The standardization of International Marketing Strategy
Variety of factors influences firms having international characteristics to expand internationally. Some of them may be experiencing conditions of monopolistic competition with an inelastic curve which implies that reductions in prices may not drive the demand upwards and as a result may experiences diminished revenues. Factors of production in the domestic economy may be exorbitant for many of them to make investments. International expansion by others could be seen as a risk minimiser as marketing a product internationally could increase the consumer base which could lead to the reduction in the dependence on the local economy. In other words, horizontal expansion may make more sense than a vertical expansion. Whatever may be the reason, international marketing has attracted considerable debate for its strengths as well as weaknesses and the challenges it has posed to businesses in their desire to foray into new areas, markets and cultures. An internationally focused marketing manager would have to acquire and hone varied skills for being successful in local, regional and local marketing. In the context of international marketing, his/her functions include to devise strategies as how to market an existing product outside the domestic market to how to develop new products for a specific international market or group of such markets. Marketing management from a global perspective involves political, cultural, regulatory etc. issues. A situational analysis of external environment and the balancing of internal environment to suit the external challenges all become part and parcel of the duties of an international marketing manager. In other words, while he/she should become well conversant with the theories and practices that govern international marketing, in particular a well informed approach on cultural and environmental uniqueness of a nation or region in terms of their history, geography, stage of economic development, media availability, stage of product life cycle, languages, religions etc that affect global businesses would make them better suited to the roles they are expected to play as international marketing managers. This paper first outlines various concepts involved in international marketing and then proceeds to a discussion for finding an answer to the question posed in the topic, viz, whether standardization as a strategy in the international marketing is doomed to fail.
2. Concepts in marketing:
Marketing is a dynamic as well as a complex concept, and consequently, it is a continuously in a state of flux. In the conventional sense, it comprises of systems that contribute to the smooth flow of goods and services from a production base to consumption base. Marketing mix is the term with which it is described when it is designed to achieve sales in a target market. However, what interests the scholars and practitioners in the field is the shift in marketing paradigms. According to Gronroos (1997) the paradigm varies from a transaction model to relationship model and many scholars as Asai (1994), Gummesson, (1998) etc. is seized with the studying and analyzing of the effects of such paradigm shifts. Developments of newer systems by researchers and practitioners have resulted in the spinning of newer methods of marketing. For instance, the thinking as propounded by Alvin et al (1997) that marketing essentially operates in the 'second wave', i.e. a factory based system built on mass production, has been giving way to newer thinking on account of the fact of the capricious consumer behaviours. This has resulted in the companies moving away from the second wave concept to more practical ones as the capturing of dynamic information on consumers instead relying on their static information (Gronroos 1993). The resultant effect is that manufacturing activities are moving away from a push system to a pull system which concentrates more on relationships among the producers and consumers rather than production per se. A pull system is characterized by quick responses and as pointed out by Hunter et al (1995) to be successful the manufacturers have to build a close relationship with their partners and consumers.
Fast changing business environment has been necessitating firms to adopt changes in the marketing systems to make they effectively respond to globalisation. Globalisation calls for innovations, deregulation, cost reductions and in a nutshell, should respond to changing consumer roles (Khan, 1998). Globalization also poses complex challenges in the consumers' demand that need to be resolved. For instance, the global requirements of the consumers are heterogeneous in nature that does not afford a standardisation feasible. This is because the income levels, the tastes and the characteristics of consumers are not homogeneous in nature. Variability is the biggest challenge international marketing managers have to handle in the context of international marketing, and variability is the antithesis of standardisation. Service encounter is yet another issue they would have to handle. Service encounter in the marketing parlance is understood as something that reduces the distance between a producer and a consumer wherein a consumer directly interacts with the producer. This may be easier in a domestic marketing environment and acquires a complexity from relatively difficult in regional marketing to greatly difficult in international marketing. From the point of view of this paper, it emerges 'marketing environment' is the most important aspect international marketing managers would have to pay close attention to compete in their arena. In this introduction and integration of emerging technologies play a critical role. But while they may help in forging certain amount of standardisation, yet because of a number of intangible elements involved in assessing the characteristics of international consumers, international marketing firms operate in a high risk environment wherein the adaptation may not gel with standaradisation.The ever changing environment has forced firms having international characteristics to pay closer attention to changes in marketing concepts by taking account the impact of technology, communications, transportation etc . Then it is the overall marketing environment that matters and not the market segmentation.
3. Culture and Marketing
The connections between culture and marketing can be explained roughly in the following manner. Consumers buy products based on their personal values, and personal values are a product of culture (Hofstede, 1984). Hence a marketer should understand the cultural motives that determine consumer behaviours in chalking out marketing strategies. A good example of failure due to not understanding the culture and ignoring customer’s personal values is the case of Wal-Mart’s international expansion into Germany, S. Korea and Japan.
