Critical Review of the Globalization of Markets

Critical Review of The globalization of markets (Theodore Levitt 1983).

Review by Samuel Abraham @: [email protected] In current years, globalization has turn out to be a major theme in every debate of international marketing strategy. Supporters of the philosophy of “Global” products and brands, for example professor Theodore Levitt of Harvard says that in a world of growing internationalization, the key to accomplishment is the development of global products and brands, in other words, an emphasizes on the marketing of standardized products and brands globally (Levitt, 1983). “Our time is driven by the Republic of Technology (whose) ultimate law…is convergence, the partiality for everything to turn out to be more like everything else.” Daniel J. Boorstin. After reading the given articles, one realizes that these days a lot of changes take place due to the companies’ tendency to globalize. Increasing opportunities of e-business and other Internet activities permit companies to emphasize not just on local or national markets, but as well on varied global markets. That is why the procedure of globalization needs detailed research and analysis. Theodore Levitt, the writer of the first article “The globalization of markets”, tries to carry out that research and analysis showing how the modernity tradition influences most countries and how refined new technologies influence further progress of the global marketing. He in addition explains the word – standardization, which is founded on standardization of products, manufacturing, and the institutions and commerce, and which is definitely expected for succeeding in global competition. His study of the Model T leads to perceptive of the relationships between competitive producers’ lower global costs and augmented quality and dependability which let them to enter far-off markets, and amplified customers’ preferences in these markets. Additionally, he identifies the outcome of Hedgehog, where he states that “The fox knows a lot about great many things, but the hedgehog knows everything about one great thing”, and the author makes the difference amid

the international company that “knows a lot about a great many countries” and the global company that “knows everything about one great thing”. (Wilmot, 2001) Theodore Levitt is time and again considered to be the first to identify the tendency towards globalization and states that: “companies must learn to operate as if the world were one large market – ignoring superficial regional and national differences…” Additionally, he argues that the companies that do not adjust to the new global realities will turn into the victims of those that do. (Wilmot, 2001) Theodore Levitt’s 1983 article regarding the globalization of markets is one of the most discussed papers on this subject. A lot of companies have turned into disillusioned with the sales in the international marketplace as old markets grow to be saturated and new ones have to be found. Levitt in his article asserts that well-directed companies have stirred from focus on customizing items to offering internationally standardized products that are superior functional, dependable and low priced. Only global companies will accomplish long-term achievement by concentrating on what everybody wants rather than worrying concerning the details of what everybody thinks they might like. (Nill, 2003) In accordance with Levitt an influential force drives the globe toward a converging shared aims, and that force is technology. It has popularised communication, transport, and travel. It has made remote places and poor peoples keen for modernity’s allurements. Nearly everyone in all places wants all the things they have heard regarding, seen, or experienced via the new technologies. Levitt wrote this article in 1983. If “The Globalization of Markets” were the single article one had ever read regarding marketing, one would find its argument convincing. But in the situation of its times, what Levitt was proposing was little short of a revolt in both how companies structured themselves and in how they thought regarding what they were doing. (Nill, 2003)

Levitt’s argument flew in the facade of hallowed principles of marketing together with and what seemed to be the harsh realities of the world as it was in 1983. Consider, for instance, what had come to be recognized during the quarter-century before the 1983 publication of “Globalization” as “the marketing concept.” We do not mean a marketing theory; in reality we must italicize the article: the marketing concept. By 1983, this thought, so effortless that it hardly seems to deserve the tag “concept,” was that companies should provide customers what they want. The marketing idea gained money during the 1950s and was based on the idea that the “problem of production” had been solved. Supply-side shortages not being in the offing, there was no need for companies to be guided by a production analogue to the marketing idea. “The sales concept,” for example it was, had as well fallen into disgrace in the literature. The sales idea was regarding pushing a creation onto the customer through sales techniques. The “sales concept” was fading as early as 1941. IBM, for instance, which was in the procedure of developing one of the greatest sales forces in the past, was instructing its salespeople by that time to tell prospects that their job was not “to sell” but “to serve.” (Hill, 2004) Therefore, we appear at “the marketing concept.” Following the saying rest the idea that business starts not with the factory but with the consumer. Marketing was the most significant of business functions since it drove everything else or as a minimum that was the ideal. In reality, businesses seemed to relapse to the contentment of their own interior needs at the cost of customer desires. Glance through, and you will discover that this is true nowadays. The guarantee of customer satisfaction is universal. (No business promises customer disappointment.) Delivering on the guarantee is a good transaction less common. There are two particular references to the Marketing Concept in “Globalization,” and the concept is alluded to somewhere else devoid of being labelled. Levitt treats this essential idea of his discipline devoid of much respect. Someway, corporations had authorized themselves

