Standardization In Global Market Is Doomed To Failure Marketing Essay

According to Investopedia Financial Dictionary, Standardization is “A framework of agreements to which all relevant parties in an industry or organization must adhere to ensure that all processes associated with the creation of a good or performance of a service are performed within set guidelines. This is done to ensure the end product has consistent quality, and that any conclusions made are comparable with all other equivalent items in the same class.” [1] 

International marketing is more complex than domestic marketing because of the incidence of more complex variables, such as difficulty in gaining timelyinformation, diversity of geographic locations, strategies, and differences in environmentalfactors.

Globalization is a complex phenomenon, contested in terms of its definition,extent and implications and therefore in terms of the most appropriate response to it. [2] It is altering the way products are being marketed throughout the world. Corporations have started coming up with strategies that encouragethe entire world’s market in almost the similar way, to buy the same product for different zones. Other think- tanks have realized that certain changes and “tweaks” need to be made for diverse arcades of different regions.

Several reasons have made trade increasingly global in today’s world. As domestic markets mature, it is becoming more and more fashionable for organizations to seek growth through opportunities in foreign regions. [3] However, the most important reason for this remains technological; practicality trumps the need to create a niche market for unique products throughout the world. “Technology causes needs and preferences to converge throughout the world.” [4] Since the opportunities for transportation and communications have improved far beyond the expectations of any business man, or a lay man for that matter, the manufacturers and consumers, now, have access to the very best products from each and every region of the planet. This fact has push- birthed the need for survival in extreme conditions where competition has become stiff become markets as to who can develop what in better quality and less time, all the while maintaining the balance between the price hike and the pocket range of a regular man. This vicious cycle has also blurred the dynamics between “need” and “wants”, all the while creating the newest in products.

To curb such a daunting prospect of viciousness, the concept of global standardization has been introduced.

Literature review

The evolution of the advertising industry and practice differs between countries, as we’re all latched on to, we have to consider timing and sequence of products introduction, new products developments and global marketing (pelkmans:1996) in standardization of products. In the early studies it was argued that advertising campaigns could be standardized across European countries in the same way they were standardized across states in the USA (Elinder, 1961). Some years later Buzzell (1968) extended the discussion to cover in addition to advertising also other marketing mix elements.

In the noteworthy quest of standardization on global marketing strategy, there is a major unresolved issue of adaption that is needed to cater for the differences in cultures, for example the left versus right hand drive cars.

In putting standardization into effect, the key concern is the government legislation and regulations that vary radically from one country to another, which are to be taken into account. There are other factors that are to be considered which include differences in consumer tastes, level of education and technical sophistication. These will be covered later in detail.

According to hart(1998), marketer proactively need to discover whether the product function or the need satisfied is the same or different in the new market. This is very vital to the introduction of a product in a specifically new market. It is possible that the product serving to oe need in a certain market might not be serving the same need in the other.

Another perspective of looking at the standardization in the global marketing are the ethical issues that breed in the different corners of the world. Kant’s (1788) views on ethics say that companies should exist to satisfy the needs of the society and firms have a duty, a moral obligation to deliver benefits to the society. Smith (1995) says that marketing managers now have to respect and care about the welfare of those affected by their marketing decisions. Presently, in the developed economies marketers were being forced to recognize and confront the issues surrounding societal marketing. For example, advertisers and print media have had to face responsibility for their role in promoting “glamorous” anorexic body images, food manufacturers and marketers have had to defend and amend the nutritional content of their products. In Islamic countries it is unlawful to launch adverts that have any sorts of nudity. Likewise, countries like India, where Hinduism is practiced, edibles containing meat will not be accepted.

Marketing strategy selection is widely affected by the variations in the economic development stages of the home and the host countries. The standardizations strategy implementation is discouraged due to the discrepancy in the competitive environments of the two, host and home countries. This strategy can only thrive if the basic marketing infrastructure is favorable for the two.

Research shows that ID’s are most likely to be standardized in comparison to other product types. They show that the product and promotion adaptations are higher for the consumer products in contrast to the ID’s

Considering another product type, the services – more effort is put in for their adaptation so as to be made more marketable in a foreign country.

Services, because of their nature, require interaction with the customer during the service delivery progression. This means a customized service plays an important role while marketing a service product category in globalized cultures. Local environment greatly affects the method by which the products are marketed. Slightest differences can trigger a sensitive reaction. Therefore, there’s a need to modify the marketing strategy incase of service providers.

Most recent studies have revealed that patents are unable to provide sufficient protection for the services, as they work more effectively for tangible products; hence these non tangible products are more exposed and liable to be subjected to the marketing environmental factors of a countries market. The marketing environmental factors include the political, legal, economical, marketing infrastructure, social culture and even the consumer related characteristics. All of these factors eventually become the underlying foundation when trying to make a selection of marketing standardization strategies to implement.

