Global Standardisation Or International Adaptation

Global Standardisation Or International Adaptation In the International Marketing field, the debate of standardisation as against adaptation has been significantly researched in the past and is still a highly debatable issue. This debate commenced in 1961 as indicated by Vignali and Vrontis, (1999). Initially this debate mainly focussed on international standardisation with regards to advertising. However, recently, this debate has been extended from just advertising to promotions mix and now to all the seven Ps of the marketing mix (Kanso, A., et.al, 2004). A brief review of literature also indentifies adaptation and standardisation as the two main tactics by international marketers for business longevity (Vrontis, D., et al, 2009). In the last four decades, according to Ryans (2003), there has been extensive academic research done in the field of international marketing standardisation. However in the past, economic development was concentrated on surplus of exports as compared to imports and hence, firms mainly focused on merely minimising costs to increase their exports. However, in this increasingly competitive and changing international market, firms have realised that cost minimisation is not just enough for gaining a competitive advantage. Nowadays, firms have become more consumers oriented and have developed techniques to satisfy and understand customer preferences and needs. (Vrontis, D., et al, 2009) The objective of this essay is to understand the issue of whether a business should adopt an international marketing mix strategy which is standardized globally or adapted internationally as per individual markets. In the quest to expand their presence worldwide, acquire higher market share, increase profitability and overcome market saturation issues, internationally oriented firms continually seek for new growth opportunities (Vrontis, D., et al, 2009). According to Vrontis (2006) whenever a firm decides to market their products internationally the fundamental decision for marketers is whether to use a global marketing strategy with a standardized marketing mix or whether to adjust and adapt the elements of the marketing mix according to the unique local target market. However, Vrontis (2006) suggests that according to the literature companies make contingency choices, which relate to key determinants in each circumstance (Vrontis, D., et al, 2009, p.3). The primary distinction between global standardisation or global marketing and international adaption in international marketing management is orientation. Standardisation forms the basis of global marketing management which views the world a s a single market where as on the other hand international marketing management is guided by an adapted marketing strategy (Cateora Graham, 1999). The basis of standardization in marketing as argued by Chung, 2007, is the comparison of a firms domestic and international marketing operations. In standardization, firms standardize all their marketing mix components. Chung further suggested that the extent to which the firms should standardize their marketing functions should be assessed. He has also highlighted in his research paper, the interaction method which helps to identify the influencing factors in selecting the standardization strategy (Ryans, J., et al., 2003). Buzzell (1995) have stated that the dissimilarities amongst countries have led international firms to redesign their marketing planning according the country in which it is operating. However, he further said that this situation is changed and he recognized potential gains for firms who adopt standardization of marketing practices. Chung (2007) further argued that culture has a major effect on just the promotional element of the marketing mix. This suggests that firms should use an adapted promotional approach when entering a different cultural environment (Vrontis, D., et al, 2009, p.3) and culture has a very minimal effect on product, price and place. Backhaus and Van, J., (2007) claims that standardisation is a trade off between the possible economic benefits of a standardised approach, as well as the performance gains attained by adapting to the needs of local markets. Marketers who support global standardisation tactics argue that consumers live in a globalized world in which nation-states are not the major determinants of marketing activities; and in which consumer tastes and cultures are homogenised and satisfied through the provision of standardised global products created by global corporations (Vrontis, D., et al, 2009; Dicken, P., 1998). Levitt, 1983 said that multinational firms have moved from customising items to offering globally standardised products which are better, more reliable and lower in price. According to Levitt, multinational firms who concentrate on particular consumer preferences become puzzled and are unable to see the big picture. Levitt strongly recommends that standardisation will bring success in the long term by concentrating on what majority wants (Levitt, T., 1983). The main reasons as suggested by Papavassilou and Stathakopoulos (1997) that add values to Levitts thesis is because it allows international firms to maintain brand identity globally and helps firms to maintain a consistent global image. It also reduces the confusion with regards to perceptions of travelling customers or buyers allowing firms to adopt a single tactical approach and enables them to reduce production