to fall victim to “the perverse practice of the marketing concept and the absence of any kind of marketing imagination. . . .” (p. 98). (Levitt, 1983) “Most executives in multinational corporations are thoughtlessly accommodating. They falsely presume that marketing means giving the customer what he says he wants rather than trying to understand exactly what he’d like.” What Levitt seems to be saying is that it is up to the corporation to know more regarding what the customer wants than the customer himself or herself does, or at any rate more than the customer can clear. He uses as an image the failed effort by Hoover to market its washing machine all through Western Europe. The cause of this breakdown was Hoover’s “‘proper’ marketing orientation.” The business conducted consumer study at a fine-grained stage that exposed that customers in different countries wanted dissimilar features. (Hill, 2004) The difference between internationalization and globalization is an intensely significant one and important for managers to realize. The cause is that in principle, the confirmation regarding the size and growth of markets could be reliable with both, because they are ways of telling the world, of interpreting the economic interdependence of societies living in dissimilar countries. We are surprised to find that the most challenging idea in Levitt’s article is so methodically misunderstood. For Levitt, globalization is an idea that describes much more than just an augment in economic switch across borders; it describes a alteration in the character of those exchanges, which then transforms the societies engaged in the exchange. What comprises globalization, in our way of view, is communication that changes things rather than leaving them the same. Victorious firms and the managers who sprint them hardly ever leave the world the way they found it. The identical is true of the global economy, whose markets have, as Levitt predicted, been changed by the efforts of firms to pay attention more sincerely to consumers. More willingly than taking consumers’ preferences as specified, as facts of lives and markets, they have treated them as results themselves, with

deep effect. Not all consumers have been convinced, and not all markets changed. Some are just still international. Some are local. (Chonko, 1995) However there are a few global markets out there and Levitt’s article has correctly convinced managers to think regarding whether those are their markets, and otherwise, whether they can be made so by their efforts. If all markets were global, the world of managers would turn out to be dreary. One strategy would fit them all; the persistent force for scale and range would dominate their thinking. In that logic, Levitt was writing regarding the end of business history, just like Fukuyama had written concerning the end of political and economic history, when a few ideas were increasing, with nothing to confront them. Fukuyama fretted that our world at the end of the past would turn into a boring place, as Levitt’s world of globalized markets would have been for us. We are fortunate that he was wrong regarding the outcome. And we are fortunate that he was right concerning the way the global markets work, through changes in preferences as firms and consumers, capitalisms and cultures interrelate with one another. Globalization is transformative. The market is not what firms find; the market is what firms make of it. (Cateora and Graham, 2005) In the end, we are also unfortunate that Levitt was right. We now live in a world where people respond negatively as well as positively to the entreaties and devices of dominant, global, and frequently emphatically Western firms. One other thing Levitt missed was the likelihood that the globalization of markets would turn out reactions next to it. The diverse fundamentalisms of the world are regularly anti-modern, infrequently anti-Western, and sometimes noticeably violent. Some societies may have witnessed growing homogeneity in their preferences; however others have seen increasing heterogeneity, a deviation from the direction of deal and financial incorporation, an extraction from the marketization of social life. (Cateora and Graham, 2005)

References Cateora, P. R. And J.L. Graham (2005), International Marketing, 12th edition, New York: Mc Graw Hill/Irwin. Chonko, L. (1995), “Ethical Decision Making in Marketing”, CA: Sage. Frankel, J.A. (2000), “Globalization of the Economy”, National Bureau of Economic Research, working paper no:7858,2000. Hill, C.W.L. (2004), “Global Business Today”, 3th edition, New York: Mc Graw Hill/Irwin. Levitt, T.(1983), “The Globalization of Markets,” Harvard Business Review, May-June 1983, pp. 92-102. Nill, Alexander (2003), “Global Marketing Ethics: A Communicative Approach”, Journal of Macromarketing, 23(2):90-104. Wilmot, S. (2001), “Corporate Moral Responsibility: What Can We Infer from Our Understanding of Organizations?”, Journal of Business Ethics, 30:161-169.