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‘All Business is Local’ - New Book Offers Survival Tips for Going and Growing Global Businesses
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CNBC, Senior Editor, Blogs
What do you think about waking up and brushing your teeth with tea-flavored toothpaste? Not your cup of tea? Well Colgate is hoping that for billions of Chinese, they’ll love the idea. Colgate is one of the many global companies profiled in the book, "All Business Is Local: Why Place Matters More Than Ever in a Global, Virtual World."
It’s a given that technology makes it easy for companies like Colgate [CL
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], Google and McDonald’s to have a worldwide presence. But the authors say consumers don’t make purchases based on a global strategy; they just want the best products and the best experience in the area they know best — their own neighborhoods.
Building on the theme that “all politics is local,” marketing experts John A. Quelch and Katherine E. Jocz explore how dozens of international companies are using a local-focused strategy and turning global brands into leading local brands.
The book is included in my 12 Most Anticipated Books of 2012 and below is an excerpt. The book goes on sale today.
Excerpted from "All Business Is Local: Why Place Matters More Than Ever in a Global, Virtual World" by John A. Quelch and Katherine E. Jocz.
Some pundits tell us the world is flat while others insist it’s spiky. Some politicians and observers tell us that cultures and values are converging, while others point to cultural divergences that generate world conflict. Some praise globalization, while others point to its dangers. We’re told consumers want to live in a digital cloud but still value the importance of physical touch. Only one thing is certain: competing trends are pulling multinational firms in all directions at once.
Accepting this premise means accepting that place still matters, that the local is still as significant as the global, and vice versa. It means believing that IBM [IBM
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] is successful because it creates “Solutions for a Small Planet,” while HSBC [HSBC'B
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] attracts customers by being “The world’s local bank.”
Local marketing and global marketing must coexist. No global company is more quintessentially American than McDonald’s [MCD
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] or Coca-Cola [KO
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]— both of which may represent the first physical contact that some people have with things American. Yet even McDonald’s cannot be a great global brand without being a great local brand. It could not penetrate, let alone dominate, markets the world over without expanding beyond its global core products and cultivating authentic local appeal. This has been a more gradual process in some markets than others — Europe accounts for 40 percent of revenues, while Asia Pacific, the Middle East, and Africa collectively account for less than a quarter. But almost every McDonald’s outlet is locally owned and locally staffed, and, wherever possible, uses locally sourced supplies. Each franchisee is encouraged to invest in the local community; and the global hamburger leader goes to great lengths to customize menus to local tastes.
Google [GOOG
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] is perhaps the ultimate “placeless” firm— all of its services and products are delivered to consumers worldwide via the “cloud.” It apparently doesn’t matter where Google offices or servers are as long as you can access its products whenever and wherever there’s an online connection. Yet recently the firm paid a high price for thinking it was “beyond geography.” In January 2010, Google announced it was considering leaving China— both its cyberspace market and physical presence there— after discovering the Gmail accounts of Chinese political dissidents had been hacked. This was not the first time Google had a run-in with China; for years it had balked at having to comply with Chinese government censorship of search requests on its Chinese- language Web site. In the ensuing spat between Google and the Chinese government, few believe Google won. Meanwhile, the company faced invasion of privacy lawsuits in Germany after it photographed streetscapes featuring private homes for its Street View mapping product. Google, a company whose primary product has no physical form, had suddenly become firmly rooted in place.
John A Quelch & Katherine E Jocz
Co-Authors, "All Business Is Local"
The Internet and the mobile phone are the most recent in a long line of technological advances that have transformed marketing by lowering physical barriers of place. But as the Google example shows, although cyberspace markets theoretically dispense with conventional geographical boundaries, in practice, geography still counts. Political boundaries with associated laws, regulations, taxes, and trade agreements still govern sellers and their digital or physical products. Relatively few online transactions cross national borders.
The geographical location features embedded in the latest communication technologies are further increasing the importance of place in the marketing mix. With great precision, these geolocation technologies are able to identify the location of a mobile phone and report it to the user, the phone company, or third parties. Firms can offer consumers ads and promotions based on their physical location. Sites like Yelp allow consumers in turn to submit geotagged reviews and photos (which verify that the reviewer actually visited the establishment in question) that increasingly make or break the success of restaurants, hotels, and other service businesses.
Excerpted from "All Business Is Local: Why Place Matters More Than Ever in a Global, Virtual World" by John A. Quelch and Katherine E. Jocz by arrangement with Portfolio Penguin, a member of Penguin Group (USA), Inc., Copyright © 2012 by John A. Quelch and Katherine E. Jocz
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