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Thomas P. "Tip" O'Neill Jr., the former speaker of the U.S. House of Representatives, famously said, "All politics is local." The same is true for business, says marketing expert John A. Quelch, dean of the China Europe International Business School, China's foremost business school.
His belief in the primacy of place — the local touchstone that animates consumers and triggers purchases around the globe — may strike some as an anachronism in an age that is relentlessly focused on global markets and global strategy.
Those naysayers will have to revise their thinking after reading his new book, "All Business is Local: Why Place Matters More than Ever in a Global, Virtual World" (Portfolio, 2012), written with Katherine E. Jocz, a former research associate at Harvard Business School.
They argue that it's possible for any business — from global mega-brands to small-town stores — to influence their customers more effectively by making "place" a part of every strategic decision. For consumers, all business is local.
"I have written this book as an antidote to conventional wisdom that the world is flat and that globalizations preoccupy us all," he says.
Though Quelch sees the positive aspects of globalization, he cautions businesses not to be seduced by a single-minded focus on a global, interconnected world that glosses over the myriad competitive benefits of strategically using the concept of place. The best global brands, from IBM to McDonald's ubiquitous golden arches, are also the best local brands, he says.
But the world will never be entirely global or local. It is a hybrid place, at once flat, spiky, globalized and local.
Quelch recently elaborated on his views for BusinessNewsDaily.
What do you mean when you say all business is local?
John A. Quelch: The world is not flat. It is flatter than it was but 90 percent or more transactions involve a local buyer and a local seller.
BND: You discuss the role of the 4Ps in marketing mix. What are they?
JAQ: The 4Ps are product, price, promotion and place. Because place always appears fourth in the lineup, it gets short shrift. Place, now more than ever, cannot be an afterthought.
BND: Why does place matter in marketing?
JAQ: Too much emphasis is attached to the glamour of building global brands, not enough to the heavy-lifting and excellent execution required to place brands in all the right locations for sales to be maximized.
BND: What are the fundamentals of place?
JAQ: Place is a very important component of our self-identity, and we navigate the world in relation to time and space. Marketers have to manage their products in physical place and in virtual place. For example, they have to place their products prominently on supermarket shelves but also enable them to be found easily by shoppers in the virtual world.
BND: How can businesses be both global and local?
JAQ: All great global brands are also great local brands. Take McDonald's, a global brand with a consistent positioning worldwide but one that sources raw materials locally, develops local management talent, adapts menus and store designs to local preferences and works with local businessmen as franchisees.
BND: How can the world be both flat and spiky?
JAQ: The world can be flat for the luxury goods marketer skimming the surface, appealing to the homogeneous, price-insensitive global elite. But, for the marketer who wants to penetrate the mass market in emerging economies, the world is much more spiky.
BND: What happens when place gets misplaced?
JAQ: Place can be a liability. Made in China does not yet connote reliability or, in the case of food, safety. Place identifiers sometimes have no basis in reality: London Broil, for example, appears on menus in U.S. steakhouses but not in London.
BND: How can a small business leverage place to compete with global competition?
JAQ: There are three ways small businesses can leverage place. First, the place they are from may be especially well-known for a product category—Thai silk, Gruyère cheese. Second, they can create a mythical place that appeals to the dreams of their target audience, as Pepsi has done with Mountain Dew. Third, small businesses can leverage being close to customers. Local, organic farmers can provide fresher produce to nearby cities because of short supply chains.
Reach BusinessNewsDaily senior writer Ned Smith at email@example.com. Follow him on Twitter @nedbsmith.