With the introduction of the euro as a genuine common currency now less than a year away, Europe is bracing itself for the upheaval that will undoubtedly ensue. However thorough institutional preparation may be, the fundamental role played by national currencies (whether as rational, economic tools or as emotional rallying points) suggests that the changeover to the euro is unlikely to be quick or painless.
The establishment of a single unit of exchange can be interpreted as both a cause and a consequence of economic convergence – the removal of one more barrier to free trade could be a result and a driver of converging living standards, interests and commercial and political freedoms.
To the casual observer the trend towards homogenisation is clear. To some, however, the future is predictable only to the extent that, despite institutional reforms, converging incomes will and do lead to diverging consumer behaviour. This, at least, is the argument put forward by Marieke de Mooij, a director of the Cross Cultural Communications Company, in a recent paper published in International Marketing Review.
Taking as her starting point the published assumptions of visionaries such as Theodore Levitt, who argued in
a 1983 article, that “the world’s needs and desires have irrevocably homogenised”, de Mooij goes on to refer to commentators such as Philip Kotler and Jagdish Sheth who, though less quoted than Levitt, maintained that while convergence on certain economic indicators may indeed occur, markets would in fact diversify, with a growing number of local products and brands appearing on store shelves alongside their global counterparts.
De Mooij’s main point of reference, however, is Geert Hofsteede, who in his book, Cultures and Organisations, Software of the Mind, lays out a framework for assessing cultural differences based around five indices: “power distance”, “individualism”, “masculinity/femininity”, “uncertainty avoidance” and “long-term orientation”. Though originally developed to address issues in intercultural management, de Mooij finds that the framework can be used to understand differences in consumer behaviour and uses them to predict that, while the future may be predictable, the only predictability is that differences between cultures will remain, rather than diminish.
Applying this to consumption patterns as diverse as mineral water tastes, car ownership, newspaper and book readership and Internet usage, de Mooij finds that Hofsteede’s indices provide a better correlation to consumption patterns than do economic indicators such as per capita GNP. Mineral water consumption, for instance, correlates most strongly with “uncertainty avoidance” and with the “masculinity/femininity” dimension of the culture in question, while femininity and small “power distance” are found to be good predictors of Internet usage.
To sum up, says de Mooij, disappearing income differences will not, in themselves, cause a homogenisation of needs. It is therefore important to understand national cultures and the way in which these affect consumer behaviour.
John Shannon is president of Grey International