Global shift in business practice

Introduction

Traditionally, companies advertised and focused their resources on the adult consumers – the “today consumers”. Children have never been a popular demographic group of consumers despite of the money they have, they are not the spenders but the saver of the money. However, in the past few decades, a new market pops up in which companies, and divisions of companies shift their focus on making and advertising products for teens.

A brief history of marketing on the children

Actually marketers started advertised to kids since the end of the Second World War through TV advertisements. The born of baby boomers created a large and whole new market. In addition to the increasingly receptive parents to the children’s requests where children manipulated their parents to buy formed the successful marketing formula at that time (Kurnit, 2005). The child market has continued to grow since then. When tracing back to the 80s, companies spent around $100 million marketing to kids only, but in 2009, it is estimated that they spent $17 billion per year on advertising children’s products (Lagorio, 2009); new product lines are also developed to target those young consumers.

Evolution of advertising on children
http://www.youtube.com/embed/eFOs4RrwF8s 

The old retail or marketing practices may tell us that promoting and selling products to kids was not a new thing, marketers knew that though the products were designed to attract kids, the real consumers were their parents. However, the new child market we are referring in the following discussion is not the one that kids nagging and influencing their parents to purchase; instead, according to McNeal (1969), it is the market which targets the children (who aged around 5 - 13) who are willing to buy for personal purposes and satisfaction. As children are now the “real consumers”, marketers change their marketing strategies. McNeal (1969) stated “Instead of saying, ‘ask your mother to buy so-and-so,’ advertisements to children often simply say, ‘buy so-and-so’.”

Reasons of the shift

You may wonder why such change would occur. We point out the following three possible reasons of the shift:

1. The increasing purchasing power of kids
2. Kids are easily affected by the narrative advertisements
3. Kids are the future consumers

How much is the purchasing power of kids? Answer can be varied across different studies. But one thing is for sure, kids have a very high buying power nowadays. In 2002, American children who aged 4 - 12 spent $30 billion (Schor, 2004); in 2005, according to the survey done by the market research publisher Packaged Facts, kids who aged 3-11 in U.S. had a collective $18 billion in buying power. Population growth in most of the developed counties has been slowed down (Worldbank, n.d.). Each family has fewer new born baby or kids when comparing to the post-WWII. Parents can hence provide a much better environment and more resources (say money) to their kids. With more money on the hand, children may no longer need to nag their parents for buying what they want; instead, they can make the purchase all by themselves.

A story designed to prepare people for change needs to evoke the future and conjure up a direction for getting there, but without being too precise (Denning, 2004).

Another reason that marketers change to sell products directly to the kids is that the lack of cognitive ability in resisting the advertisement makes the children easily be affected by the advertisements. Advertisements that target children do not necessarily convey the message very explicitly, instead, like Calvert (2008) explained in his finding that marketers use online advertising and embedding the products in films, online and in video games that make the children difficult to understand the undermining persuasive message of the advertisement, but being attracted to buy the products.

Lastly, companies understand that the young consumers are the adult consumers in the future. Companies try to cultivate the children consumers when they are still young and make them loyal to their brand in the future. 

New marketing strategies

Advertising for children on the TV and the Internet

Young children became an important target for the advertisers as we have already mentioned at the beginning.  Before analysing in a deeper way how companies actually promote their products, we first define what children consume and how much money they can spend on it. The chart provided below shows that the average budget children have per month can allow them to buy such products as sweets, small toys or kid magazines.  

Average Income and Spending for Children aged 5-13 yrs

                   Regular Income     Annual Income#      Savings     Total Spending  

                   $US/month/child    $US/year/child                             $US/year     

Germany                 32.30             569.40                  46%              0.9 billion    

UK                            31.50            506.20                  26%              1.7 billion    

US                            29.10             493.10                 21%               8.9 billion    

France                     22.50             377.90                 30%                2.2 billion    

Japan*                    10.70             407.90                62%                1.0 billion    

China*                     9.00              182.00                 60%                2.6 billion  

* urban areas only # including special income

Source: Laurie Klein, `More than play dough', Brandweek, Vol. 38 (24 November 1997)

Sources for advertising

There are different types of means to advertise products to the children. First we will have a look at the two biggest sources of advertisement: the television and the Internet.

