“Successful international firms frequently introduce standardized products covering most market needs, thereby replacing many specialized products"
Introduction
The globalization and internationalization has increased the concerns of international business and international marketing. The firms have been involved in developing themselves into the Multinational Corporations (MNCs) rather than local and national firm. It has resulted in various MNCs across the world such as Coca Cola, McDonalds, Pepsi Co., KFC, Wall Mart, Zara, Unilever, Nestle etc. Marketing strategy is defined as the development of the decisions for the resource allocation, relationship of the company with the investors and the timings for the actions. With the growth in the internationalization, the management of the companies is now more concerned to develop the marketing strategies that must be effective in the global and the worldwide markets. In this global marketing environment, the study has found that the firms develop their strategies based on three dimensions include Adaptation-Standardization, Strategic integration and configuration coordination (Furry, 2006).
Adaptation-Standardization is the major and the most important strategic dimension for the international marketing that includes the decision about the products’ offerings, pricing, and promotions across different countries (Nordstrand & Ohman, 2005). Bradley (2005) has stated that successful international firms introduce standardized products covering major market needs, thereby replacing many specialized products. Therefore, the paper is going to assessing this statement and will study that whether the companies adopt standardized strategy or the adaptation strategy for the successful international marketing.
Dimensions for International Marketing Strategies
The three dimensions mentioned above include Adaptation-Standardization, Strategic integration and configuration coordination is going to discuss in detail first to understand the approaches of the international firms to their global marketing strategies and plans. The first approach in the Adaptation-Standardization that means the international firms either use different or similar strategy for the marketing mix in different markets. Based on different viewpoints, different firms adopt different strategies in this dimension.
Some researchers, scholars and field experts believe that the consumers across different market prefer similar type of products and services and the markets are homogenized across the world (Nordstrand & Ohman, 2005). Based on this perspective, many multinational firms are offering similar products in different countries of the world. Let’s have an example of McDonalds that uses the standardized marketing strategy across different countries of the world. Despite of this, some researchers and experts believe that the consumers have different preferences based on the cultural context and values and demands of the consumers are different across the world. In line with this argument, many companies have used the adaptation strategy for their marketing in different countries. For suppose Red Bull uses different packaging in China as compare to America because of the cultural believes and attitudes towards different colors and symbols. The picture below shows Red Bull, where, blue and silver packaging is used in America and golden is used in China (Ruettimann, 2015):
The second dimension is the integration in different markets across the global industry in which the firms planned for their execution in different countries based on the level of competitiveness. The two major strategies are used in this dimension include independency and interdependency. The third dimension is the configuration in which the firms use different strategies for configuring their value added activities, some companies use concentrated strategy and some use disperse strategy for their value added activities that directly impacts on their chain of activities across the international market (Furry, 2006).
Adaptation Strategy vs. Standardization Strategy
Adaptation Strategy vs. Standardization Strategy has been debated in the literature as well as practical field in the context of international marketing. Either the firms have to use Adaptation for the marketing mix or the standardization strategy. The marketing mix includes different marketing factors such as product, price, promotion, advertising, distribution channel, place and people etc. In debating and discussion about these two strategies for the marketing mix, different studies have found various factors affecting the choice of the international firms. However, the culture has found as the major and the common factor in many studies (Papavassiliou & Stathakopoulos, 1997).
Cultural Diversities
Before discussing the cultural diversities, it is important to understand the term culture. The culture is most commonly defined as the set of beliefs, norms, behaviors, languages, values, laws, practices, traditions and customs (Hall, 1989). The study has argued that these set of norms, values, traditions and beliefs are different across different countries and it is known as the cultural diversities. The culture is a broader term that is used to differentiate the markets based on different perspectives, beliefs and thinking. The study has found that the cultural differences and diversities influences the marketing strategies of the companies in the international perspectives and the dissimilarities are found across different countries in marketing strategies (Meyer & Bernier, 2010). It shows that the most of the firms use different marketing strategies in different countries based on the cultural differences and information available for the culture.
Cross cultural aspects are now considered as very important for the globalized companies as the culture directly influence the humans and their psyche that shapes their needs and demands (Popovici, 2011). It means that the cross cultural factor and diversities in culture impacts on the marketing strategies of the firms, then how the similar product offering can be successful is a question mark here.
Cultural Dimensions
As the culture is a broader term, different dimensions of the culture are used to understand the markets in the marketing field. These cultural dimensions can be included the communication style, dressing, food trends, family and friends relationships, norms and values, beliefs, attitudes, habits and routines, religion (Burton, 2008). The study has used the following framework to define the cultural dimensions (Meyer & Bernier, 2010):
(Meyer & Bernier, 2010)
Despite of these factors, the education and literacy is also found as one of the important aspects of the culture that directly impacts on the marketing strategies. The study has suggested to the marketing management that they have to consider the culture as the major focus and need to conduct the research about different markets to understand that what innovation and changes in the products will be suitable in the specific market (Vrontis & Thrassou, 2007).
Adaptation vs. Standardization strategy for Product
Before understanding and discussing the marketing strategies for the product, it is important to understand the term product. The product can be defined as any offer in the market to meet the needs of the consumers for the attraction. Products or offers of the company can be both tangible and intangible such as the consultancy offering is intangible and known as service, while the food, clothes, vehicles, mobile phones etc are tangible products (Parrry, Newnes & Huang, 2011).
