Editor’s note: Koen Pauwels is co-founder of the DATA-Initiative and distinguished professor at Northeastern University, Boston. Thomas Fandrich is co-founder and managing director – U.S., at quantilope, New York City. Raoul Kübler is junior professor of marketing, Marketing Center Münster, WWU Münster.
For years, brands have been toying with the idea of a global consumer. A persona who’s preferences, digital competence and budgets all align in a connected world. Supply chain optimization, universally available products (such as digital apps) and connections made through social media all support the notion of a global consumer and the feeling that our cultures are becoming increasingly more similar around the world.
But how does a global consumer affect product pricing and marketing? The age-old dilemma of whether to localize or globalize product marketing (and marketing research) strategies remains a highly debated topic. For pricing specifically, it’s easy to assume that a steady increase in global wealth would result in the need to implement a global pricing strategy to optimize revenue and reduce tension on resources. A globalized pricing strategy would include unified, income-adapted prices for products with single price promotion campaigns, offering similar changes to product prices across countries.
However, our research tracking digital app purchasing behavior of consumers across 60 countries found that price sensitivities are not yet subject to globalization. As it turns out, there is a clear distinction between how consumers respond to changes in a product's price that substantially differs based on where they live. For example, in Italy, offering a 10% price discount will result in a near 5% increase in app popularity. However, in China, the same decrease in price will only result in an increased popularity of 1%.
The high degree of diversity in price sensitivity between nations e...