To put it simply, ID’s are most unlikely to adapt in the foreign market in comparison to the services and the consumers products, which due to a new market will require tremendous amounts of customization so that they are able to meet the required needs of the host country.

Previous researches have generated productive findings regarding services, consumer products and IDs (Patterson and Civic, 1995; Boddewyn et al., Cavusgil et al. 1993). Although valuable, these researches however, have not examined whether a product type performs any interaction effect concerning the relationship between the extent of standardization and the marketing/consumer factors.

As discussed prior, an interaction examination is of utmost importance to be able to specifically investigate which aspects of IDs are different to, or similar to, in respect to their counterparts (i.e. non-IDs). In regards to operating in a foreign host market, the extent of marketing adaptation exporters is greatly dependant on the degree of difference in the marketing environmental and consumer factors between the home markets which an exporter is used to and the new host market that they have entered. This will most likely develop a different relationship between IDs and non-IDs.

In addition to production cost savings, standardized product appearance seems to have had an impact on consumer buying habits in Europe. A quote from Fortune illustrates this point: “refrigerators have begun to look more alike as national tastes in product design give way to an international ‘sheer-line’ style.” (Siekman, 1964).

In a study concerned with the international life styles of women, Douglas and Urban (1977) conclude that food products, cleaning products, household products, and products related to home-centered roles 126 are more likely to require adaptation to local markets, whereas products purchased by minority segments are often good candidates for standardized marketing strategies. Such products include stereo components, health foods, and cosmetic. [i] 

Looking at it from yet another perspective, standardization drives the market that favourably affects per capita income, lifestyles and standard of living (Sun 1996). Thus, the question remains: is standardization in global marketing strategy doomed to failure?

Standardization Is Doomed To Failure…

Less Locally Oriented Market Approach

Regardless of the level of discourse at which the debate is addressed, the positioning of culture as the crucial variable in determining whether or not there is a need to adapt international marketing strategies (and if so, to what extent) permeates the international marketing literature. [5] When a product is standardized globally, it essentially means that regardless of all cultural barriers, the product will be available to one and all. This, less locally oriented market approach is cause of much concern, especially in the third- world markets. In regions where customs and traditions hold the utmost importance and the ways of life are bent and encircled around cultures, the above mentioned kind of globalization is doomed to failure.Places where the local competition knows the consumer preferences, it is considerably difficult for a standardized product to make space. While the “standardized” product may appeal to some, those few will form a niche market and hence, with all the strategies of cutting- cost- and- improving- profit- margins, the manufacturers are bound to lose a considerable market share, resulting in the loss of profiteering.

Coordination Costs

The driving factor in moving towards global standardization should be the efficient worldwide use of good marketing ideas rather than scale economies. [6] While standardization may be the answer to many other dilemmas, including cost of production and advertising, the coordination cost may not be one of them. As the world shrinks by each hour, courtesy internet mainly, it has to be kept in mind that the forbearance of actual conceivement of ideas and then globally spreading them might not be as cost- effective as was once thought initially. The relaying of directives; be it training plug-ins or manuals, the cost of organizing, directing and managing marketing and sales and many other over- heads, will eventually exceed far beyond expectance; as compared to the local competition. Only a few, well- known organizations may be able to survive such an impasse.

Loss of Motivation and Morale

Global marketing strategy should not only be oriented towards the market or the activities affecting it, but also towards the internal processes of the company. [7] Serious depravation of morale and loss of motivation can be triggered by the “not invented here” syndrome. As more and more globally standardized products are introduced in the market, the local sentiments and psychologically induced concepts might cause hurdles in the sales of the product.

Standardization Is The Answer!

Cutting Cost, Increasing Profit

Using standardized produce all across the world, in all the business units of a corporation, helps cut product cost. Two very famous examples, that can be used as classic case studies are McDonald’s and Coca-Cola. They use the same brand identity and the same product name throughout the globe. This, in effect, also makes it possible for them to use the same slogan or the same line for the product. This helps cutting the cost more than what was thought previously, not marginally! The savings from the advertising campaigns and creative costs, can then be used to lower the consumer price, and/or can be re- invested as fresh blood, in the company. The research and development, funded from such a cost, can then inject the business with new ideas for superior or original products. Even though the profit margins may be smaller for the manufacturer in the beginning, but since it lowers the price for the consumer, the sales increase and margins spread to a largely high number of consumers.