Offering the products and services, the customer satisfaction is the major concern for the companies to achieve the competitive advantage. In this perception, the firms have to choose the right strategy for the international market for what and how to launch the product in the specific country. The study has argued that the standardization is more essential and easy for the product strategy as compare to the other strategies in the marketing mix. The major reason, the study has found for the standardization of the product is the product management and easy covering of the investment. Further, the companies can easily reduce their cost of the production with the help of standardizing the product (Sankaran, 2013). There are many companies and multinational firms are successful in the international market, even offering the standardized products.
Success and Failure of the International Companies
Let’s have an example of Coca Cola that offers the similar product in different countries of the world. Same beverages are being offered across different markets and everyone in the world welcomes the products of Coca Cola. Coca Cola is the leader of the beverages industry. It means that the standardized products offer across the world makes the company successful. However, it can be said that the companies use different strategies for other marketing mix while offering standardized product. For example, Coca Cola though offers similar products, but use different advertising strategies across different countries.
Another example of Standardized product strategy of the successful company is Apple. Apple is one of the leading and the successful companies in the electronics industry of the world, where, its major competitor is Samsung. The Apple is a successful company, while its strategy for internationalization is the standardized product. Apple launches similar product in different markets across the world, except changing the power source because of the voltage differences in different countries (Mtvanhelder, n.d.). Though, another study has criticized that the standard product offering limits the ability of Apple Company to be more forceful in the international market (Nagari et al 2013).
The study has argued that the adaptation of the culture for the international marketing is the key to success of the international companies (Combarieu, 2014). However, the adaptation strategy for the products and offerings sometimes lead the brands towards failure. The adaptation strategy is usually failed due to the lack of information and the high cost of the production. There are many examples of the failure of the leading brands because of the adaptation strategy.
Let’s suppose the example of Nokia. Nokia was one of the successful and leading brands in the electronic industry, mainly for its mobile phones. Nokia was used the adaptation strategy for its cell phones, while launching in different markets. It has customized the products, offering different features based on the nature and practices of the customers in different markets such as Asian was found as the demanding consumers for high volume because of the high noises in the environment. However, the Nokia was failed with the development of Samsung and Apple Company. The reason was that the company was failed to understand the changing needs of the international market, while keep focusing on the specific major markets that was resulted in the lack of information about the international standardized changes and thus, the company had fallen and now it has been operated by Microsoft Company, neither as the leader, nor as the successful company.
Another example of the failure of adaptation strategy is Tesco “Fresh and Easy” launch in the United States. Tesco considered the culture of U.S. as similar to that of UK and develop the marketing strategy based on the cultural aspects that was resulted in the failure of the idea and the company has faced the loss of billions (Heffernan, 2013). It means considering the cultural differences and similarities can cause the loss and failure to even the largest companies of the origin countries. It means that either the companies have to research and survey for the accurate information about the culture or they have to introduce the standardized products and offers to even reduce the risks of loss as the similar product can be resupplied in other markets, where demandable.
This approach is making many other international firms and brands to adopt the standardized strategy for the products to be successful. Let’s have an example of Subway. It is one of the popular and leading fast food brands in the world. Subway initially was offering the fast foods based on the different natures and demands of the consumers in different markets, however, it has changed its strategy to be standardized in all the markets across the world. Now, the subway offers similar food products, prepare using similar ingredients across different markets, whether or not the preferences for flavors are different (Ting et al., 2010). Further, Subway also removes the Ham and Pork from its production based on the strong demand of Subway among the Muslims (Poulter, 2014). It means that rather than considering different needs of the cross cultural consumers, Subway has completely adopted the standardized products that can be eaten by every consumer across different markets.
Benefits of Standardized Product Strategy
The various examples of the leading brands using standardized strategy for the product shows that the strategy is becoming popular across the world and many leading multinational firms are adopting this strategy. The study has revealed that the major reason for the adoption of the standardization for the product marketing is the cost reduction. To develop and design the standardized product, it is less costly to outsource the material as well as it can also improve the flexibility. It is less costly to produce few specific products using similar material rather than producing various products using multiple materials (Perera, Nagarur & Tabucanon, 1999). It means that the cost reduction is the major cause of the success of the companies that are offering standardized products and replacing the specialized products.
Standardization is now considered as the winning strategy for the companies, controlling the cost and improving the customer satisfaction. Nordstrand & Ohman (2005) have also found various benefits of standardized strategy for the product such as the managerial control over the product and its quality, the cost reduction, simplification in the strategic planning, home country benefits and differentiating based on other marketing mix.
It shows that the standardized product strategy is beneficial for the companies to be successful in the international market as the cross cultural aspects can be controlled by using adaptation strategy for other marketing mix such as prices, promotions, place and advertising etc.
Conclusion
During the discussion, the culture is found as one of the most impacting factor to the international marketing strategies of the company that creates difficulty for the companies to consider the product strategy in different markets such as the Nokia was failed considering different culture perspectives and needs rather than searching for the standardized needs of the consumers. The major reasons found for the success of standardized product strategy are the cost advantage, investment plan, product management, and brand equity and image and customer satisfaction for the quality.
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