Consumer mindsets are local despite globalization

Decades of globalization have undeniably brought dispersed societies closer together. As they travel abroad, interact on social media, and stream the same movies and music, people around the world are increasingly exposed to similar trends, perspectives, and values. Many global companies have therefore assumed globalization is helping to create vast borderless markets of like-minded consumers and that they can appeal to certain demographic groups with similar messages. This narrative has gained particular strength regarding global “mega segments,” such as Millennials, Gen Z, and the affluent.

However, our research at Boston Consulting Group (BCG)’s Center for Customer Insights (CCI) has found that the mindsets of global consumers remain far from homogenous. Consumer attitudes vary significantly from one market to the next across a wide range of goods and services. In fact, these geographical differences are just as pronounced within demographic segments that are often regarded as having similar perspectives and needs.

Understanding the nuances that really drive consumer choice has rarely been as critical as it is now. Well before the COVID-19 crisis, global markets were already being transformed by societal and technological changes. Now, with the world’s economies at various stages of recovery, global companies are scrambling to comprehend the ways in which the pandemic has shifted purchasing behaviour and usage in their product categories. Many marketers are relying on methods they’ve traditionally used to position their products: they’re crunching demographic data and using surveys and focus groups to quiz people on a wide range of attitudes and sentiments.

The risk is that companies could make unwise choices by building global campaigns based on generic archetypes. As part of an intensive international research project into the drivers of consumer choice, the CCI interviewed 15,000 consumers of different ages and income segments in China, Japan, Australia, France, Germany, and the United States. We asked consumers to respond to 56 different attitudinal statements.

We found that consumers’ attitudes and behaviours remain highly localized, across all income and age segments. Differences are not only sharp between the East and West, but also between Asia’s two largest markets. Consumers in Australia, France, Germany, and the US exhibited far greater individualism, for example. When asked to rank their most important attitudes, respondents in these nations agreed strongly that it is “important to be an individual”—a statement that resonated less in Japan and failed to make the top 10 attitudes in China.

There was far higher agreement in Japan and China than in the West, on the other hand, that technology “enables a richer life,” and that it’s important to be recognized for “sense of style”. With some attitudes, Chinese consumers stood apart from the rest of the markets we studied. Eighty-six percent of Chinese consumers expressed interest in how others perceive their purchases, which was not a major concern in other countries. Only 27% of Germans and 24% of French cited others’ perceptions as important. Around 80% of Chinese consumers agreed they are optimistic about the future, again far more than in any other market. In Japan, only 25% expressed optimism for the future.

Our findings also call into question the notion that the attitudes of younger generations and high-income consumers around the world are converging. When we compared cross-country correlations of attitudes for Gen Z consumers to those for all respondents, we found for example that the attitudinal differences among young consumers are just as distinct from one market to the next (see chart below.) Attitudes also differed as sharply among high-income segments as they did for other income levels.

Our study did find some striking attitudinal agreement among consumers in some countries. US and Australian consumers aligned on a surprising range of sentiments. For instance, they placed a similarly high priority on being among “small groups of close friends,” and agreed to a similar degree on the benefits of technology and on their optimism about the future. Overall, however, such agreement from one market to the next was the exception, rather than the rule.

Just as consumers’ attitudes differ dramatically around the world, so do their needs. Consider snacks: Chinese consumers cited a much higher need for health and quality when purchasing a snack than did those in the other markets. Japanese consumers attached much higher importance to “convenience” when snacking. This may not be surprising for some categories: leading international brands such as Nestle, Philips, Starbucks, and McDonalds have long known that it is important to tailor products such as snacks, beverages, and menus to local tastes in the markets where they compete.

What is surprising is that we also found that consumer needs vary by country in categories in which companies invest relatively little to localize, such as automobiles, insurance, PCs, and payments. In only a small minority of the product categories—most notably content streaming and luxury retail—were needs found to be somewhat similar across the globe. Other BCG CCI research into consumer sentiment during COVID-19 showed that this localization may intensify as consumers rally around local brands and communities.

These findings tell us that global archetypes of consumer mega-segments based entirely on demographics are exaggerated. Just because Gen Z consumers in different countries play the same online games and engage with the same social media channels doesn’t necessarily mean they will respond the same way to a broad marketing strategy.

A key implication of our research is that one-size-fits-all global “playbooks” are unlikely to work for most business-to-consumer categories. Companies must take a country-by-country approach to tailoring their products and positioning to local audiences, and take into account the ways in which local mindsets influence needs—even in categories where they don’t traditionally localize. A more nuanced understanding of what drives consumer choice can make the difference between dominating a category in a target market and leaving significant money on the table.

Read more on Demystifying Global Consumer Choice.