Consumption patterns are greatly influenced by purchasing power, which has risen globally, but most acutely in emerging markets. Future global economic growth will significantly influence the levels of wealth and purchasing power among consumers in different countries, as well as the continued spread of technological use among consumers. But the direction and speed of this growth between now and 2015 remain uncertain, since the rise and fall of economic cycles ultimately depend on how other macro factors unfold. In addition, while technology has already penetrated many aspects of modern life, the potential of technological developments to further transform consumer behavior is less than certain. Will the convenience and experience of online shopping equal or exceed that of conventional shopping? If so, how enthusiastically will consumers embrace these technologies?

Rice and Beans

The first possibility, rice and beans, would be weak economic growth worldwide—or worse yet, a prolonged global recession or a global economy disrupted by unpredictable events (see Figure 3.3). Such a scenario would restrain the rise of the global middle class in emerging markets and elsewhere. Consumers in developing countries would be empowered and demanding, but possibly unable to afford the quality products they want.

If this scenario materializes, companies must find innovative ways to price quality goods at very low prices for mass consumption in order to get a piece of the shrinking consumer pie. Domestic, homegrown companies in developing countries may be more agile and capable of supplying such products, and may also be viewed as less culturally intrusive. By contrast, global companies entering these markets may find themselves targets of a serious backlash, as they may be viewed as exploitative of poor consumers. This backlash could gain momentum if small groups of technologically savvy, discontented consumers coalesce to take on large corporations. Under this scenario, global corporations may increase their likelihood of survival by scaling back intrusive marketing efforts, toning down their brands, and operating as smaller, regionalized companies that partner with domestic brands.

World Bazaar

If the global economy maintains moderate and stable growth, allowing consumption patterns to remain similar to those today, consumer demand will continue to span a wide spectrum from customized, quality goods to subsistence basics. The scenario that unfolds would be a world bazaar. Increased fragmentation of consumer groups could confer a competitive advantage upon global companies that have already established themselves in emerging markets, as they can more easily command loyalty among existing customer groups. Companies that wish to enter these markets must strive to quickly win the hearts of fragmented consumers and repackage products to reach masses of lower-income consumers. Internet usage will continue to increase moderately and reach saturation in developed markets, where online channels will increase consumer leverage, but not revolutionize buying behavior. However, continued lack of Internet infrastructure in parts of the developing world will limit companies’ ability to reach those consumers in the lower-income brackets through electronic marketing tools. Instead, companies are more likely to break into those markets through word of mouth or community networks in more rural areas.

Companies that manage to be all things to all people through multiple, differentiated product lines that offer high-end to low-end merchandise may be more uniquely capable of reaching a broad consumer base. The backlash against culturally intrusive foreign brands will continue within developing countries, but this backlash will be somewhat alleviated as dissatisfied, marginalized consumers are counter-balanced by consumers who have experienced rising living standards and purchasing power.

Hey, Big Spenders

The third scenario, hey, big spenders, envisions savvy, technologically sophisticated, and affluent consumers worldwide, with new concentrations of middle-income consumers in developing countries. Global economic growth continues to surge, spreading wealth across different income groups in both advanced and emerging markets. As personal income levels continue rising, affluent consumers dominate consumer markets. Demand for premium products swells across the globe, with virtually all consumer segments seeking higher quality, more upscale products that they are now able to afford.

Most of the nouveau riche will be found in the modernized cities of rapidly developing countries like China and India. These affluent consumers, younger and more technologically adept, will demand products that display their newfound status and fit with their lifestyles. They may also have developed pre-established loyalty to certain powerful domestic brands. As a result, consumer goods offered by global corporations— ranging from technological gadgets to furniture—may be characterized by more culturally sensitive designs, small sizes, and multifunctionality, together with customizations and unique experiences for consumers. With consumers in emerging markets wielding such power, customers in developed markets in North America and Western Europe may have to start adapting to designs geared toward Chinese consumers. In addition, companies will be compelled to devise creative marketing tactics to reach increasingly sophisticated consumers, who frequently conduct their purchases online and also exchange product evaluation information with other consumers worldwide via multiple media. Companies that sustain global technological infrastructure and networks as well as optimize the use of new marketing tools—such as blogs, product placement, and advertising via mobile phones and computing devices— will find themselves well positioned to reach their consumers.

In any of these cases, global corporations must take the cue from their empowered consumers. Companies may find themselves fending off negative media and risking vandalism if they are too aggressive or intrusive in their marketing efforts. But they will watch market share slip away if they treat themselves as mere providers of goods and fail to tap into new demands and growing markets. Given the instability of this environment, leaders of today’s corporations will find themselves in an elaborate balancing act.