The prophet’s words got lost

Twenty years on from the publication of Professor Ted Levitt’s The Globalization of Markets, it has become fashionable to knock most of the premises underlying his seminal essay. ‘Naive’ is the word most commonly employed by his critics, as we are invited to explore a commercial world characterised, not by the superbrands of a few homogenised multinational corporations, but by increasingly fragmented local markets fractiously resistant to US standardisation. The advent of Mecca Cola stands out, anecdotally, for all that is wrong with the Levitt Doctrine.

Yet what exactly was the Levitt Doctrine? As Alan Mitchell points out, close perusal of the original scripture reveals a surprising fact. Not once in his essay does Levitt use the term ‘global brand’. His chief interest is how advancing technology is fostering a ‘single converging commonality’ and the ‘alleviation of life and the expansion of discretionary time and spending power’. The benefits of civilisation, it has to be said, are not necessarily co-terminous with those of branding.

Nevertheless, Levitt did have some important things to say on the multinational corporations responsible for what we now call global brands – and they were largely negative. He found them cumbersome, bureaucratic and – in the case of their marketing departments – frequently spendthrift and prone to mindless replication. If they were ever to harness global economies of scale, they would have to become a lot more fleet of foot.

That, in the event, is precisely what has happened in the past two decades, with companies delayering their management and leveraging supply-side benefits from improved production and buying processes. Who would now recognise the IBM, Procter & Gamble or General Electric of 1983?

Where Levitt seems to have been less intuitive is in his assessment of evolving consumer behaviour. Nowadays, it is conventional to laud market differentiation over the homogeneity which Levitt apparently foresaw. Closer examination might reveal this Levitt revisionism had little to do with his actual theory, and everything to do with unrealistic expectations held by US multinationals (and no doubt their ad agencies) following the dramatic collapse of Soviet power and ideology at the beginning of the Nineties.

The new markets that opened up – including China – did provide great scope for the growth of branded goods, but not exactly in the way anticipated. Top brands found they were too expensive, and that the unlocked aspirations they catered for were soon seduced by local brands, which copied the essentials, but could better exploit local knowledge and employ keener pricing. More recently, though for different reasons, there has been stiffening resistance to global brands in Muslim countries.

Today, perhaps only ten to 15 per cent of marketing spend comes from truly global brands (see WPP’s latest figures). It is also clear that some sectors have an inherent tendency to global branding – cars, finance, technology – whereas others don’t.

But that doesn’t necessarily mean Levitt was wrong; simply that, in assessing consumer trends, his timing may have been out. In other respects, he seems to have been misunderstood – perhaps wilfully – by his disciples.

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