In 2000, Metro’s chief executive, Hans-Joachim Koerber, predicted that Wal-Mart would not succeed. “The company’s culture does not travel, and Wal-Mart does not understand the German customer,” he said. (Times, 2006)
Wal-Mart didn’t consider the Asian culture, the distribution channels, the need of small local suppliers, centrally located small shops rather than the traditional hypermarkets, Asian’s fondness to fresher products, therefore, Wal-Mart’s standardized Western model didn’t succeed in Germany, Japan and S. Korea.
Marketing is dominated by two factors, viz, the needs and wishes of consumers. While the consumers have limited needs as food, clothing, shelter, etc., they have unlimited wishes. It is these wishes that constitute the kind of human needs, which have to be considered by a marketer in a cultural context. For example all the human beings in the world have to satisfy their need for food, but it is the culture that determines what type of food, say rice or noodles they would prefer. The marketers would have to concentrate in determining this differentiation, which is described as 'emotional marketing'. Kotler (2003) had argued that an opportunity for marketer is thrown open when a product is particularly capable of satisfying consumers' needs and wishes based on their 'emotional feelings' for this offers them an avenue to differentiate their individual product from that of the competitor. Marketers to be successful then should take into account the culture as it determines the wishes of the people, and it is these wishes that ultimately determine the consumption behaviour that satisfies the needs which have the characteristic of limitedness.
The importance of culture in determining the consumption behaviour that is relevant for marketers can further be expanded as follows: There is a combination of need and psychology that determines the purchasing behaviour of a consumer. In this needs have limited roles to perform, say, as satisfying a hunger. It is the psychology in the satisfaction of such needs play a larger role for it contains elements that can be associated with the wishes of consumers. As opined by Nieschlag et al, (1994) since consumers in saturated markets can choose from a plethora of producers who could serve consumers basic needs, they do not pay much attention there but rather tend to make their decisions on personal values, which have the ability to satisfy their wishes. Consumer decision making n a manner can be regarded as a problem-solving strategy. At the same a person's cognitive capability is limited. This imposes a limitation in their choices of buying decisions in that they cannot focus on any product as a whole but only in a fragmented manner on a combination of different product attributes but even here their decision making has been established to be subjective by a number of scholars as Olson et al (1983), Reynolds et al (1984). This makes it clear that product attributes in themselves do not play a significant role in the psychology of their purchases. Such a psychology makes them to evaluate the factors behind the consequences of goods and services bought. These factors range from one extreme to another, viz, the benefits being considered as positive to risks being perceived as negative. These factors are shaped by the personal values which in turn are determined by personal beliefs. These personal beliefs are shaped by the culture. It is this value that needs further amplification in this paper for the fact it has multidimensional characteristics that are important to marketers.
The concept of value is found across all the disciplines though each one define it the manner that suits each discipline. Thus in the view of anthropologists, it imposes itself as ‘objective social elements' on the individual lifestyle of people. Sociologists focus themselves on ' ideologies and conventions'. As already mentioned, Psychologists view it something, which determines the long term behaviour of individuals based on their beliefs and conditioning.
The broader implications of value for marketing and international research then can be briefed in the following manner.
Values are enduring and stable in nature. Because of that, people resist changes.
These values could be social or personal but personal values cannot be wholly isolated from social values, for the reason the personal values are shaped by a variety of social values prevalent in that society in which the individuals were born. Consequently, these choices cannot be described as objective in nature and in fact are subjective for such values are influenced by the social environment in which they are born and living. Values are determined by culture, and hence it is necessary for marketers to delve deeper in to cultural issues in so far as it applies to marketing strategies, for instance to advertising strategies. For example, Coca-Cola and Pepsi Cola do not believe that each country requires an individual advertising. However companies such as Gillete still use the localized approach to international advertising to market its Trac II razor to Europe. The company changed the Trac II name to GII in some nations, since marketing research showed that trac in some of the Romance languages meant “fragile”. Similarly, the copy design was adapted to match the local perspective (Talan, 1982)
It is here the 4Ps of marketing or the marketing mix, viz, pricing, distribution, product development and communication acquire importance for it is impossible to assess the impact of consumers' cultural backgrounds on the marketing strategies in a generalised manner.
Pricing is seen to constitute two elements; one is the production costs and the other is the willingness of the consumers to play a particular price. While the production costs are essentially economic in nature and are within the control of producers, the price a consumer is willing to pay is shaped by his/her cultural background. Consumers learn during the process of socialisation to be discriminate in their choices of products, and consequently, it is not the economic value that alone would determine the price, they would be willing to pay for a product but the social perception as well. As a result while determining a target market, a marketer would have to take into account the cultural effect as well and if the decisions are made purely on economic costs, it may not succeed.
