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.
By observing the PEST-C variables, international businesses are able to make smarter choices in their global marketing decisions. These attributes that must be thoroughly understood and analysed in order to succeed in the international marketplace. All of the variables relate to global marketing. Global marketing can be defined as marketing on a worldwide scale. All variables must consider the understanding of the advantages of global operational differences, similarities, threats, and opportunities that can be used to meet international objectives.
There are many critical factors contributing to the success of a global company. Some significant aspects that I had seized are the global brands (Holt et al., 2004), the distance matter (Ghemawat, 2001), the international strategy (Ghemawat, 20...
...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.
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
As we have already mentioned, the historical background of the debate is deep and it may well be the oldest debate in marketing history (Vrontis et al, 2009). As soon as globalization made it possible for a firm to sell its product in more than one country, the choice of standardizing or adapting it emerged. In the first decades of the 20th century, when mass production was the rule among businesses and cost minimization their main goal, many economists argued that people in all countries have some universal characteristics, hence standardisation was the best marketing strategy (Ryans, Griffith & White, 2003). Others claimed that all markets are not the same and therefore, a certain type of product adaptation should be applied. Later, in the sixties, businesses who aimed for cost saving opted for standardisation, whereas firms that believed that markets presented a high degree of heterogeneity choose to adapt ...
Samiee and Roth(1992) emphasizes the conceptualized of standardization has been in the different ways. Like the same strategy can be used in all markets. or it can be mean the same marketing strategy can be adopted in the both market which are the domestic market or foreign market (Cavusgil,1993)
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.
Competition in the business world is fierce and in order to survive companies must expand. “With the increasing globalization of markets, companies find they are unavoidably enmeshed with foreign customers, competitors, and suppliers, even within their own borders,” (Cateora-Graham, 2007). One way in which many companies have done this is by going global. International marketing, although more prominent than ever before, is still a difficult arena for marketers to master. Although religion and culture are not immediately brought to mind when business is brought up, marketing is one aspect of business that is highly sensitive to culture. Not only culture, but also politics, the economy and the law effect marketing strategies. This paper will examine the differences between the American and Japanese marketing environments.
Finding the balance between standardisation and localisation is one of the towering problems that companies encounter when tapping international markets. So many times companies choose to standardise their marketing mix for international markets, either for cost efficiency reasons or the lack of reasonable global marketing strategy. (Singh, 2016)
International marketing challenges: The issues faces by organizations by using standardized marketing strategy across culture
The most important external driving forces of an increasing internationalization are the openness to new markets due to liberalization and deregulation, further development in technologies and logistics, as well as shorter product life cycles, and a homogenous consumer behavior whereas internally the strategic-focused attitude of companies represents an essential factor.
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 we consider “Customizing Global Marketing (John A. Quelch and Edward J. Hoff)”, we should check which strategies are used; adaptation or standardization. When we analyzed the case, we see that 7- Eleven made adaptation strategy in Taiwan. Because, there is not enough space in stores to apply standardization strategy. In U.S., 7 – Eleven uses so much space in stores, but they cannot have similar conditions in Taiwan. Therefore, they are used adaptation strategy to this conditions and they are designed their stores again. Another reason is applying this strategy is that Taiwan culture.
Gogel, R. and Larreche, J.C. (1991). Pan-European Marketing: Combining Product Strength and Geographical Coverage. San Francisco, California: Jossey-Bass