Despite Decades of Globalization, Consumer Demand Remains Highly Local
BOSTON—A considerable market-by-market divide exists in consumer purchasing decisions in key economies, reinforcing the need for brands to develop a differentiated, country-specific approach to win shifting demand, according to a new report by Boston Consulting Group (BCG) and its Center for Customer Insights (CCI). The report, titled Demystifying Global Consumer Choice, is based on a survey of more than 15,000 consumers across Australia, China, France, Germany, Japan, and the United States. It highlights the ways in which COVID-19 has fundamentally shifted purchasing behavior as companies try to make sense of the needs and drivers of consumer choice.
Consumers’ Mindsets Remain Highly Localized
The survey results indicate that despite decades of globalization, consumers’ attitudes and behaviors remain highly localized and vary significantly between consumers in the East and West, as well as within Eastern markets. This finding was particularly evident in relation to the importance that consumers place on public perception: 86% of Chinese consumers said that such perception is important, compared to an average of 34% of consumers in the four Western countries. Similarly, more than 88% of Chinese consumers said they consider technology to be a positive force and do not have strong privacy concerns about it, while consumers in Western markets expressed more muted enthusiasm for technology. Among Western consumers, Americans stand alone in the extent to which they consider religion to be a critical aspect of life.
It is vital for companies to invest in understanding local variations in needs. For example, Chinese consumers cite a much higher need for health and quality when purchasing a snack than do their counterparts in France. Even categories such as leisure travel, luxury retail, and content streaming—where needs remain similar worldwide—show distinct differences between markets.
The study also found that needs and attitudinal differences are just as distinct by country among Gen Z and Affluent consumers as they are among older age groups. Consequently, overreliance on global megasegments could be risky for companies.
“There is a common assumption that all Gen Z and millennial consumers around the world make purchasing decisions in the same way. Our research has confirmed that this notion is simply untrue,” said Aparna Bharadwaj, a BCG managing director and partner and global head of BCG CCI. “Attitudinal differences among young consumers are just as distinct by country as they are for older age groups. It’s important for brands to take local nuances into account because these factors play a significant role in consumer choice.”
Context Completes the Picture
Although important, consumer mindsets and demographics alone are not primary drivers of purchasing and consumption decisions. For example, although large majorities of consumers around the world—ranging from 67% in Japan to 81% of Australia—agreed that value for the money is an important consideration, only a small minority cited such value as one of the leading needs they considered in their most recent dining or auto purchase. Likewise, although 52% of consumers surveyed said that they routinely purchase environmentally friendly products, they cited value and quality as the two most important considerations in their most recent clothing purchase. Sustainability failed to make the top ten.
Changes in context often influence how consumers fulfill their needs. In general, the more frequently consumers purchase or consume items in a given category, the more powerfully context affects the decision. For example, the most important variable (out of more than 100 considered) in choices made on particular dining occasions is whether the consumer is dining with others or alone.
As the complexity of the global economy continues to grow and as consumer behaviors shift in response, these findings have key implication for brands. In the future, consumer archetypes will play a helpful but increasingly limited role as brands work to adapt their value propositions to win a specific moment of demand, rather than targeting 100% of any customer’s share of wallet. To understand the true drivers of consumer choice market by market, companies must arm themselves with comprehensive research that combines a thorough understanding of attitudes and demographics with a deep appreciation of context.
“The challenge for companies is to understand context alongside other factors that influence the tradeoffs consumers make,” said Lauren Taylor, a BCG managing director and partner. “Companies that truly understand consumer needs and decision making and build an informed, differentiated, market-specific strategy to target a specific moment of demand will be well positioned to win market share.”
About the Survey
The BCG Center for Customer Insight, Global Drivers of Consumer Choice, survey ran from August 22 to September 27, 2020. BCG surveyed more than 15,000 consumers of representative ages and income levels across Australia, China, Germany, France, Japan, and the United States, asking them to identify their level of agreement with 56 attitudinal statements. The survey explored the key needs that influenced their most recent purchase or consumption decision, as well as the context at the time of their most recent purchase or usage occasion in 13 categories: beverages, snacks, dining, payments, skin care, health supplements, streaming, apparel, luxury retail, PCs/tablets, leisure travel, insurance, and automotive. This article is the first in a series focusing on research that we will expand to 18 of the world’s most important markets in coming months.
A copy of the report can be downloaded here.
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