If we take the example of the USA, children going to school spend around 2 to 4 hours watching television. The researchers found out after various studies that children are more likely to stay in front of the television during the advertising time. That is why the companies choose very carefully the time of the day. Most of the commercials demonstrate happy children, animation and cartoons: they are happy because they use the product advertised. And young kids are easily influenced so they believe these products will make them happy as they did to the kids from the TV. The form of commercials is always joyful, musical and very colourful.  We can take an example of the advert for Kinder Surprise or Kid’s meal for Burger King.

http://www.youtube.com/watch?v=alf0HfujmGE

Nowadays, companies also use another powerful way to advertise their products to children which is Internet. It can be also used as a source of information. If we visit the website http://www.ebizmba.com/articles/kids-websites we can see that most of the popular websites for kids are games. The companies sometimes have contracts with these websites so that for example before playing a game a kid has to fill out a small and easy survey which is a very useful source of information for the advertisers. According of the Centre of Media Education at least 90% of the websites designed for kids use different type of surveys in order to gather the information. Another method is to publish an advert for the company and to offer a free gift if a child gives some information about his or her taste or even more personal information. Some companies can even create online games where children must choose characters with tastes that correspond to them and the products their characters can buy. This helps advertisers to get necessary information without surveys.

There are also websites which provide games which are free at the beginning and then you have to pay to continue the game. The most famous example is Farmville on Facebook, where you can buy “virtual” goods using your real money.   

These are the main sources for companies to advertise their products or to get to know the consumers better which are becoming increasingly important on the global market.

Other types of marketing  

Commercialization in education

To target children, the most direct way is to increase the exposure of the companies’ products to where the kids spend most of their time—school. Thus, companies now try to put different vending machines selling snacks and soft drinks with big posters or advertisement on the vending machines in school. When the kids used to buy those snacks and soft drinks of specific brands at school, they will also buy those brands outside school. This kind of marketing strategy makes use of the convenience of school setting and kids’ subconsciousness by reminding them the brands and products whenever they are at school to increase kids ‘addiction to the products.

Commercialization in TV shows    

Companies also attract kids to buy their products by showing the products in kids TV shows. For example, they will sponsor those kids TV shows like “Good Night Kids” in Russia with the companies ‘products like drinks, toys or stationery. When the kids watch the TV shows, they can also see the products.

As they usually like the characters in the TV shows, it is very likely that they will buy the same products which are used by the characters. It is how the marketing strategy in TV shows work. The most convincing example is Walt Disney Company. Walt Disney Company produces lots of Disney cartoon series and movies and show them on the Disney Channel to make its characters like Snow White, Winnie the Poon and Mickey Mouse popular among kids. When the kids like the characters because of the cartoons and movies, they will also buy the toys, dolls or stationery of those characters in Disneyland or other retailing shops.

Placement strategy in supermarket

Since the companies have noticed that kids now have their own purchasing power too, they are trying to directly reach the kids regarding them as independent customers. For example, companies use placement strategy to attract children’s attention of their products in the supermarket. Companies require the supermarket to put their products such as chocolate, candies and potato chips in the lower level on the shelves so that the kids can see their products regarding their heights. By this special placement of products, it is easier for kids to pick the products up and buy them. Some supermarkets also provide children trolley for the kids to shop on their own without accompany their parents. This can let the kids feel like to be a customer and put what they want to buy into their own trolley without permission from their parents. These placement strategies in supermarket can increase the possibility that kids will buy more products.

The media industry is also targeting this potential segment. Children Magazines such as Sports Illustrated, National Geographic Kids Magazine and Discovery Girls are published for the kids’ market.

