Most experts in cross-border trade, such as Thomas L. Friedman, the international columnist for The New York Times, believe strongly that globalization is not just a phenomenon, but an international system. It is the integration of capital, technology and information across national borders. In a way, it is creating a single global village.
Will globalization be positive or negative for direct marketers in the United States? In the past 10 years, I have seen globalization up close, leading 47 trade missions for direct marketing worldwide. From Sydney to Santiago, from Hamburg to Houston, it is clear that globalization will have positive effects on direct marketers in this country.
Three forces have come together to create globalization: freedom, aspirations for higher living standards and powerful technologies. These integrate us more each day.
Eastern Europe, South America and parts of Asia are moving toward freedom. Free people and free markets go hand in hand. With this freedom comes a yearning for new products, products from America and from every corner of the globe.
Some cornerstones of globalization have been democracy, free market capitalism, technology and trade agreements.
Globalization quickly exposes and links consumers and businesses with global markets, global fashion, global food and global entertainment. Direct marketing can provide all of these in a cost-effective way, fueled by revolving consumer credit. To understand globalization, one must understand the technology as well as the politics. The technologies are computerization, miniaturization, digitization, satellite communication, fiber optics, Internet, databases and aviation.
Direct marketing can take advantage of these global technologies better than other forms of marketing. The power of direct response marketing is the ability to sell and fulfill. Improvement in aviation is an important technology that benefits DM. The ability to move small parcels around the world quickly, reliably and cost-effectively is important to the direct response industry. And it allows the carrier that pulls up to your loading dock every day to take your products to consumers in Malaysia as easily as to those in Miami.
Database marketing in all its forms will benefit from globalization. The United States is the most advanced country for database marketing. The number of pieces of commercial mail in the United States has increased steadily over the past 15 years, thanks largely to improvements in database marketing. In 1990, direct mail represented just under 40 percent of the volume for the U.S. Postal Service. In 1999, it was more than 44 percent.
Digitalization is a bonanza for cross-border DMers. Digital systems let us quickly change things for local audiences. It allows for easy adoption of catalogs, statement inserts and all printed materials from one language and culture to another. Globalization is not just for Coca-Cola and McDonald’s. Small to medium-size firms have more power to influence markets and nations than ever.
The average tariff and duty at the end of World War II was more than 40 percent. Today, with the creation of NAFTA, the EU 92 program, the Free Trade Agreement of the Americas and other similar treaties, the average tariff and duty is 7 percent to 8 percent and falling.
In Europe, Lands’ End’s slogan is: “Somewhere in America, there is a company that wants to be your friend.” Global consumers are realizing they can have direct relationships with firms that are based thousands of miles from their homes but serve them with a regional or local presence through DM.
Consider the words of Larry Downes and Chunka Mui, authors of “Unleashing the Killer App.” They make a compelling case that “the world can be thought of as a very large network, and the attraction of such a network is irresistible.”
When freedom, aspirations for higher living standards and powerful technologies combine, globalization is the result. These forces converge in radical, creative ways to the benefit of direct marketing.