Demographics and World Commerce

The brave new worlds of globalization and cyberspace have met in an arena one might call geodemographics (Goss 1995). Goss, who apparently coined the term, refers to a specific, “hype-ridden” portion of the marketing industry, but his word is useful shorthand for the current state of demographics and world commerce in general. Regional differences between populations are, arguably, being diminished rapidly by virtue of Internet access worldwide to both information and goods, so it is fitting to discuss demographics in global parameters. It might be well to note, also, the inherent difficulties Goss raises in geodemographics: His concern, he says, is not that geodemographics can help in planning profitable marketing strategies for anything from ideas to soft drinks but rather than “geodemographics displays a strategic intent to control social life and that the ideological conception of identity and social space within the model may become real — in other words, that the assumptions will be validated as the strategies take effect” (Goss 1996, 171+).

Few would deny that the diffusion of ideas and technology has impacted global commerce. Just recalling the fall of the Soviet Union, based on the dissemination of ideas and arguably enhanced by the rising use of technology from broadcast to (at the time) limited use of the Internet among research facilities, makes clear the extent of the diffusion of ideas on global commerce. Before the fall of the Soviet Union, the reunification of Germany, the independence of the Baltic States and other geopolitical upheavals (probably fostered by technologically superior communications), those vast populations were not markets for the commercial goods and services of the rest of the nations of the world. Now they are. They are joined, finally, by China. Although it has not given up its communist political model, it has accepted enormous numbers of western ideas, and along with those, western goods. It is arguable that the ceding of Hong Kong to China hastened the adoption of that stance; it is also arguable that it was technology that helped diffuse the ideas that are slowly brining China into the world of commercial nations.

The “China Syndrome” also intimates at the relationships among ideas, events, social climate, and commerce.

While it is excellent in a commercial sense that commerce has become more global, along with that globalization has come the globalization of some less attractive ideas, as well. Goss makes the point that the technologies of geodemographics makes it easier for marketers to predict how customers will behavior using date based on statistical models of identity and residence. Rather than using locale-based demographics, geodemographics is oriented toward discovering new markets regardless of location, culture e or any other attribute that is typical measured. Instead, it uses other parameters to specifically identify potential customers, not wasting time or effort on marketing to any potential non-customers. Geodemographics has, then, changed demographics substantially. It has removed the marginal markets from the equation, and it has done so across national boundaries. There is a very clear relationship between ideas (whatever concept or product is being marketed) and events; the event is the fact that marketers now can, to a great degree, separate potential consumer groups into ever smaller ‘regional’ groups, a group, even, of one person if the object being marketed was a Van Gogh painting, for example, or a new mummy from the Valley of the Kings in Egypt.

In terms of geodemographics, it is difficult to identify a specific social climate, except perhaps to say that there are as many social climates in the global cyber universe as there are people. A relatively ubiquitous idea, however, is that of privacy. In a universe in which demographic research can access so much information about the target populations, it is a reasonable concern. Politicians have responded to it by drafting laws such as the Privacy Act, which regulates the federal government’s right to disclose individual records and the Right to Financial Privacy Act, limiting record disclosure by financial institutions.

These two concern subjects that seem weighty; seemingly less weighty are the Cable Communications Act requiring cable companies to inform subscribes of the records they keep, and the Video Privacy Protection Act, preventing disclosure of rental information to third parties. One must wonder how any of these fare in light of the USAPatriot Act, which allows access, at least to federal agencies, to one’s library records.

The social climate in the United States, then, is mixed regarding demographic information. On one hand, there is the putative government need for information to deter terrorists; on the other, the private citizen’s constitutional right to privacy.

As Goss points out, such laws protect procedural rights but do nothing to prevent the collection of information; thus, despite the demand for them by the public, they have little effect on geographic and world commerce. This is so obvious to consumer advocates that they argue “for more comprehensive measures that would establish the privacy of personal information as an inalienable right, or at the least ensure that statistical identities belong to the individual as personal property over which they have rights of alienation ” (Goss 1995, 171+).