The newspaper like The Standard also diversifies its product lines like the Student Standard Goodies for primary school students. Companies can place advertisement in the kids’ magazines and draw their attention to buy them. 

Ethical Concern

Marketing directly to children is controversial. Different perspectives of related parties are provided in this session.

Children

Children purchase goods in order to satisfy their needs. According to James U. McNEAL (2001), there are two levels of satisfaction. The basic satisfaction is produced by the items they bought themselves. For example, candies and some simple toys can make them feel very happy. The second dimension of satisfaction is the “purchase behavior” because it may indicate an evidence of “grown-upness”. As children growing up, the first type of satisfaction is increasing while the other is decreasing.

Parents

Parents concern about the impact of advertisement directing at their children. They criticize the promotion of materialism, persuasion of people to buy unnecessary goods, and provision of misleading information (Pollay and Mittal, 1993). Some parents worry about the hidden messages that delivered through advergames and product placement. (Quilliam and Rifon, 2009)

Researchers and experts

Many researchers and experts have concern on direct marketing to children, too. Many experts think it is unethical to advertise to children at early age because they question their ability to understand advertisements and evaluate advertising claims.

l   According to Richard Mizerski, “their cognitive structures are beginning to form and they are most sensitive to external influences.” Children interact with external parties and learn from them. Parents, teachers, peers, and even people they do not know may influence how they percept the world. At the early age, children usually cannot tell right from wrong. It is also hard for them to evaluate goods rationally.

l   According to Karpatkin and Holmes from the Consumers Union, “Young children, in particular, have difficulty in distinguishing between advertising and reality in ads, and ads can distort their view of the world” Advertisements targeting at children are usually made to be fancy and attractive, children in their early age are easily been attracted and mix them with reality.

Harris study conducted a survey concerning the ethical issues on marketing to children among 878 professionals from youth marketing and research agencies, educational and non-profit institutions, and traditional advertisement and promotion firms. Below is the table summarizes the discrepancy in their perceptions of the appropriate age to market to children.

Questions	Opinion on Average Age
Appropriate age to begin marketing to children	7
When children can view advertising critically	9.1
The age of distinguishing fantasy and reality in media and advertising	9.3
When can make intelligent choices as consumers	11.7

In addition:

l   72% of the professionals think companies are putting pressure on kids to “grow up faster than they should”.

l   61% agree that the beginning age of targeting at children is too young.

l   58% think too much marketing has been directed at children.

Industry

It is suggested that self-regulation is very important for advertisers. For example, the Children’s Advertising Review Unit (CARU) of the self-regulatory National Advertising Review Council has provided guidelines on advertising to children (Better Business Bureau 2006; Martin 2006). They also created a voluntary program Children’s Food and Beverage Advertising Initiative which is supported by 15 major food and beverage marketers aiming at promoting healthy lifestyles to children.

Management

Regarding children as a marketing segmentation and directly marketing to children is controversial and should be paid significant attention by management. Corporations should participate in managing the issue rather than just responding to the public. (Jaques, 2009) Fail to manage the issue may create a social responsibility gap, which is one of the sources of reputational trouble. (Greyser, 2009)Hence management should be very careful when they marketing directly to children. When designing the marketing campaign and advertisements, companies should balance the trade-off and concern more on their social responsibilities.