Different distribution policies need to be devised by a marketer because consumers from different culture exhibit different buying habits. For example, a Japanese distribution and logistics network, e.g. ‘keiretsu’ creates logistical headaches for large retailers such as Wal-Mart, Tesco, Carrefour, and cuts the profits. In order to successfully customize merchandise offerings to satisfy the needs of Japanese customers in different regions, international companies have to establish good relationships with small local suppliers in different regions.
Culture is an important ingredient in the development of a product for the features expected by the consumers are not uniform. Specific circumstances and usage policies have to be taken into account in the product development. For instance, religion plays a role in the purchase of food products. For example, fast food restaurants, such as Mcdonald’s or Burger King cannot standardise their product offerings over the globe. Whilst, a Big-Mac would be the same in Buenos Aires as well is in Paris or Hong-Kong, the same Big-Mac should not be sold in India at all, or any other beef burgers for religious reasons.
It is necessary for a marketer to ascertain the reasons for culture specific consumption for that would throw light on the cohesion between the buying motives and cultural background. For this reason, the marketer would have to devise appropriate communication strategies to communicate the relevance of their products to international markets. Communication strategies then would have to take into account the differences in languages, the level of technological developments (say the diffusion of mass media as TV) and the legal limits (i.e. comparative advertising standards) that such technologies may be permitted to go in the promotion of a product.
Elinder (1961) considered the debate of standardization vs adaptation with respect to worldwide advertising. During that period, advertising and the need for international standardization was the major debate (Kanso and Kitchen, 2004)
Although standardization of advertising tremendously reduces the costs and helps unifying the corporate image, it might, on the other hand have big implications on (how) to deliver the right message to the target audience. For Example, in the 1960s, Goodyear international, was following a standardized approach in its advertising campaigns (Peebles 1967), the director of advertising and promotion for Goodyear at that time, underlined the importance of the cost savings which was achieved by having one artist instead of 30 artists drawing the same tires in 30 different countries each charging the price. On the other hand, Melewar et al. (2008) emphasizes on implications of standardizing advertisement for several reasons, for example - technological factors. The fjord Seafood, faced problems to standardize the advertising in the new member countries of European Union. Only few families in the new member countries had color Television, therefore advertising the new food brands on black and white TV was not an option for Fjord Seafood.
Culture specific elements as symbols, rituals, etc. are used as components of communication strategy to ensure the success of a product regionally or intentionally. In a nutshell, there is a close relationship between personality and marketing and a firm should devise its advertising by taking into account the cultural elements and advertising is a vital part of communication and as a result the linkage between culture and communication in international marketing gets established.
The foregoing analysis has laid the firm ground of the linkages between culture and marketing. The central element presents in such linkages are values (values are essentially culture specific) which drives the buying motive. The firms in addition should be conversant with the awareness of the consumers' buying motives as they are the basis for product differentiation. The knowledge gained from the inquiry into buying motive helps in the determination of communication strategies, including specific elements of communication as an emotional appeal in advertising for the product. Besides, personal values of a consumer are seen to be enduring and stable. Knowledge of this enables a marketer to use the values as the basis for emotional advertising to derive the advantage of differentiating his/her product from a long term perspective.
Having established the interrelationship between culture and marketing through a cultural analysis, the paper would next proceed to consider issues relating to adaptation and standardisation.
4. Standardisation, adaptation: A discussion:
There has been varying perceptions among the scholars and practitioners on which global strategies would work in the arena of international marketing. For instance, Kaustin (1994) equates adaptation with a modified marketing strategy, Moon (2005) talks of standardization meaning customisation.. Though not explicitly stated scholars like Chung (2006) by implication seem to be favouring adaptation as a better strategy over standardization. On the other hand, Vrontis et al (2009) have conducted hands on research to determine the issues relating to standardisation vs adaptation in an explicit manner. This paper would these authors their research work specifically in this paper to arrive at an answer to the question that is central to it.
The contentions of those who argue in favour of standardisation are that there is homogeneity in the needs of customers who, in other words, imply that geographical locations do not have a role to play in the demand of the consumers. Scholars as Levitt (1983, as quoted in Vrontis et al) found significant merit in this argument for it confers economies of scale for the manufacturers in both the production and distribution of goods to what is being described in general terms as the 'mobile consumers'. At the same time, proponents of adaptation strategy find that standardization may not work effectively as a global international marketing strategy due to both macro and micro factors. In a macro sense, political environment, the climate, the race, etc. is diverse and in a micro sense, the disposable incomes the values and tastes differ from one place to another. This implies that regions and nations have unique characteristics that are not amenable to successful standardisation.