Simplified and Better Decision Making

Commonality of product pricing is the global standardization of the cost that customers are asked to incur for products. [8] The commonality of product includes first and foremost, the brand name and the brand packaging. The product positioning, the advertisements and sale promotions all become far simpler if the concept of global standardization is followed. It is exceptionally easy for the administration of the corporation to make decisions. Rather than have worrisome difficulties regarding various factorial zonal/ regional sensibilities, the think- tank just has to come up with a single, multi- faceted product, simpler in its origin and multi- purposed to suit and meet the needs of almost all, globally. The slogans and the packaging also provide enough diversity to meet the cultural indifferences, somewhat half- way, and thus makes it an artless, superior choice.

Easier International Transfer of Marketing Skills

“Potential Synergies” is a very important factor since most cost advantages from standardization can be traced to this factor. [9] When a product is globally standardized and sold the same way, with similar or identical slogans and packaging, it become easier for the manufacturers to transfer their marketing skills to the locales, in hopes of spreading their market share and thus, having the competitive edge over their opposition. A prime example of such can be the international food chain of Nando’s. With same product and similar packaging, Nando’s has provided similar environment to their consumers worldwide. With minor, subtle differences, it has maintained its individuality and yet, has conformed to the basic standardization needs. The marketing skills for such a chain have become its signature. In such a market where the brand is known for its name, the transfer of marketing skills from one region across to the other, keeping in mind all the cross- cultural differences and sensibilities, is of utmost and extreme importance.”Standardized processes will facilitate the standardization of programs through easier communications and coordination.” [10] 

ADVANTAGES AND DISADVANTAGES OF STANDARDIZATION:

The first advantage that will be discussed is how standardization creates international uniformity in the world. As people travel the world, they are confident that where ever they go they will find the same product with the same standard benefits. From this we can infer that the components that they buy from one local market become global, hence forming the standardization. It also helps in creating positive perceptions in the minds of the consumers of the product. One of the payoffs of excellent quality for a product category is that a good reputation will increase it sales tremendously. Dividends for brand owners are paid through positive word of mouth of the product.

Economies of scales can be achieved through cost reduction. Since large quantities are being made of the same non adapted product benefits are gained from bulk manufacturing. By buying components in large qualities, the cost per-unit can be reduced. Other benefits of economies of scale include improved Research and development, marketing operational costs, lower costs of investment and standardization as a plausible product category due to the decrease of trade barriers.

Due to the concentration of efforts on one single product the quality of that product increases. The quality can also be improved by training of the staff appropriately. It can be safeguarded by allowing the manufacturers to invest in specific technology of the standardized product offering.

Now let’s move the focus towards the disadvantages of standardization. The first one is the wholly undifferentiated nature of the product, due to that the fact that it is the same everywhere. This eliminates the factor of uniqueness in it. This can have a negative impact by providing a competitor to design and manufacture a tailor made product that is differentiated. We also know that different needs and tastes are present in different countries and markets. Thus standardization can cause a danger by making the product quite vulnerable.

Another issue could be from the fact that standardizations take a lot of advantage from economies of scale. If the country being dealt with does implement trade barriers then this will cause localization and resultant adaption to be inevitable.

Standardized marketing mixes can also be quite disadvantageous. This error is done when you’re standardizing everything from your product to your customer service and support, pricing and distribution channels. Again too much of undifferentiating is bad, too less of it also bad.

Conclusion:

Enthralling arguments can be put forth to better heighten both sides of the coin. A gift or curse, standardization has taken over the world of global marketing by storm. While some may argue the lack of ingeniousness, easily blamed on the above mentioned novel concept of unimaginative marketing styles for one plain, ole generic product floating through the markets of the world with utter laze and sheer abandon, others might argue convincingly about the easy accessibility of the product, without the added heartache of difference of quality or the pressure on the consumer’s finances to buy something cheaper, or extravagant , all thanks to the heartily accepted idea of standardization. The uniqueness of such an idea, might convert some to the staunch starchy belief of communism, one and the same for all, while several others might just end up calling it a failure of the essence of marketing and product developing. Environmental factors, such as political and economic stability, significantly affect the possibilities for standardization, enabling firms to improve sales margin.

As we have seen in the disadvantges of standardization, every market and every customer around the globe has its differences. And all of them cant be satisfied by one single product. The requirements of them all are different from products to price and distribution. Even the economies of scales that provide a very helping hand in the process of standardization are not equally flexible in every country throught out the globe. This fact reduces the applicability of standardization. And as mentioned before too much of anything can be negative. So the key is to find a balance between too much and too less. An extremely pure form of anything has its own downsides. And the long lasting concepts of segregation and differentiation in the world should be fully respected even when it comes to global standardization of products, services and the processes attached with them.