References

Greyser, Stephen A.. corporate brand reputation and brand crisis management. Management Decision, 2009, Vol. 47 Issue 4, p590-602, 13p; DOI: 10.1108/00251740910959431

Grimm, Matthew, Is Marketing to Kids Ethical? Brandweek, 10644318, 4/5/2004, Vol. 45, Issue 14

Jaques, Tony. Issue and crisis management: Quicksand in the definitional landscape Public Relations Review, Sep2009, Vol. 35 Issue 3, p280-286, 7p; DOI: 10.1016/j.pubrev.2009.03.003

McNeal, James U.., The Child Consumer: A New Market, Journal of Retailing, Summer69, Vol. 45 Issue 2, p15, 8p

Quilliam, Elizabeth Taylor; Rifon, Nora J.. Trick or Treat: Children, Advertising, and Social Responsibility, American Academy of Advertising Conference Proceedings, 2009, p30-32, 3p

Sharon Beder, 'A Community View', Caring for Children in the Media Age, Papers from a national conference, edited by John Squires and Tracy Newlands, New College Institute for Values Research, Sydney, 1998, pp. 101-111.

 http://www.media-awareness.ca/english/resources/special_initiatives/wa_resources/wa_teachers/tipsheets/online_marketing_strategies.cfm

Marketing to Children, Sharon Beder  

          

Global indicator: marketing strategies of multinational companies

Since the globalization is spreading very fast on more and more countries, multinationals and other big companies have to count with it while going international. Firms that sell their products abroad now have to use different strategies according to the countries' level of globalization and attachment to the local culture.

If we have a close look on the past, we will see that companies selling their production abroad did not have to adapt their production to the local needs. The perfume Chanel #5 remained the same even if it was sold to many countries.

Nowadays, companies cannot use this strategy for every country or for every type of product. In our opinion, we can divide the firms'strategies to three types according to the level of country's globalization and the product type. The first type is so called "global" strategy which means that the product remains unchanged even for the export (e.g. iPhone).Another strategy is "local" which implies the adaption of the product to a particular country in order to succeed (e.g. private banking). The last strategy we have picked up is so called "glocal" that represents the fusion of local and global strategy. The most famous example is MacDonald's which remains the concept but slightly changes the meals according to the tastes of different countries.

We consider that nowadays there are countries that are more used to standardized products than others. That is why the multinationals have to jungle with these three strategies in order to meet in the best way the customers' need.

Therefore, the global indicator we have chosen is thistype of marketing strategy.

Going global – What does it mean for enterprises?

www.cipherion.com

In formulating business strategies to better operate in the internationalized markets under globalization, companies may struggle in choosing “going global” or “adapting local” (Vrontis & Thrassou, 2007;Alimienơ & Kuvykaitơ, 2008). One may believe that giving standardized products or services are the key strategy for companies to enter and survive in the more global and homogenized markets. 

As defined by Hitt, Ireland and Hoskisson (2007), the international business strategy of offering the standardized products across country markets is the global strategy. Apart from providing highly standardized products, a global strategy should be executed with the competitive strategy dictated by the company’s home office. It is believed that firms are benefited from adopting a global strategy to enjoy the economies of scale (cost saving)and to better apply the innovations developed at the corporate or country levelto other markets. Vrontis et al. (2007) summarized the reasons of UK MNEs standardizing their products as followed:

Why does not every enterprise only mold their products?

In spite of the potential benefits brought by the global strategy, you may notice that not every MNE chooses this strategy.Scholars argued that product standardization is an extreme business strategy which is rarely feasible and convincible in reality, the degree of standardization should be dependent on both the internal (e.g. organizational structure) and external (e.g. target market) factors (O’Donnell, 2000).

For example, the demands for those high-tech ortechnology-intensive products like electronic devices are universal across the markets (Cavusgil, Zou & Naidu, 1993), with the addition of the possibility in mass production, firms in high-tech industry are favored in adopting the global strategy to provide standardized products across markets. The Japanese MNE Canon, Inc. illustrates how the suitable organizational structure and product nature supports the use of global strategy. The MNE divides its product groups into 4 categories – consumer products (cameras, printers etc.), office products (large copier), industrial products (broadcasting equipment) and Canon product groups (document scanners, personal information products etc.). Canon then integrates all the product operations worldwide and archives the lower production costs through economies of scale (Hitt et al, 2007).

