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 / Third Quarter 2000 / Issue 20(originally published by Booz & Company)


John Quelch: The Thought Leader Interview

S+B: Not to put too fine a point on it, but you're saying marketers believed the world consisted of business-class-flying global road warriors, but in reality it consists of a lot of Iranian revolutions?

QUELCH: Exactly. It's easy to go international with a standard global campaign. But it's not easy to build global sales volume decade after decade with a standard global approach. Attention has to be given to local adaptation. It's not just WTO related. There has been brewing for about a decade a desire, perhaps led by national governments, to fight the trend toward globalization and the increasing influence of multinational corporations.

So in a sense, there has been a national government agenda against global marketing. It's unarticulated, but definitely present. Governments want to assert local differences, to assert national differences, and to encourage populations, on a patriotic basis, to subscribe to those differences.

S+B: I'd argue that it actually is articulated and explicit in many countries. For years, we've tended to accuse Japan of favoring the local. But France has acted in largely the same way.

QUELCH: Of course. Whenever there's an economic recession, or an economic downturn, free trade goes on the back burner, and the protectionists come out of the woodwork. And when there is the threat of a downturn, whether it be in France or in India — or, for that matter, a decade ago in the United States — you will then see patriotic "buy national" campaigns asserting themselves.

S+B: Go back to the Coke example. Are you saying there really is no such thing as global marketing?

QUELCH: No, not at all. What we're saying is that global marketing can only carry you so far in terms of market penetration. Obviously, in many product categories, one can identify a segment of consumers or customers that is driven by the same benefit requirements, the same attribute priorities, across national boundaries. But there comes a point at which, once one has skimmed off that particular group of customers, one has to accommodate more of the local preferences of the remaining consumers.

S+B: So what does this mean organizationally?

QUELCH: First, common sense dictates that every time you adapt your marketing program, it costs money — in extra administration and in added complexity costs associated with shorter production runs, different product formulas, etc. This means that the cost of the marketing-plan adaptation must be more than covered by the extra profit generated as a result of the adaptation. That extra profit can come from selling more units at the same price; presumably, a portion of the market that wasn't interested in the unadapted product will now be interested in it. Or the extra profit can derive from selling the same number of units at a premium price, because the market is prepared to pay a price premium for the local adaptation. You end up with 8,000 brand SKUs like Nestlé has, but the question again arises: Are the complexity costs associated with all these SKUs more than offset by the upside profit that you have generated as a result of all the adaptation?

The organizational issue is very challenging for a company like Coca-Cola. Having said "think global, act local" for years, if you suddenly start saying "think local, act local," the question arises: How many people does the company have at the local level who can think locally. Atlanta is finding that the depth of strategic management talent at the operating subsidiary level is, in some cases, short of where it needs to be in order for better decision-making to be done.

S+B: You could argue that the optimum model for global marketing management is a Cisco or Dell model, in which you create a "value web" where goals are set, but decisions on how to achieve those goals are made in the field, by independent operations.

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