global firms, because the similarities in needs and scale create congruencies. Dealing with a patchwork of local firms creates inefficiencies. Thus, companies marketing globally benefit from adopting global CRM practices, because this is what their customers want in business partners. This relates to the growth of the global economy, where some firms operate primarily on the local level, with minimal international dealing, and other firms build a global brand and a global business.

With respect to China, it already is either the largest or #2 consumer market in many categories. Hundreds of millions of Chinese are moving to cities and living middle class lifestyles -- which are not as luxurious as their European or American equivalents but nevertheless are enough to propel China to consumer prominence. There seems little doubt that with the country's ongoing economic expansion China will become the world's largest consumer market in coming years. It is already the world's largest consumer of energy, and of other key goods.

Whether China's status as the world's largest consumer market is sustainable is perhaps a better question. The country has a shortage of water, energy and domestic food production. China's shortage of these things makes its current….....