Consumer needs are not homogenizing

Over twenty years ago, Theodore Levitt argued in his famous article “The Globalization of Markets” that new technologies would homogenize consumer wants and needs, i.e. standardized, high-quality products at lower prices would be preferred over customized, higher-priced products. This theory was based on the core assumption that consumer decisions are based on purely rational reasons, such as pricing or utility differences.

However, many researchers since that time have discovered that consumer behavior is frequently not rational; decisions are not always made to maximize economic or functional benefits. Instead, it is becoming more apparent that individual consumer behavior is driven by the cultural values that are pervasive in that consumer’s country.

Indeed, Hofstede’s five dimensions of national culture are being increasingly used to explain consumer behavior (from their original use of describing global corporate organizational cultures).

For example, de Mooij and Hofstede (2002) note the following consumer preferences that can only be attributable to cultural values:

  • Leisure spending is lower in countries with high power distance, due to the fact that more free time is spent with family and relatives in these cultures rather than on organized leisure activities.
  • Food expenditures are higher in collectivist cultures because providing food and having food in the home for guests is an important value in the collectivist cultures.
  • Grooming expenditures (clothing, footwear, makeup) are higher in countries with high uncertainty avoidance; researchers speculate this is because being well groomed is one way to bravely face a threatening world.
  • Privacy-related expenditures, such as a private garden, are higher in individualist cultures. Hofstede notes that in individualist countries, people entertain friends in the privacy of their own backyard, while in collectivist cultures, people get together in parks, bars, bistros, etc.
  • Luxury items are more frequently sold in masculine cultures since they are visual symbols of success – a core value in masculine societies.

As de Mooij and Hofstede explain, “when income levels are such that consumers have satisfied their basic needs and wants, they will then spend their discretionary income on what best fits their value systems”.

References:

de Mooij, M., Hofstede, G. (2002) “Convergence and divergence in consumer behavior: implications for international retailing,” Journal of Retailing. 78 (2002), pp. 61-69.

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One thought on “Consumer needs are not homogenizing

  1. Pingback: Consumer Behavior | Markets And Trading

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