Market drivers are the growth of common customer needs, the emergence of global customers, the development of global channels of distribution, and of marketing approaches that are transferable across cultural and geographical boundaries. Forecast the convergence of markets as a result of the development of economic and socio-cultural interdependencies across countries and economies. He argued that the new communication technologies are key to the growing homogenization of markets, reducing social, economic, and cultural differences, including old-established differences in national tastes or preferences. This process has forced companies to respond to growing similarities between consumer preferences. He also said quite simply that, if you can make a c better product, cultural barriers will not prevent it becoming acceptable worldwide. The international success of the civil services examination Japanese consumer electronics industry appears to support this claim. There has been a long-standing debate about whether global markets are developing as tastes converge across the globe in a widening range of industries. Examples of such convergence include McDonald’s burgers, designer jeans, and Coca-Cola. The debate centres on the desirability of standardization of products or services for broadly defined international market segments. This belief in a homogenization of tastes coexists with the view that fragmentation may more appropriately describe the trend in international consumer demand.
A great deal of discussion has taken place over the opportunities for and barriers to, such standardization. The argument for global markets does not, however, necessarily signify the end of market segments. It can mean instead that they expand to worldwide proportions. The retail chain Benetton has built its whole strategy on these assumptions. In Benetton there is some adaptation of such things as colour choice for different domestic markets, but such adaptation occurs around the standardized core of Benetton’s ‘one united product’ for its target market segment worldwide. It sells ‘active leisurewear’ globally to 15-to-24-year-olds. Cross-border M&A provides many opportunities for achieving economies of scope from global marketing strategies. Branding provides a useful illustration of this potential. An increasing number of multinational corporations (MNCs) are standardizing their brands to send a consistent worldwide message and take greater advantage of media opportunities by promoting one brand, one packaging, and uniform positioning across markets. Rather than a patchwork quilt of local brands in local markets, the owners of international brands increasingly favor simplified international brand portfolios.
Many local brands have been developed by high advertising spend over years and have established strong intangible switching costs among their local populations. Despite this, they are likely to die in the face of a determined global brand assault. Focusing on civil services
fewer strong brands is seen as the best way of addressing fierce competition from other brands and private-label products, as well as getting the best value from expensive investments in advertising. Another way in which brand globalization is being felt is in the branding of companies themselves; a trend observable as companies become established as MNCs rather than just domestic market champions. Names that are felt to be too parochial or nationalistic are made more universally acceptable. Obvious candidates for such treatment have been previously state-owned enterprises, so that British Telecommunications became BT, British Petroleum became BP, and the Koreanchaebol Lucky Gold star became the internationally unexceptionable LG. Similarly, the name AXA was chosen to cloak the French origin of this insurance MNC and thereby make it more regionally and globally acceptable. This is the likely fate of many UK companies acquired by foreign multinationals.
Globalization offers the advantage of economies of scale and standardization even for a segmented marketing strategy. In advertising costs, for example, PepsiCo’s savings from not producing a separate film for individual national markets has been estimated at $10 million per year. This figure is increased when indirect costs are added, for instance the speed of implementing a campaign, fewer overseas marketing staff, and management time which can be utilized elsewhere. International standardization of activities is established by practitioners at points in their value chain where advantages can be derived, even though there may not be a global operation across all functions. Benefits are possible from globalization in any or all of the following: design, purchasing, manufacturing operations, packaging, distribution, marketing, advertising, customer service, and software development. Globalization makes possible standardized facilities, methodologies, and procedures across locations. Companies may be able to benefit even if they are able to reconfigure in only one or two of these areas. Potential cost advantages such as these are an important incentive to undertake cross-border M&As.