However, for some industries, global strategy is notalways the best way to do business. The study done by Li (2005) showed that the home triad-based regional strategy is more effective than global strategy for the US service industries. It can be understood that services are highly customized to cater individuals’ needs, which is difficult to be standardized.

Product Localization

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As multinational companies expand their business to different part of the world, they will always come to the questions: What canwe do to obtain the market share? What level of modification do we need to doto adapt to the need of customers? According to the Localization IndustryStandards Association (LISA) in the year 2007, $25 dollars was returned for every $1 invested in localization. (Amir Helzer, 2011) Localization is needed for most of the companies going internationally, but the level differs according to various nature of the industry. There are many industries need high level of localization such as online games, website design, advertisement, mobile apps and so on.

Take website design for example. Companies like eBay,Dell and Amazon expand globally to reach global online consumers by setting uplocal websites. (Singh et al. 2004) When doing e-business globally, the major obstacle companies facing is to understand their customers, overcome cultural barriers and language barriers. (Violino, 2001) For example, consumers will concern more when buying online because they cannot see the real products and they would like to know more about the details of the products, delivery,maintenance and so on. They will feel more comfortable if the website and buying processes are in their native languages. Furthermore, it will be moreeasily for customers to accept the marketing which make use of a proper content, familiar dialects and rhetorical styles. Hence companies should localize their websites in order to attract more customers in specific markets.According to Singh (2004), “Companies also need to consider adapting colors, icons, signs, web page layout, number format, date format, postal codes,measurements, titles, character fonts, and most of all cultural values and symbols of the foreign country.”

As management of MNCs, the first thing they should consider is to what extent the modification of their products should be made.The level of localization depends highly on the nature of the industry.According to the article Rethinking Globalization by Hollis (2009), “How much a brand needs to blend into local culture is dictated by the nature of the product category, the country and the competitive context.” If an industry is very susceptible to the demands of local tastes and habits, the company should consider localize its brand to a large extent.

What is glocalization?

Glocalization is a combined idea of globalization with that of local considerations.

To sustain in this ever-changing and dynamic world, the companies can not only go global, but also adopt certain degree of localization so that they can attract more customers from all over the world. That's why glocalization is getting more and more popular. As our group mentioned in the first blog, even though the world is globalized, local markets like flea market are still very popular in developed countries. That reflects standardized products under solely globalization strategy cannot really work. Thus, many companies adopt glocalization strategy instead.Apart from this reason, realistically, it will be very costly for multinational companies to translate everything from its home countries without any beforehand analysis of the local market, culture or society values. Therefore, companies should promote some standardized products or services in general while create localized ones based on geographic markets at the same time. Companies should do some market research to understand the expectations of the targeted customers and provide products or services that satisfy their expectations and needs.Overall, glocalization can help companies save some cost from economies of scale by producing standardized products in globalization prospective while more easily to target, attract and retain local customers in localization perspective. Moreover, it can build up and maintain the same and consistent company image throughout the world but at the same time easier to enter the local markets as well. To be able to adopt glocalization marketing strategy, the companies' operation should be flexible enough to handle different localizations strategies so that those local branches can be ran effectively in the world. That’s the matter of the nature of the industry. Just like McDonald's, since it is in the food industry, it is easier to adopt the glocalization strategy based on the following reasons.First, all branches over the world mostly use the same ingredients such as vegetables, beef, chicken or potatoes to make the meals even they are located in different countries and adopt some localized meals. For example, chicken and vegetables are also needed to make the McArabia in Arabic and McChicken in Hong Kong. Thus, ingredients can be bought in bulk and delivered to different places and thus enjoys the economies of scale.Second, as McDonald's is in food industry, actually it is essential and necessary to localize its meals to satisfy the local people's preference and tastes according to the countries. Then, McDonald’s can gain as many customers as it can and maximize the profits with the localization strategy. Meanwhile, McDonald's still maintains its global strategy to provide standardized meals in every country to keep its global company’s image as the world's biggest fast food company.Reasons mentioned above explain the nature of industry of McDonald's is favorable to adopt glocalization strategy.
McDonald's localization strategy is providing specialized meals that are differing from country to country. McDonald's does not offer a standardized menu but almost each country hasa special meal to the countries' culture or people's preference instead. For example, thereare McMolletes, or English muffins topped with bean, cheese, and salsa sauce inMexico. The McArabia features a chicken patty with garlic mayonnaise,vegetables,and Arabic bread.
On the other hand, McDonald's also creates the Vegetable McCurry Pan to fit the Indian tasteand it is very famous and popular dish in India. ChickenPorridge with onions, ginger, and chili peppers in Malaysia is created to fit their preference of spice.
On the other hand, McDonald's also creates the Vegetable McCurry Pan to fit the Indian tasteand it is very famous and popular dish in India. ChickenPorridge with onions, ginger, and chili peppers in Malaysia is created to fit their preference of spice.
Another example is Disneyland. Although it has opened five theme parks around the world, Disney has successfully created aconsistent and remarkable brand image of the parks, which is "world ofmagic and imagination" which is well known in the world. In every themepark, there are the same Disney cartoon characters with games and rides and sections like Tomorrowland, Main Street USA. All of these are the standardized and consistent elementsin all Disneyland. Once people think of it, they will associate with a theme park characterized by magic and wonder. That's the globalization strategy.

