Standardization V/S Adaptation of International Promotional Strategies24th November 2021 0 By indiafreenotes
Standardization means an undifferentiated use of the same Marketing Mix (4-7Ps) in all countries. In this case, the firm simply replicates, without any changes, the same strategy in the different markets in which it operates. In general, firms that adopt the standardization strategy are those that are exporting for the first time, or those that focus on cost savings through economies of scale and for whom an adaptation process could result very costly. You can find below some factors that favour standardization:
- Economies of scale: Mass production allows the firm to lower unit production costs by increasing volumes through economies of scale.
- Globalization of the market (consumers/customers): Companies that offer a product whose market is “Global” can offer the same product in multiple countries, catering to a wide range of consumers.
- Transferable competitive advantages: Offering a standard product can provide several competitive advantages. The cost reduction provided by economies of scale allows the firm to introduce competitive pricing. In addition, a standard product ensures quick response times to the market, provides a global standardized image and better control over marketing strategies.
Adaptation means that each country/market has its Marketing Mix. The adaptation strategy is geared towards meeting the needs of the market, planning all business activities with the aim of efficiently meeting the specific needs and respecting the values of local consumers. We can take as an example beer companies. When entering a new market we can see that one country can prefer non-alcoholic beer. The company then has to adapt to the situation and, for instance, decide to produce more beer which results preferable for the chosen country/market. As in the case of the standardization, the adaptation strategy is better suited in the presence of the following factors:
- Differences in local competitive conditions
- Differences between customers/consumers
- Differences in local legal conditions
- High degree of service in the company’s offering
Standardization vs. Adaptation
The first view is the standardization standpoint. According to these authors, supporters of standardization believe that there is a union of cultures with similar environmental and customer demand around the globe. They argue that trade barriers are getting lower and that technological advances and firms are displaying a global orientation in their strategy. As they believe, creating one strategy for the global market and standardizing the marketing mix elements can achieve consistency with customers as well as lower costs. Levitt argues that companies that are managed well have moved away from customizing items to offering globally standardized products that are advanced, functional, reliable and low priced. According to him, companies can achieve long-term success by concentrating on what everyone wants rather than worrying about the particulars of what everyone thinks they might like.
On the contrary, supporters of the international adaptation approach, emphasize the importance of customization. The fundamental basis of the adaptation school of thought, is that when entering a foreign market one must consider all environmental factors and constraints such as language, climate, race, occupations, education, taste, different laws, cultures, and societies. However, researchers have identified important source of constraints that are difficult to measure such as cultural differences rooted in history, education, religion, values and attitudes, manners and customs, aesthetics as well as differences in taste, needs and wants, economics and legal systems. According to Vrontis and Thrassou supporters of this approach believe that “multinational companies should have to find out how they must adjust an entire marketing strategy and, including how they sell, distribute it, in order to fit new market demands”. It is important to alter the marketing mixed and marketing strategy to suit local tastes, meet special market needs and consumers non-identical requirements.
Advantages and Disadvantages of Standardization
Standardization and international uniformity has many advantages. For one, people can expect the same level of quality of any specific brand anywhere around the world. Standardization also supports positive consumer perceptions of a product. If a company enjoys strong brand identity and a strong reputation, choosing a standardized approach might work to its benefit. Positive word-of-mouth can mean an increase in sales around the globe. Another advantage includes cost reduction that gives economies of scale. Selling large quantities of the same, non-adapted product and buying components in bulk can reduce the cost-per-unit. Other advantages related to economies of scale include improved research and development, marketing operational costs, and lower costs of investment. In addition, standardization is a reasonable strategy at a time where trade barriers are coming down. Finally, following a standardized approach helps companies aim focus on a uniformed marketing mix specifically focusing on one single product, leaving enough room for quality improvement. By emphasizing on one uniformed product, staff can be trained to enhance the quality of the product attracting manufacturers to invest in technology and equipment that can “safeguard the quality of the standardized product offering”.
Standardization, however, poses a number of disadvantages. As mentioned previously, different markets mean different preferences. Selling one unified product lacks uniqueness. This allows competition to gain market share through tailoring their products to meet the need of a specific market/segment. Since different markets have different needs and tastes, by using the standardized approach, companies can become vulnerable. One example is Walmart’s failure in entering global markets. The retail giant faced many challenges when entering foreign markets such as Germany, Brazil, South Korea and Japan as it discovered that its formula for success in the USA (low prices, inventory control and a large collection of merchandise) did not translate to markets with their own discount chains and shoppers with different habits. The biggest problem was that Walmart, a uniquely powerful American enterprise, tried to impose its values around the world. In particular, Walmart’s experience in Germany, where it lost hundreds of millions of dollars since 1998, “has become a sort of template for how not to expand into a country”.
Another disadvantage is that it depends largely upon economies of scale. Naturally, businesses that are global manufacture in many counties. This can pose a problem since a number of countries implement trade barriers such as the USA and the European Union (Products and International Marketing, n.a). In this case, adaptation is predestined.