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May
13

Rise of the new-age consumer: Effects of globalization and digitalization

Globalization and digitalization are the hallmarks of the 21st century. While globalization has been a term which has been widely used in the last three decades, the advent of the internet has brought the world much closer, resulting in a much more interrelated world. Digitalization or digital revolution has redefined the meaning and scope of globalization. As highlighted by Hamid Yeganeh in a paper published in FIIB Business Review, “Globalization and digitalization are drastically changing the economics of doing business across borders by bringing down the cost of international interactions and transactions. As a result, new markets and communities are created and small businesses and individuals use digital platforms to shop, sell, and communicate on a global scale.” Globalization and digitalization, he further points out has reshaped the world by transforming the concepts of time, space, materiality, work, wealth, and production. The twin forces of “globalization and digitalization” have resulted in a transformation of the consumption process itself. In recent times, this is most evident in the way the world has responded to the current Covid-19 pandemic crisis. With entire countries under lockdown and work cultures shifting to online modes, consumption has seen a sudden and drastic change.

Yeganesh (2019) further identifies seven consumption trends which he attributes to globalization and digitalization viz. surge in the global middle class and the shift of consumption from west to east; cities as centres of global consumption; the emergence of convergence and divergence between local and global cultures resulting in glocal consumer cultures; short product life cycle; the rising cost of consumer attention; the rise of the digital consumer; and collaborative consumption. The implications of these trends are manifold and can affect all the process of production, supply chain, marketing and sales. These trends and their implication for manufacturers and marketers are explained below:

1.The Surge in the Global Middle Class and the Shift of Consumption from West to East

With a rising middle class with increased purchasing power, Asia has emerged as a big market. The global middle class is expected to rise from 7.6% of the world’s population in 2000 to between 16.1% and 19.4% of the world’s population by 2030. The population in the West, on the other hand, is declining, youth (15-24 years) account for 19% of the population in Asia and the Pacific region. This is a huge untapped market.

2.The Growing Importance of Cities as Centres of Global Consumption

Though cities have always been important economic centres, in the current times cities are emerging as major centres of global consumption with rising urbanization. More than 50 per cent of the world’s population live in cities according to the World Bank. Asia and Africa are witness to mass urbanization with a huge and growing middle class who will account for massive consumption.

3.The Glocal Consumer Culture

Megacities have become cultural melting pots. Multiculturalism and diversity has become flashpoints of the emergence of convergence and divergence between local and global cultures resulting in glocal consumer cultures wherein local cultures are adapting and resisting the global multinational cultures. MNCs on the other hand while trying to retain their global outlook are seen adapting to local needs.

4.The Shortening Product Life Cycles

With the advent of digital media, the attention span of consumers has decreased rapidly. Marketers are faced with the challenge of attracting the short attention span of the buyers. In order to do so they have to innovate faster leading to a short lifecycle of products. Often two or more processes in the supply and chain need to be integrated to enhance efficiency in production.

5.The Rising Cost of Consumers’ Attention

With a short attention span of consumers in the digital era, advertisers with the challenge of adopting innovative solutions to a dipping audience. Markets are flooded with products and copious amounts of information sources buyers can choose from. Advertising and marketing have become more difficult than ever with buyers spoilt with choice and lowering attention spans. The challenge is to create effective and successful advertising campaigns that can lead to higher levels of consumer engagement.

6.The Rise of the Digital Consumer

The new-age customer is faced with the dilemma of ample choices. On every nook, they see a new product which catches their fancy. This is especially true with digital products like laptops, mobiles, tablets, etc. There is more innovation than ever. Customers are not only spoilt for choices but are more aware because of the information resources available. They expect convenience and ease of use along with value for money for the products they buy. Businesses need to look into three main areas to attract and retain their customers: customer experience, personalization, and ownership to access.

7.The Collaborative Consumption

A very important feature of today’s economic model is collaborative consumption or a shared economy. It has transformed our experience as not only consumers but as producers and owners. Collaborative consumption is based on the idea of sharing our possessions. One such example of collaborative consumption is the shared cab system. Collaborative consumption is characterized by bartering, sharing, gifting, lending and leasing or renting. Consumers are empowered individuals and resources are shared. Individuals connect over computers and mobile phones. It is cost-effective and producers and consumers interact often creating a mutual trust. This business model has brought about disruption in the old capitalist models.

Consumption led by globalization and digitalization has brought upon a new and more aware customer. In the midst of the constant changes unleashed by the twin forces, the challenge before businesses is to understand the evolving market and to identify the patterns of consumption and how to mould their businesses to channelize and gain from these patterns.

About the research

Hamid Yeganeh. (2019). An Analysis of Emerging Patterns of Consumption in the Age of Globalization and Digitalization. FIIB Business Review, 8(4), 259-270. https://doi.org/10.1177/2319714519873748