As for the localization part, like Shanghai Disneyland, it will feature aMagic-Kingdom style, in keeping with its cousins in Asia, the U.S. and Franceas well as creating some Chinese characteristics to relieve the worry of cultural invasion into china by
As for the localization part, like Shanghai Disneyland, it will feature a Magic-Kingdom style, in keeping with its cousins in Asia, the U.S. and Franceas well as creating some Chinese characteristics to relieve the worry of cultural invasion into china by instilling strong American values and culture. (Brand Disneyland comes to Shanghai, 2009) That's the Brand Localization. As a whole, Disneyland delivers core values’ happiness, friendliness and adventure” which are accepted by people all over the world but also create specific and local features to every single theme park in different places.

McMolletes - www.neogaf.com

To satisfy customers or conform to religious beliefs worldwide, McDonald's also offers a regionalized version of its menu. This makes the food specific and localized to particular regions that those menus are only seen in the local operation but not every country.For instance, In India, McDonald’s does not offer beef and pork products because of Indian religious sensitivities. Jhatka certified chicken and fish are the only meat products used in India.

McCurry Pan - www.perezsolomon.com

Extension and Responses to Comments:

We appreciate all the comments the readers gave to us, which help us extend our blog to re-clarify our points. There are many comments regarding whether companies’ websites should adopt the strategy of localization. Some agree and some disagree. One of the readers pointed out that websites do not need to adjust their color and page layout, what they only need to do is to change the language. The reader also gave examples like Facebook and Apple. However, Facebook and Apple are both using the strategy of globalization rather than localization. Brands implementing globalization strategy do not need to adapt to the local culture in a high level, so they just need to change the language on their websites. However, there are still some companies implementing localization strategies. They need to adapt to the local culture on a much higher level than other companies. For example, the websites for online auctions need to adjust the signs, icons, page layouts etc. according to different culture and habits. They need to study their customers’ preferences and online shopping habits. For instance, if the company is designing the webpage for Chinese version, they should be aware of Chinese preferences and do some adaptations: Chinese like to open many windows rather than go back to the previous page; they have special feelings for the color red; they like seeing fashionable words in the advertisements etc. Knowing these preferences and adjust the webpage accordingly will contribute to the attractiveness of the company and lead to their success.

We also want to thank heartily for other readers who gave recommendations on how we could do better in organizing our blog. We want to apologize for the typos that we made in the blog and we have revised the whole blog for improvement. We learnt that it is crucial for a blogger to make his/her blog comprehensive to the readers before s/he could convey the ideas. We will stay open-minded to the critics and hope for further improvement in our writing.

