Standardization or Adaptation: How Multinational Firms Achieve Superior Business Performance through International Marketing Strategy?
Introduction
Along with increasingly liberalised trade policies, economic integration, higher stability of monetary transaction and development in transportation as well as communication, international business has experienced a dramatic rise (Czinkota and Ronkainen, 2001). This rise is also accompanied with enormous challenges that generate from differences between multinational companies’ home countries and foreign markets. Therefore, international marketing strategy that aims to achieve business success in competitive overseas markets has become a focus of studies especially in terms of standardization and adaptation. Years of fierce debates generate three basic perspectives. From a standardization perspective, reasons for standardizing strategy can be growing market similarity, economies of scale, homogenized customers, technological advance and consistent corporate brand (Levitt, 1983; Theodosiou and Leonidou, 2003). By
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However, it is apparent that the study owns some limitations. Firstly, in the case of IKEA in Chinese market, the discussion of marketing strategy is inadequately associated with contextual factors and performance outcomes. The role of transformation strategy in performance outcomes needs more valid evidence. Also, the case study of IKEA’s penetration into China can be narrow. That is, it may fail to explain transformation approach of other goods categories’ marketing strategy in other countries with different conditions. In summary, this article is exploratory and theoretical. It is still at the early stage of studying international marketing strategy from a transformation perspective and requires more investigations and supporting
Global marketing is defined as marketing on a worldwide scale, or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives. Marketing managers are also tasked with the responsibility of “wringing the pennies out of the activities.” Basically, they are responsible for and add value to their activities that will contribute to a higher value in the mind of their consumers. Managers must understand the role of their salespeople as marketers – they must collaborate and support them. They must work with their supply chain functional managers to accommodate international customer preferences. Communication must flow up and down the chain quickly in order to respond to emerging international marketing threats and opportunities. It is essential to monitor the firm’s global marketing efforts in a global market.
The desired outcomes from reorientation of the company’s business were to reduce risk of increasing prices, decrease costs and increase sales. These desired outcomes have ap...
We propose a branding strategy which takes into account the brands capabilities and competencies, strategies of competition brands and the outlook of consumers experience in their respective societies. As an international brand there is the challenge of staying connected with local customers. We will overcome this by adapting marketing strategy to local needs using a variance of standardized marketing mix and an adapted marketing mix.
Today, many companies enter the global market, and some companies have become extremely successful in the global marketplace and others still struggling. In Theodore Levitt’s article “The Globalization of Markets”, he states that a well managed corporation focuses on selling standardized products with high quality and low priced instead of focuses on selling on customized products with high cost. Levitt defines the differences between multinational corporation and global corporation, and adopts many specific examples to proves his view. He defines the multinational corporation who operates in many countries and adjust its product based on the taste of specific region. This will result in a high cost to produce the product because company have to input more resource into each individual product. However, global corporation sells similar product worldwide at relative low cost. According to Levitt, the cultural differences are becoming more and more “homogenized”; therefore, becoming a global corporation will lead to the successful of the company in the global market.
IKEA’s cost effective and unique Scandinavian designs provide its target customers great value. IKEA primarily uses 4 marketing strategies when compares to its competitors in the furniture retain
... Using this strategy can slow down the speed of execution, but the companies can have a single, harmonized brand. E. G. When ‘DOVE’ a Unilever brand creates an advertisement, the set, the colors, the concept remains the same but only the actors and language differ from country to country so that the audience can relate to the commercial. CONCLUSION The world is now borderless for companies who wish to go global to offer their products or services. The most important decision a company has to make is whether they should standardize or use an adaptive strategy to enter and appeal to the market.