Jan (1989) stated that political environment of the host country could force foreign firms to change their operations, policies, strategies in that country. Political intervention of host countries create difficulties in implementing standardised programmes (De Burca, Fletcher and Brown, 2004)
For example, the US giant, Wal-Mart, didn’t consider Germany’s restrictive shopping hour regulations when decided to enter into Germany. Wal-Mart’s standard 24/7 customer service based operations couldn’t work in Germany because from June 1st, 2003, a store in Germany can only be open for 80 hours a week, while in UK 168 hours a week.
Consequently, to be successful, international firms should devise varying strategies in their international marketing endeavours. While both the sides have their arguments that make sense, the research conducted by Vrontis et al acquires importance in trying to get an answer in a deterministic way for it employs quantitative techniques to arrive at conclusions and making recommendations. The results are based on a study of 1000 multinationals based in the UK. This paper would not go into the merits and limitations of the quantitative model taken up by the authors as that is not the objective of it. It would rather go into the interpretation of results to see whether it can throw a clear answer to the question central to it.
Some of the important results emerging from the study are.
(i) The need to adapt is more powerful than the need to standardise. The reason for this is cited to the fact that ‘adapt-construct' throws four variables as against only two variables thrown by standard-construct.
(ii) The research findings state that businesses should not attempt to base their strategies on homogenisation based marketing mix save those circumstances wherein they have at their disposal clearly defined sets of circumstances as well as in respect of certain product categories.
(iii) Though strange it may appear to be, much to the discomfiture of those who reject standardisation yet international markets are getting homogenised to an extent that multinationals can market their goods and services in the same manner all over the world by formulating and implementing same type of strategies and achieve the objectives of lowering the costs and via that increase the profitability.
(iv) Globalisation of society and globalisation of markets are two distinct phenomenons. Although, this affects the consumers and businesses in different ways, yet, multinationals cannot incline themselves totally in favour heterogeneity.
(v) Finally the emerging view which provides the clue to arrive at an answer to this paper states that it would be unwise for the global businesses to follow 'an either or approach' in their methods to and making tactical decisions in the pursuit of international marketing strategies. Standardisation is recommended whenever possible and adaptation is advised wherever necessary.
(vi) Based on the above a conclusion is drawn that globalisation refers to both strategy and tactics. Standardisation is considered to be strategic and adaptation is considered to be a tactic.
The stage is now set for drawing conclusions.
There have always been difficulties on the part of marketing scholars and practitioners to transfer theories of consumer behaviour, their linkages to culture. What one finds in the literature is of extreme positions in that either some rely exclusively on economic factors while others rely exclusively on cultural factors. This poses genuine problems to draw definitive conclusions. Within these limitations, one can draw a tentative conclusion with the theories and evidence analysed in the foregoing paragraphs of this paper.
The first conclusion is that there is no rationale in making a sweeping statement to the effect that standardisation in international marketing is doomed to fail. If that be the case, there would not have been researches that would have been undertaken in determining its value in formulating strategies relating to international marketing. Moreover, even the view of Vrontis et al (2009) which constitutes the primary base in arriving at the conclusions in this paper state the danger of advocating either of the constructs. It is not as if standardisation is completely devoid of merits. A standardised approach to marketing confers the advantages of branding, setting the quality standards. Furthermore, standardisation takes place across factories and encourages research and development on a global level. Standardisation further is considered to be holistic in nature by scholars as Sashi et al (2002) according to whom it incorporates the entire marketing operations, as, product, price, distribution, promotion, etc for which reason it is considered to be holistic. Besides economies of scale, Zou et al (2002) state that it confers additional benefits in affording opportunities to share ideas at a global level, consistency in product development and customer service.
Having said all the above, one has to take into account the merits of adaptation as a strategy in international marketing. Its merit primarily relies based on the work of Vrontis et al on the possibility of measuring the outcomes in concrete ways. While such research and results tend to favour more adaptation to standardsation yet it has not pronounced a final judgment to draw a sweeping conclusion that standardisation is doomed to fail.
There is no gainsaying the fact that culture does play a crucial role in the devising of strategies in global marketing. For instance, this paper has clearly established the role culture plays in shaping values and how values are related to buying decisions of the consumers. This throws open the need for more cross-cultural research and certain amount of cooperation among the researchers in integrating multitude of factors, some economic, some anthropology, some psychology to offer beneficial solutions. In other words, there appears to be a fragmentation in the approaches to international marketing. While it can be stated in general terms more cross-cultural and multidisciplinary research would be beneficial to those involved in international marketing, yet the answer in regard to the question raised in this paper is negative. . In other words, think globally but act locally is the view that emerges from this paper.
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