Consumer Behaviour: Globalization Impact

Consumer Behaviour: Market Situation - Globalization

• Topic: Consumer behaviour in a global market
• Market Situation: Globalization
• Speaker: Silvio Addolorato
• Institution: Universidad Europea
• Objectives: Understand globalization, its consequences on consumption, global and local brands, and challenges in internationalization.

Index of Consumer Behaviour

• Topic 15: Market situation: globalization
  • Presentation
  • Learning objectives:
    • Define globalization
    • Explore consequences of globalization
    • Analyze global brands
    • Examine local brands
    • Identify errors in internationalization
    • Understand globalization in the fitness sector
  • Bibliographic references

Consumer Behaviour Objectives

• Understand the phenomenon of globalization, especially in the economic field
• Analyze consequences of globalization on consumption
• Recognize characteristics of local and global brands
• Identify common mistakes in brand internationalization

Globalization as a Presentation Topic

• Globalization is a fact; today large corporations operate internationally
• Advances in transport and communication resulted in accelerated globalization particularly in recent decades
• The same globalization trend, although somewhat later, significantly impacts the sports sector, particularly the fitness industry.

Companies in the Globalized World

• Companies succeeding globally need a different mindset compared to local companies
• Global companies need to be aware of adapting to cultural differences by adapting their cross-cultural product and service vision.
• Strategic decisions in marketing should be made centrally at first, then locally adapted to culture specifics

Globalization Definition

• Globalization is a fusion, integration, and interaction of people, cultures, governments, and businesses.
• This fusion results in interdependence among nations across economic, social, and political fields and aspects
• International trade agreements have diminished national autonomy in economic matters

Example of Globalization: European Union

• Free movement of capital, products, and people creates many transnational competitors for companies in the EU.
• Companies that historically had few local competitors are now challenged by many global players.

Globalization: Additional Aspects

• Social, ecological, and other movements spread across borders
• Modern technology allows geographically dispersed teams and individuals to simultaneously work on projects.
• Globalization is an indisputable fact, with ongoing impacts despite various opinions and perspectives.

Globalization as a Continuing Trend

• Globalization is not something new; humans have historically worked to reduce distances; trade routes existed early on.
• Advancements in technology, particularly 20th-century transportation (air travel), media (TV), and the internet in the latter half of the 20th-century, have markedly increased globalization's rate.
• Globalization is prominent within the fitness sector: large chains today try to reach international audiences, and this has been increasingly dramatic

Globalization Consequences

• Globalization is an unavoidable process; only its consequences can be analyzed.
• Some consequences give companies opportunities, while others present threats
• Example: Both positive and negative impacts of globalization on the fitness sector have impacted the demand for athletic products and services, and the way they are distributed and marketed.

Globalization Advantages

• Increased competition prompts innovation and better consumer products at lower prices
• Lower labor costs lead to cost reductions.
• Increased employment opportunities for emerging economies occur through outsourcing

Globalization Advantages (continued)

• Technological development arises from competitive pressures and cost reduction; research and development (R+D)
• Easier access to goods in areas with lower development indexes promotes economic development and quality of life.

Globalization Disadvantages

• Unemployment in developed nations due to outsourcing of employment
• Increased income inequality
• Diminished opportunity for small competitors

Global and Local Brands

• Globalization promotes cultural homogenization, leading to a greater emphasis on standardized, global brands
• Global brands usually command a higher level of prestige
• Economies of scale are an advantage of global marketing strategies

Global Brands: Advantages

• Prestige: perceived higher quality
• Marketing synergies (cost savings): unified image leads to reduced marketing costs
• Economies of scale in marketing: running a single ad campaign globally saves money
• Global consumers: people recognize global brands across different countries

Global Brands: Disadvantages

• Cultural differences: brands must consider that different cultures have different norms and perspectives
• Established local brands: adapting to local tastes and preferences
• Positioning challenges: brands might need to adjust their positioning in each market due to cultural differences

Local Brands

• In the age of globalization, companies choose to maintain local brands
• Some large multinational companies that produce consumer goods use both global and local brands

Local Brands: Example

• Multinational fitness company entering the Spanish market might study the already well-established Spanish fitness chains.
• If it is too expensive to create a new brand, the company may buy an existing local brand

Local Brands: Approach

• Local brands are perceived as closer to the market and consumers.
• Global companies often use mixed strategies, combining global and local brands depending on the product or consumers involved in the target market.

Denationalization of Brands

• Global brands can penetrate local perception intensely to become local brands through cultural adaptation
• Brand successfully becoming culturally integrated leads to success in the market.
• Global brands can be thought of less as foreign when successfully denationalized

Denationalization of Brands (stages)

• Stage 1: Initial awareness of the brand
• Stage 2: Brand is available in the market, but still seen as foreign
• Stage 3: Brand is accepted as local
• Stage 4: The brand's origin is less noticeable because of local production
• Stage 5: The brand has lost its national connotations and is fully accepted globally

Internationalization Mistakes

• Product: Brand products may not match tastes, preferences, or habits of consumers in different countries
• Communication: Global marketing campaigns may not consider cultural nuances
• Pricing: Price differences in purchasing power across countries can result in problems depending on local needs
• Distribution: Variations in buyer habits and customs can be significant in different geographical regions.