It's a complex world

Firms are finding new windows into global communities, says Stephen Pritchard

KNOWING your own market is no longer enough to be a success. With technology, communications and low-cost travel reducing distance and creating a single market - a global village - it is apparent that businesses need to think beyond national boundaries and act globally. Ignore that, the theory suggests, and they risk being overtaken by competitors with a more international outlook.

But new research from the United States warns that the reality of global marketing is far more complicated. The report, Global Village versus Global Villages, from Boston-based consultancy Conduit Communications, warns managers that a simplistic view of the international market is counterproductive.

The paper quotes the example of a cleaning products company that operated globally, but failed to dominate any individual market. Smaller, more flexible competitors were taking sales away. The company's position looked good on paper, but on closer examination it was losing money. As Conduit found, "the sum of the parts was impressive; the parts were not".

Companies making commodity products often treat their customers as commodities. They assume customers have the same needs, wherever they are. They rarely do. Even champions of global marketing produce slightly different goods for different markets. Brands do not come much more global than Coca-Cola. The American giant uses the same branding, logo and appearance on its soft drink across the world. Inside the can, though, there are critical differences. In the US, consumers put more ice in their drinks than European counterparts. Coke for the US market is sweeter, to counteract dilution caused by ice.

If even the mighty Coca-Cola has different products for different markets, does that mean the global village is a myth? There are national markets, of course, such as right-hand drive cars in Japan and the UK, or food and drink: in France, for example, McDonalds sells a unique McEspresso. Conduit suggests that it is possible to have global markets, but there is not just one global market. Instead, researchers found a series of global villages; smaller markets based on communities of interest. Today's marketing manager needs to address a "fragmented and complex" environment. Each village has inhabitants with their own dislikes and preferences. And boundaries between them need not be based on geography.

Colin Gounden, a director at Conduit, explains: "Globalisation is a trend that everyone is talking about. The ability to do business anywhere with anyone is approaching rapidly. Only a small fraction of businesses are really able to do business everywhere." Since the term global village was coined in the late 1960s, it has become shorthand for large, homogeneous markets where all consumers think - and spend - alike. In reality, there are relatively few of these. "The marketplace is actually fragmented and segmented, not along geographical lines but along behavioural patterns, irrespective of geography," Mr Gounden says. So, global villages form around like-minded sets of people , such as teenagers, or outdoor enthusiasts.

Some interest-group villages already exist. Companies, Conduit suggests, can make use of these for marketing their products. But they can also build their own, or bring facilities to existing villages to strengthen them. New media and technologies, especially the Internet, means international sales are realistic for even quite specialist products and services.

Mr Gounden cites Procter and Gamble's web site for parents, Parent Talk (www.parentalk.com), which is for parents with young children. The site itself is not branded, but it provides a forum which brings together people with a shared interest. By providing this, P&G creates its own global village. It can sell products and services to parents through links from the site. Just as importantly, it gives the company a window into the global community of parents. The company uses the site to test ideas and discover its customers' future needs. P&G employees also take part in the forums, which gives the company's marketing department valuable feedback.

According to Mr Gounden, Procter and Gamble's initiative has created an electronic `village hall' for Parent Talk's community. Companies can learn about their customers, and as long as the site is genuinely useful, customers gain a valuable resource which pays its own dividends in terms of a more loyal customer base. Nor is electronics the only way to build a community. As Mr Gounden points out, motorcycle manufacturer Harley Davidson has been bolstering its community for years, by sponsoring rallies and conventions for Harley owners.

Successful companies will take time to learn about their customers and meet their needs, rather than relying on `one size fits all' products, Mr Gounden predicts. Managers may need to adjust their own approach. "It requires a commitment to thinking beyond geography as the limiting or defining characteristic of your customer base," he says.

"The companies that will survive are the ones that have done this. Companies that go beyond geography to really think about who are their communities of interest are the companies that will be the next Fortune 500 or remain in the Fortune 500," he predicts.

Conduit Communications: www.conduit.co.uk or 0181 987 4400.