Last but not least, we would like to response to the comments that the indicator we chose is not that original. We understand that the issue of Globalization vs. Localization may not be a new topic to many of us, through giving out the real business cases, we hope that we can have a deepen discussion over the topic; by introducing the concept of “Glocalizaiton”, we expect that both of the writers and the readers could have a new insight about the business practices that are currently adopting by the MNCs. Globalization is a complex set of processes but not a single event, over the next few decades, we may still discussing the similar concept over and over again. But the point is that, if we could learn and improve through the repeated discussion, it worth spending time to dig into the matter.

References

Alimienơ , M. & Kuvykaitơ, R. (2008).Standardization/adaptation of marketing solutions in companies operating inforeign markets: an integrated approach. Engineering Economics, 1(56), 37-47.

Cavusgil, S. T., Zou. S., & Naidu, G. M. (1993).Product and promotion adaptation in export ventures: an empirical investigation.Journal of International Business Studies, 24(3), 479-506.

Helzer, A. (2011). Localizing for software, websites and global apps. Multilingual, 22(3), 34-37.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E.(2007). Strategic management: competitiveness and globalization. Masion, OH:Thomson Corporation.


Hollis, N. (2009). Rethinking Globalization. Marketing Research, 21(1), 12-18.

Li, L. (2005). Is regional strategy more effectivethan global strategy in the US service industries. Management InternationalReview, 45(1), 37-57.

O’Donnell, S. (2000). Marketing standardization withinglobal industries: an empirical study of performance implications.International Marketing Review, 17(1), 19-33.


Singh, N., Furrer, O., & Ostinelli, M. (2004). To Localize or to Standardize on the Web: Empirical Evidence from Italy, India, Netherlands, Spain, and Switzerland. Multinational Business Review (St. Louis University), 12(1), 69-87.


Xiaochun Zhang. China localizes online games for global players, MultiLingual, Oct/Nov2009, Vol. 20 Issue 7, p40-45, 6p, 4 Color Photographs

Vrontis, D. & Thrassou , A. (2007). Adaptation vs.standardization in international marketing – the country-of-origin effect.Innovative Marketing, 3(4), 7-20.

Violino, Bob (2001). E-Business Lurches Abroad.Internet Week, March 19th, Available: www.internetweek.com

Myth of Globalization

The term “Globalization” is not a new idea to us. It can be traced back to the 60s in the last century when it was first introduced to the world (Steger, 2010). Under the effect of globalization, different nations have shared a more standardized and similar system in terms of economy, education, society and politics etc. Globalization narrows the gaps among different countries and allows the entire world and people in different nations to get closer.

www;topnews.in

It is believed that globalization encouraged the international trading among different nations. Companies can manufacture and sell products globally more efficiently and cheaply. For example, the increasing trend in adopting outsourcing services reduces the production cost. Therefore, globalization is supposed to lead to higher consumption in global products and empower the growth of global companies. However, the flourish of local flea markets, farmer’s markets, swap-markets etc in the highly globalized and developed countries, like the European countries and the USA, does show the opposite: people like buying local products. So is it true that globalization promotes global products and lead to greater powers for global companies?

Though globalization benefits companies by reducing the production cost, it does not guarantee consumers a cheaper price. In addition, studies show that globalization sharpens the income inequality and poverty problems to a certain extent (Wade, 2004). Many global products are still unaffordable to the poor. Therefore, the small-scale markets like flea markets are still prevalent that people can buy the necessities at a low price. Globalization may not always bring the advantages to the global companies.

