|
Consumption patterns are greatly influenced by purchasing power,
which has risen globally, but most acutely in emerging markets. Future
global economic growth will significantly influence the levels of wealth
and purchasing power among consumers in different countries, as well
as the continued spread of technological use among consumers. But the
direction and speed of this growth between now and 2015 remain uncertain,
since the rise and fall of economic cycles ultimately depend on how
other macro factors unfold. In addition, while technology has already
penetrated many aspects of modern life, the potential of technological
developments to further transform consumer behavior is less than certain.
Will the convenience and experience of online shopping equal or
exceed that of conventional shopping? If so, how enthusiastically will
consumers embrace these technologies?
Rice and Beans
The first possibility, rice and beans, would be weak economic growth
worldwide—or worse yet, a prolonged global recession or a global
economy disrupted by unpredictable events (see Figure 3.3). Such a scenario
would restrain the rise of the global middle class in emerging
markets and elsewhere. Consumers in developing countries would be
empowered and demanding, but possibly unable to afford the quality
products they want.
If this scenario materializes, companies must find innovative ways to
price quality goods at very low prices for mass consumption in order to get
a piece of the shrinking consumer pie. Domestic, homegrown companies
in developing countries may be more agile and capable of supplying such
products, and may also be viewed as less culturally intrusive. By contrast,
global companies entering these markets may find themselves targets of a
serious backlash, as they may be viewed as exploitative of poor consumers.
This backlash could gain momentum if small groups of technologically
savvy, discontented consumers coalesce to take on large corporations.
Under this scenario, global corporations may increase their likelihood of
survival by scaling back intrusive marketing efforts, toning down their
brands, and operating as smaller, regionalized companies that partner with
domestic brands.
World Bazaar
If the global economy maintains moderate and stable growth, allowing
consumption patterns to remain similar to those today, consumer
demand will continue to span a wide spectrum from customized, quality
goods to subsistence basics. The scenario that unfolds would be a world
bazaar. Increased fragmentation of consumer groups could confer a competitive
advantage upon global companies that have already established
themselves in emerging markets, as they can more easily command loyalty
among existing customer groups. Companies that wish to enter these
markets must strive to quickly win the hearts of fragmented consumers
and repackage products to reach masses of lower-income consumers.
Internet usage will continue to increase moderately and reach saturation
in developed markets, where online channels will increase consumer
leverage, but not revolutionize buying behavior. However,
continued lack of Internet infrastructure in parts of the developing
world will limit companies’ ability to reach those consumers in the
lower-income brackets through electronic marketing tools. Instead,
companies are more likely to break into those markets through word of
mouth or community networks in more rural areas.
Companies that manage to be all things to all people through multiple,
differentiated product lines that offer high-end to low-end merchandise
may be more uniquely capable of reaching a broad consumer base. The
backlash against culturally intrusive foreign brands will continue within
developing countries, but this backlash will be somewhat alleviated as dissatisfied,
marginalized consumers are counter-balanced by consumers
who have experienced rising living standards and purchasing power.
Hey, Big Spenders
The third scenario, hey, big spenders, envisions savvy, technologically
sophisticated, and affluent consumers worldwide, with new concentrations
of middle-income consumers in developing countries. Global economic
growth continues to surge, spreading wealth across different income
groups in both advanced and emerging markets. As personal income levels
continue rising, affluent consumers dominate consumer markets.
Demand for premium products swells across the globe, with virtually all
consumer segments seeking higher quality, more upscale products that
they are now able to afford.
Most of the nouveau riche will be found in the modernized cities of
rapidly developing countries like China and India. These affluent consumers,
younger and more technologically adept, will demand products
that display their newfound status and fit with their lifestyles. They may
also have developed pre-established loyalty to certain powerful domestic
brands. As a result, consumer goods offered by global corporations—
ranging from technological gadgets to furniture—may be characterized
by more culturally sensitive designs, small sizes, and multifunctionality,
together with customizations and unique experiences for consumers.
With consumers in emerging markets wielding such power, customers
in developed markets in North America and Western Europe
may have to start adapting to designs geared toward Chinese consumers.
In addition, companies will be compelled to devise creative marketing
tactics to reach increasingly sophisticated consumers, who frequently
conduct their purchases online and also exchange product evaluation
information with other consumers worldwide via multiple media. Companies
that sustain global technological infrastructure and networks as
well as optimize the use of new marketing tools—such as blogs, product
placement, and advertising via mobile phones and computing devices—
will find themselves well positioned to reach their consumers.
In any of these cases, global corporations must take the cue from
their empowered consumers. Companies may find themselves fending
off negative media and risking vandalism if they are too aggressive or
intrusive in their marketing efforts. But they will watch market share slip
away if they treat themselves as mere providers of goods and fail to tap
into new demands and growing markets. Given the instability of this
environment, leaders of today’s corporations will find themselves in an
elaborate balancing act.
|
Disclaimer