The same can be said about a localization strategy. Localization may give a firm a competitive edge, but if it is simultaneously facing aggressive competitors, the company will also have to reduce its cost structure, and the only way to do that may be to shift toward a transnational strategy. This is what Procter & Gamble has been doing. Thus, as competition intensifies, international and localization strategies tend to become less viable, and managers need to direct their companies toward either a global standardization strategy or a transnational
...d i.e. to use a mix of both the strategies. Some academic experts also presented the same arguments which stated that the company should use standardized tactics and adapting others to difference market is necessary. Such authors believes that both the standardization and adaptation are nothing but a matter of degree to use in international marketing strategy. Also McDonald strategy is the best example of such arguments where the company has globalized it brand but localized its marketing strategies. Considering the success of McDonald I would strongly recommend that a right balance of standardization and adaptation is need to ensure good growth and success in international marketing. Hence it can be concluded that if a company wants to be successful at global level, then it should include elements of both standardized and adaptation approach in its marketing mix.
Studies and analyses regarding variations between companies performing higher or lower regarding their marketing practices has helped out to assure that a central textbook marketing strategy principle; which is to achieve success regarding that in the long term the products and services of a firm have to be well ‘positioned’ in the market. This paper aims to highlight the common formulations or ‘anatomies’ for strategies and the isolation of some of the most important inclusions that were thought to be really important in achieving success. Just to bring some “flesh on the bones”, this article examines the method through which theory is translated into practice.
Mazda is one of case studies which success in business transformation. There used the brand strategy which reform from the insight of th...
In conclusion, it can be said that global marketing has been emerged very rapidly in recent years. It has provided various opportunities for the companies to expand their business to the other regions of the word. However, there remain certain environmental issues that need to be considered before entering in to the desired region. These issues can be resolved with designing the strong global marketing plans and strategies, the data for which can be gathered through conducting global market research. Despite numerous issues, one can easily say that globalisation has reduced the global reach of the organizations as well as customers. It would not be wrong to conclude that
When analyzing an organization’s target market, the first step is to understand the business and what they hope to achieve through their marketing strategies. Targeting and positioning strategies consist of analyzing and identifying segments within a given product-market, choosing which segment or segments to target, and developing and implementing a positioning strategy for each targeted segment (Cravens & Piercy, 2009). The company’s target market determines what customer group or groups the company wants to serve (Cravens & Piercy, 2009). Analyzing IKEA’s target market allows the company to determine if their marketing strategies have successfully targeted their intended customer group or groups. Discussing the company’s positioning strategy helps determine if the strategy is effective or if the company must make improvements strengthen their positioning strategy. The company must determine if their targeting and positioning strategies may be lacking. If the company’s targeting and positioning strategies are lacking, the company must determine what they must do to strengthen their targeting and positioning strategies.
The main topic for this Extended Essay is to analyze the effectiveness of company’s market strategy. A marketing strategy can be defined as a process that helps a business to optimize the opportunities in order to complete business objectives, which mainly gain profits. It includes all basic and long-term field activities of marketing that deal with the analyzing of initial strategy, evaluation of the strategy, and making of a new strategy if the initial strategy is found to be ineffective or even might cause loss. (Homburg, Kuester and Krohmer 2009) To make sure the effectiveness of marketing strategy, its crucial to establish the right marketing mix which cover all the element needed in marketing a product. (Clark, et al. 2009)
International Marketing, at its simplest level, involves the firm making one or more marketing mix decisions across national boundaries (Jobber, 2010). At its most complex level, it involves the firm establishing manufacturing facilities overseas and coordinating marketing strategies across the globe (Jobber, 2010). There are various reasons for going global, some of which are: to find opportunities beyond saturated domestic markets; to seek expansion beyond small, low growth domestic markets; to meet customers’ expectations; to respond to the competitive forces for example the desire to attack an overseas competitor; to act on cost factor for example to gain economies of scale in order to achieve a balanced growth portfolio. The methods of market entry that could be used are indirect exporting (for example, using domestic –based export agents), direct exporting (for example, foreign –based distributors), licensing, joint venture and direct investment. I found this par...
Gogel, R. and Larreche, J.C. (1991). Pan-European Marketing: Combining Product Strength and Geographical Coverage. San Francisco, California: Jossey-Bass