There is another point. It is a common view that nowadays global brands take a big part in the everyday consumption. One can find a great variety of foreign products in a supermarket next-door. One can say that sometimes our choices are conditioned by the multinationals that might impose their products to the consumers. Big brands are widely spread all over the world. We can easily find French shops in Asia and they benefit from a wide popularity.

www.hot-news.blogspot.com

However, flea markets and other type of local fair still exist in every European country and in the USA. They take a large part in people's daily life. It is usual to see weekend markets full of customers buying local production like fruits, vegetables or even object from artisans. People would buy in the flea markets may imply that they can find the suitable products only in the local market. Despite of formulating the global strategies to tackle the business challenges in the global market, the highly standardized nature of the global products still makes it difficult to fulfill the local individual’s needs unless the companies can figure out the strategies to manage market-by-market needs (Sinclair & Wilken, 2009).

We can look at the problem from the behavioral point of you. Globalization brought standardization of consumption so people may have the feeling their choices are done for them. Therefore, they are more and more willing to buy authentic, local products in order to prove themselves they make their own choices while consuming.

Even if the global processes facilitate the consumption as more foreign products are brought to the market, people realize they are more attached to their local production. We can say that it may be a sort of resistance. They may not want to follow the global trend and consume in the way they want to.

www.saddlebackbuzz.com

It is easy to fall into the trap that globalization empowers the multinationals to make more profits by selling their global products. However, the situation is not always true that other factors should be taken into account like the abilities of the consumers to purchase the products and how well does the products can meet the consumers’ needs. 

Nowadays, local markets such as flea markets, farmer’s markets, swap-markets are still in high demand mainly because the products they provide can meet people’s needs with lower prices. However, international companies are trying to reduce the gap in order to expand in the local market. For example, in order to reduce cost, large international companies are using the new logistics and specializing the production. When going to the local markets, many companies do researches and make modifications on their products in order to adapt to the specific markets. In addition, these companies can make use of their competitive advantages such as economies of scale, good brand images and so on. Even though the demanding of flea markets, farmer’s markets, and swap-markets remains very high, will it shrink smaller and smaller as the technology developing and the globalization going on in the future? Are there some factors that cannot be replaced by international companies so that these markets will always be valued by consumers? What will be the globalized market like in the future? The “invisible hand” – market will give us the answer.

Extension Section and Responses to Comments

Reply to 51440005daydreamer

Hi daydreamer, thanks for your comment. It is true that to some extent local markets cannot compete with the global markets dominated by the international companies because of the limit of products variety. With the huge capital and large market share from all over the world, MNCs really can control the global markets against local market. For example, many people in Hong Kong will buy Coca cola once they want to buy soft drink no matter how many local or mainland china brands are there. This can reflect the truth that MNCs really can totally go into the local markets to influence local people’s buying choice.

The development of globalization has reached the high level already. There must be some global brands in every country every city. We think that the progress of globalization will not stop in the future. The local markets still can survive due to their customization of consumers, familiarity with the local market demand and cheaper prices. Yet, as you said, they can never compete with the MNCs and global markets.

Reply to 40041603_IBstudent

Dear IBstudent

Thank you for your comment and your point of view is very relevant and clear. However, we would like to explain that it not exactly what we were trying to say in our blog. It is not only about the resistance to big multinational companies but mostly about the fact that some consumers get frustrated about the products and the y quality they can have in big supermarkets. 

Our point is to say that somehow global companies like Wal-Mart cannot respond to all the consumers’ demand that is why people decide to return to the “basics” and shop in small markets next to their house. I agree with you on the fact that people will always go to local markets but not because of some principles, they do it in order to experience something more authentic than things they can get in huge supermarkets. 

Reference

Steger, M. (2010). Globalization. NY: Sterling Publishing Company.

Wade, R. H. (2004). Is globalization reducing poverty and inequality. World Development, 32(4), 567-589. doi:10.1016/j.worlddev.2003.10.007

Sinclair, S., & Wilken, R. (2009). Strategic regionalization in marketing campaigns: Beyond the standardization/glocalization debate. Journal of Media & Cultural Studies, 23(2), 147-157. doi: 10.1080/10304310802710496

Nigel Hollis (2009), Rethinking Globalization