Convergence and Divergence in Consumer Behavior

Consequences for Global Marketing and Advertising

The central question of this dissertation is whether consumers worldwide are becoming alike or whether they remain different. In the past decades multinational companies and advertising agencies have believed in increasing universality of consumer values and behavior across countries. This belief was caused by the success of a few global brands such as Coca-Cola and Levi's. For professionals the assumption of universality of human values is convenient, as it would enable global companies to develop standardized brands with standardized marketing and advertising programs across countries. If, however, evidence is found that worldwide people's values, and thus what motivates them to prefer some products or brands to others, are different and remain different, it should be the end of standardized global advertising.

The findings reported in this dissertation are based on meta-analysis of cross-country consumption data for a large number of product categories and media. Time series data were used to measure convergence or divergence over time. Groups of countries worldwide and economically similar groups of countries were compared. Correlation and regression analysis were conducted using GNP/capita and Hofstede's (1980, 1991, 2001) dimensions of national culture to find predictors for differences in consumer behavior.

It is true that in the industrialized world incomes are converging, but convergence of consumption is limited to a few product categories that are not representative for total consumption. Several cases of convergence actually mask diversity. Convergence is mainly found from macro-institutional data and our calculations at the micro level demonstrate many instances of divergence of consumption.

Our findings are that contrary to the assumption of convergence of consumer behavior across countries, there is evidence that with converging incomes, people's habits are stable in time or even diverge. For many products, in the economically advanced countries a ceiling of convergence is reached at a certain level of wealth at a certain point in time. For the "old" products, most advanced countries reached such ceilings long ago, leaving no room for further convergence. This is reflected in ownership and usage of many products.

Over time a common pattern can be distinguished. For many new commodities initially income differences explain differences in ownership. At some point in time, the numbers of units owned per 1,000 population of countries have converged. When that point is reached, ownership and especially usage start to diverge. The differences can be explained by culture. Penetration of telephone main lines for example converges, but in Europe, even among the wealthy groups, variance across countries with respect to numbers of telephone lines per family, numbers of international calls and ownership of mobile phones is considerable. In Europe, around 1990, both ownership of television sets and cars per 1,000 inhabitants had converged. At the end of the century, countries had diverged with respect to the numbers of television sets owned per family, ownership of wide screen TVs, viewing time and numbers or types of cars owned per family.

The patterns followed by "old" technology can be used to predict the pattern of "new" technology. New technology (e.g. computers) has not reached the final point of convergence, so differences between countries are still mainly related to national income, but its future can be predicted. We have found that the older the product category, the stronger the influence of culture is. This explains why food products are persistently culture-bound.

What is new changes fastest, what is old changes slowest. Differences in consumption of "old" products are not likely to change during our lifetime. New technology converges fast, but only at the macro level. At micro level soon after introduction of new products, usage starts to differentiate. These differences can be explained by values of national culture.

Modern processed food keeps carrying the values of the generic "old" food ingredients. Milk consumption, for example is historically related to climatic differences. Milk is an energy provider in cold climates and milk perishes easily in warm climate. Although in modern times milk can also be kept in warm climates because of refrigerators being everywhere, collective memory says that milk cannot be trusted. This lack of trust in milk products has become a cultural factor and is extended to the consumption of ice cream that varies enormously across countries in Europe. Like milk, more ice cream is consumed in the cold climates, where historically people have trusted products like milk more.

We find that three product categories have homogenized most: soft drinks, soaps and cigarettes. These three categories have been dominated by a few large Anglo-American multinationals. Convergence is likely due to the dominance of a few early multinationals and their global brands such as Coca-Cola, Procter & Gamble's and Unilever's soap brands and Marlboro cigarettes. The use of their products and brands has converged with converging incomes in Europe, but convergence has stopped at a threshold, a point where cultural factors explain the remaining differences.