costs by taking advantage of economies of scales in production. Levitts, 1983 suggests that standardisation on a tactical level is very important for global markets. He further argues that global firms which operate on standardised functions, at lower cost, can consider the entire world to be a single market and can sell product in the same manner globally. Keegan Green, (2000) supports Levitt by stating that standardised global marketing is similar to mass marketing in one country involving similar marketing mix strategies. This approach of global standardisation of the marketing mix is opposed by the researchers who support international adaptation approach. According to Vrontis et al, 2009, Supporters of adaptation declare that the assumptions underlining global standardisation philosophy are contradicted by the facts. Jain, (1989, p. 71) has stated that, Standardisation is at best difficult and, at worst, impractical (Jain, S., 1989, p. 71). According to Ruigrok and Tulder (1995), Globalisation seems to be as much of an overstatement as it is an ideology. Ruigrok and Tulder (1995) further stated that it is not possible to effectively market by using standardized marketing mix methods everywhere. Helming (1982) and Youovich (1982) challenged the basic assumption of the standardisation approach and argues that similar buying motives of international consumers may, at best, be simplistic and at worst, dangerous(Vrontis, D., et. al, 2009, p.3). Hence, supporters of international adaptation argue that minor or major adaptations in the elements of the marketing mix are vital and necessary in meeting the target market demands. According to them, different international markets are subject to different micro and macro-environmental considerations and hence standardisation of the marketing mix is not feasible. The marketing mix consists of seven components namely product, price, place, people, process, positioning and promotion. Any possibility of a global marketing mix suggests that the same configuration of the seven Ps could be applicable internationally, regardless of cultural and conditional differences. Some businesses do focus on global standardization; however, current data suggests the need for local adaptation. This may be achieved by carefully analyzing the regional market segmentation (Semenik, R., et.al, 1995). Hassan, Craft and Kortam (2003) has distinguished three important market segmentations namely, those group of countries which have a similar product demand, different countries in different region which already have the same product and Universal segment which are present in most countries. The other drivers considered by multinational companies with respect to segmentation and operating in the international markets can be divided into macro factors such as political, e conomic, technological, geographic, etc. and micro factors which include consumer tastes, preferences, lifestyles, attitudes, etc. Lipman (1988) has supported international adaptation strategy because in his view, the global-marketing theory itself is bankrupt and bunk (Vrontis, D., et.al, 2009, p.3). The standardization concept which once rushed executives to reconfigure their marketing strategies are now feeling duped. The differences in the customer characteristics, climatic conditions, culture, consumer behaviour and other factors are in the ascendency and having a single global marketing strategy is a vague concept. On the other hand, the huge costs involved in adaptation and the benefits of standardisation, may not allow adaptation to be used extensively (Vrontis, D., 2005). Adaptation and Standardisation are two extreme schools of thought. The view of adopting any one of these two strategies is rejected by researchers, authors and marketers who have found it difficult to apply these strategies in practice. For them, global standardisation and international adaptation is not a proposition, but a matter of degree. Diversity amongst countries does not permit global standardisation. They have stressed on the necessity of simultaneously using both international adaptation and global standardisation wherever necessary. (Sorenson, R., et.al, 1975; Prahalad, C., et.al, 1986; Boddewyn, J., et al., 1986; Douglas, S., et.al, 1987; Kim, W., et.al, 1987; Choi, K., et.al, 1996; Terpstra, V., et.al, 1997; Vanaij, W., 1997; Hennessey, J., 2001; Vrontis, D., 2003; Vrontis, D., et.al, 2005). The best example of an effective international marketing firm which adopts an integrated approach of standardisation and adaptation is McDonalds. The firm has expanded internationally by branding globally and adapting to the local tastes. (Vignali, C., 2001). Successful multinational firms should incorporate elements of both approaches. Hence, incorporating both concepts means that global firms must try to standardise as many elements of the marketing mix as possible and also follow necessary adaptation in order to satisfy market needs. To conclude, the goals of market complexity and cost reduction may influence firms to consider standardisation where as customer orientation may lead them towards adaptation but by incorporating both will help firms gain a competitive advantage and above average returns. References: Backhaus, K. and Van, J., (2007), Consumer perceptions of advertising standardisation: a cross-country study of different advertising categories, International Management Review, Vol. 3 No. 4, p. 37. 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