Arguably, now that there are no communist monoliths except China, these same concerns help form the social/political climate in other global nations as well. Indeed, it would be very surprising if they did not exist in at least the G7 nations, which includes the important nations of Western Europe and Japan.

There is a great homogenizing effect in global geographics, fostered by the widespread access to the Internet and bombardment universally by other ‘message’ media, from television to recorded messages about new services on the bank’s 24-hour phone line menus. and, while regular Internet shoppers have, for one example, been found to be less conscious of brand and price — instead looking for the best deal — than non-Internet consumers, they are regional differences displayed quite well in the arena of Internet shopping. One of the unique findings concerning international consumer behavior, supporting Hofstede’s work in the 1990s concerning national characteristics, is that “Consumers in different countries may have more in common with one another than consumers in the same country” (Lynch and Beck 2001, 725+). If this is so, then simply knowing whether a nation scores high or low on the Hofstede parameters, Individualism, Uncertainty Avoidance, Masculinity, and Power Distance, would help in determining what form global commerce will assume in each country. This would also aid in determining the true ‘geodemographics’ of a region, rather than those predicated on geography alone. In fact, international surveys revealed that there were differences in trust in online purchasing depending on whether one came from a relatively collectivist culture, such as Israel, or an individualist culture, such as the United States, Great Britain, and so on.

However, the commonalities among Internet shoppers has also been found to be substantial, suggesting that regional demographics will play a more diminished role in commercial pursuits in the future. In fact, according to Lynch and Beck, “If the majority of Internet buyers share commonalties in age, sex, occupation, and salary, and are consistent internationally, it suggests the emergence of a ‘typical’ global Internet consumer” (2001, 725+). Those who agree with Beck and Lynch argue that Internet technology has crated a world culture based on parameters other than geographic location, depending more on attitudes. Beck and Lynch believe that this trend began long before the Internet, with television the central medium creating a ‘global mall’ and the Internet emerging as a second source (2001, 725+).

While the reach of new technologies is an important driver of marketing to specific locales and/or all locales, virtual communities created by the ability of marketers to separate communities on the basis of commonalities other than standard geographics or demographics can create a “market of one” (Armstrong and Hagel III 1997, 141+). That completely changes commercial patterns because customization becomes not special but standard. On the other hand, because reaching these markets of one is so direct and precise, it eliminates the waste involved in mass marketing. There is no need to send sales forces out in cars, or to waste untold hours cold-calling, in theory.

That, of course, raises one of the most significant advantages of the current trend toward increasingly technological sales and fulfillment to increasingly highly identified markets; less environmental damage. Granted, it may be that a buyer in Singapore wants an item only created in Istanbul, so shipping is involved. On the other hand, it is likely, applying Moore’s Law to commerce as well as technology, that before long, mini-factories will spring up across the globe to fulfill desires close to the locus of their creation. It will be demanding: Marketers in such a commercial environment “will have to be highly attuned to the needs of their users, as the hostess of a French salon understood the intellectual and cultural tastes of her guests” (Armstrong and Hagel III 1995, 127).

While no one expects Star Trek-style replicators, moving production closer to consumption will very likely increase, making manufacturing, selling and delivering goods and services infinitely more personal and infinitely less damaging to the environment.

References

Armstrong, a. And J. Hagel III. 1995. Real profits from virtual communities. The McKinsey Quarterly 3, 127. Retrieved 24 May 2005 from www.questia.com.

Armstrong, a.G. And J. Hagel III. 1997. Expanding markets through virtual communities, McKinsey Quarterly 1, 140+. Retrieved 24 May 2005 from www.questia.com.

Beck, J.C. And P.D. Lynch. 2001. Profiles of Internet buyers in 20 countries: Evidence of region-specific strategies. Journal of International Business Studies 32(4), 725+. Retrieved 24 May 2005 from www.questia.com.

Goss, J. 1995. ‘We know who you are and we know where you live’: The instrumental rationality of geodemographic systems. Economic Geography 71(2), 171+. Retrieved 24 May 2005 from www.questia.com.