Initially the early global brands have caused convergence of their categories because of their advanced marketing methods. With increased global competition the companies of these global brands searched for efficiency in operations including global standardization of their advertising. Global advertising campaigns are generally based on added value. These values are a reflection of the values of the culture of the country of origin of the advertising campaign, the culture of company management and advertising agency people who created the advertising. These values appeal more to people of cultures of similar values and less to people of different values. In particular for the volume of soft drinks and cigarettes we found variance that is strongly related to culture. These global, standardized advertising campaigns in turn are likely to have stopped the process of convergence and even have caused the now existing differences between countries.

Advertising meant to include universal values in reality includes culture-bound values, the values of the creator of the ads. Thus, the role of global advertising in the globalization process is different than intended. As consumer behavior varies across cultures, global standardized advertising is not equally effective in all markets. It is wasted in markets where consumer values are different from the values of the advertising campaign. Coca-Cola and Levi's have learned this lesson the hard way. They lost market share in alien markets. Coca-Cola changed their centralized strategy into localized strategies. Levi's had to close operations in Asia.

Our findings confirm that there are no universal values. Also so-called global communities with similar values do not exist. Global homogeneous markets exist only in the mind of the international marketing manager. Even people with similar lifestyles do not behave as a consistent group of purchasers because they do not share the same values.

There also are no "new" values, caused by a "new" economy. With changing circumstances "old" values are expressed in different ways. In the new post-scarcity society, the "old" values become manifest in consumption and consumer behavior. People's values, attitudes and behavior are surprisingly stable in time. The stability of cultural values is in contrast to the expectations of economists, that with converging incomes, cultural values and habits will also converge. The opposite is true, cultural values are stable and with converging incomes they become more manifest. When people possess more or less enough of everything, they will spend their incremental income on what best fits their value pattern. The ultimate ideal of Americans is the five-car garage, the Dutch will buy more luxurious caravans (holiday trailers) and the Spanish will eat out even more than they do now. More discretionary income will give people more freedom to express themselves and they will do that according to their own, specific value patterns. This also applies to the means of the new economy.

Differences in media use across countries are persistent because media are part of peoples' culture. A strong example is newspaper readership. Since 1950 the differences in circulation of daily newspapers per 1,000 people worldwide have remained stable. Worldwide the differences are related to national wealth. In economically homogeneous areas, such as Europe, the differences in readership of newspapers are related to culture. Ownership of television sets may have converged, but differences in viewing time have not converged and are culture-bound.

Also the new media are used by people for the same purposes as they were using the old media. This is demonstrated by the influence of culture on the use of the Internet. The people who have integrated the Internet in their daily life will use it to enhance current activities. They will use it for applications they have been doing before, but the new media will enhance these activities. People will use the new media for the interests and habits they acquired in the country where they grew up. These habits are part of their national culture and they are persistent. McLuhan's (1964) philosophy of the new media innovations, that they are merely enhancements or extensions of ourselves, is still valid. The consequence of this philosophy is that new media like the Internet will not lead to convergence of values. Instead, they will lead to divergence in Europe and even more worldwide.

Consumption is related to culture. Consumption differences between countries can be understood by culture-analysis with Hofstede's cultural dimensions. Different cultural values are attached to different product categories. Value differences related to specific consumption activities can be used for segmenting markets in the global market place.

Consumer behavior is the most important area of study for marketing and advertising. Those who want to sell to or communicate with consumers must know what moves them. During the 20th century plenty of theories have been developed on what moves consumers within their cultural environment. Little has been done to compare consumer behavior across cultures.

The problem is that in consumer behavior theory, culture is merely viewed as an environmental influence on consumer behavior, while our findings demonstrate that culture influences the central values of people that in turn influence consumption and consumer behavior. Modern marketing uses these central values for developing effective marketing and advertising programs. When developing programs for global markets, marketers must - but more often do not - realize that programs reflecting their own values are likely to be less effective in markets where people have different values.

The findings of our study can be generalized for international market development theory and can be applied to strategy development. Branding strategies are cultural phenomena and so are market research methods. For efficiency purposes, cultures can be clustered according to cultural values. Finally, our findings can be used for understanding the effectiveness of public policy measures.

Marieke de Mooij
University of Navarre, May 2001