Levitt - the Globalization of Markets

Case Study #1:

The Globalization of Markets

Levitt structures his article around the belief that the tastes of consumers around the world, despite vast cultural differences, have become homogenized. He contends that the multinational approach of tailoring products to a market has become outdated and truly successful companies have abandoned this strategy and become global companies, offering standardized products on a worldwide scale.

He advocates for a form of global marketing where companies operate as if the world were made up of a singular market: all differences between regions, cultures, and nations are to be disregarded. Striving to offer high quality products at a low cost is a central aspect of this argument. If Levitt’s standardized product model is followed, then high quality products can be offered at a low cost by taking advantage of economies of scale. This strategy disregards any cultural considerations and can be detrimental to the success of products in some markets. A classic example is McDonald's in India not offering beef because of the large Hindu population that does not consume the product. If Levitt’s model was followed and a standard hamburger based menu was used, the restaurant chain would be an utter failure in the market. Examples of the pitfalls of Levitt’s model abound. An in-class example is Hershey's Cajeta Elegancita. Another extremely costly example is Gerber’s marketing strategy in Africa. The use of standardized marketing resulted in the company’s abysmal performance throughout the market. Gerber did not modify their product presentation when entering the region and put baby food on the shelves with their typical design featuring a baby on the packaging. Product packaging in much of Africa indicates what is inside, so the product was perceived as being marketed to contain real babies (Consumer Law Magazine, 2017). Even considerations such as color can vary vastly between markets, with black and white having nearly reverse meanings in many Eastern and Western cultures (Lee, 2015).

Levitt’s global marketing model is an extremely risky endeavour. Strict standardization should only be followed once thorough research has been conducted to assure that no tailoring of the product is needed when entering a new market. Some facets of a product may be successful if standardized, such as brand logo, and others, such as size or container type, may need to be adjusted to ensure success in the market. That being said, even something as integral to a company’s image as a logo may create an issue in some cultures. Having an awareness of market differences across cultures and nations is extremely important. Disregarding these aspects and blindly following Levitt’s model can lead to poor performance and financial failure.

        Technology, Levitt states, is the force driving the world toward a converging commonality. Since the article’s publication, this statement has gained added relevance. With the rise of social media has come the rise of influencers. Despite being a recent addition to the marketing toolkit, 73% of marketers have a budget for influencers, 71% of consumers reported being more likely to make a purchase based on a reference via social media, and 70% of teenage YouTube subscribers trust influencer opinions over traditional celebrities (Ward, 2017). Influencers will become more “influential” in the coming years, moving from a simple piece of the marketing puzzle to a major global marketing strategy.

The success of home tech won’t end with Amazon Alexa. The modern consumer’s home will move toward greater integration, regulation, and customization (Forbes, 2018). Minor aspects of the home will be controlled with a simple command or even a motion of the hand. These technologies already exist, but mainly remain in the realm of innovators and early adopters. They will expand to a greater audience as consumers become more aware of them through reference groups. Home tech will continue to integrate with objects outside the home, such as wearables, which themselves will see a rise in popularity. As modern technology spreads across the globe, home tech will flourish beside it.

Wearables will benefit from improved design, lowering cost, and broader features. They are slowly escaping the wrist and moving into an expansive range of accessories such as necklaces and earrings. They are commonly used for matters of convenience, appearance, social standing, and health tracking. A current product that suggests the future potential of the wearable market is Equisense, a product specifically designed to be worn by horses that analyzes health metrics and assists in training, linking the info to a smartphone app. Within the human realm, it will see success in health monitoring, particularly in those with specific health issues. For example, glucose monitoring and heart rhythmic data will be tracked and shared with a patient’s health provider. The rise of wearables is growing and if correctly developed and marketed they may someday share the same ubiquitousness as the modern smartphone. With lower future costs and further expansion, along with health being a basic need of all consumers across the globe, wearables will grow in popularity and use.