Transcript GLOBAL MARKETING: STANDARDIZATION OR ADAPTATION? Michele Fedor, USA

GLOBAL MARKETING:
STANDARDIZATION OR
ADAPTATION?
Michele Fedor, USA
International Marketing Specialist
16 November 2012
VUZF University
Business Strategies Class of Prof. Evgeni Evgeniev
Globalization
: the act or process of globalizing : the state of being
globalized; especially: the development of an
increasingly integrated global economy marked
especially by free trade, free flow of capital, and the
tapping of cheaper foreign labor markets
Globalization

The trend toward a single, integrated and
interdependent world
 Economists:
emergence of global markets
 Sociologists: convergence of lifestyles and
social values
 Political scientists: reduction of national
sovereignty
 CEO/Marketing Manager?
Global Business
Framework
Global Business

EPRG Framework (Dr. Howard V. Perlmutter, Wharton)

"The more one penetrates into the living reality of an
international firm, the more one finds it necessary to give serious
weight to the way executives think about doing business around
the world.“

Organizational world views shaped by how company was
formed, CEO's leadership style, administrative processes, myths
and traditions

These orientations determine the way strategic decisions are
made and relationship between headquarters and affiliates
Global Business

EPRG
 Ethnocentric (Home Country orientation)

Domestic strategies are superior, applied to foreign markets
 Polycentric (Host Country Orientation)
 Decentralized management, affiliates manage their market
 Geocentric (World Orientation)
 Integration of worldwide marketing with no bias towards home or
host country
 Regiocentric (Regional Orientation)
 Region viewed as a single market
EPRG Characteristics
Ethnocentric
Polycentric
Regiocentric
Geocentric
Source: Multinational Organization Development, 1979, Perlmutter, H.D.
Global Business/EPRG


Does not exist in the purist form
Only geocentric organization decides on
marketing adaption or standardization?
Ethnocentric with surplus product?
 Regiocentric uses same ads?
 Polycentric insists on branding standards?

Global Marketing Strategy
Definitions
Global Marketing Strategy

Marketing Mix
4
P’s
Product/Service
Price
Place/Distribution
Promotion
Global Marketing Strategy


The Oxford University Press defines global marketing
as “on a worldwide scale reconciling or taking
commercial advantage of global operational
differences, similarities and opportunities in order to
meet global objectives.”
Steps before entering a market
Assessment of the economic, political, legal & cultural
environment
 Selection of appropriate markets
 Market entry strategy
 Marketing Mix

Global Marketing Strategy
Standardization or Adaptation?
Global Village
Globalization implies we
are becoming more alike,
one “global village”…

Global Village
Global Village
Bulgaria and Macedonia are the same?
 British English and American English?
 Women’s role in car buying?
 Bathing suits in different countries?

Global Village
Global Village

Globalization
 Does
not imply homogenized markets
 Does imply that we are interconnected
Standardization or Adaption?
Standardization or Adaption?

Standardization


Assumes homogenous markets and in response offers
standardized products and services using a
standardized marketing mix
Adaption
 Takes
into account the inherent diversity in the global
marketplace and adapts the marketing mix to fit the
local culture, preferences, laws and rules, infrastructure
and competition
Standardization

Transfer of company’s best, proven ideas
 Learning

curve
Economies of scale
 Production,



Marketing, R&D/development
Simplification
Greater control
Consistency
 Easier
to maintain uniform brand identity
Standardization


Millward Brown study found that just over one in 10
successful ads did equally well in another country
 truly cost efficient cross-border campaigns?
Marketing Science Institute study showed distribution and
price sensitivity across European countries
 Commodity product
 More mass communication, more price sensitive
 Increased distribution of high quality product effective in
less economically developed areas
Standardization Blunders


Workers in an African
port saw the “Fragile”
symbol and presumed it
was broken glass, threw it
all in the sea
(Neil Payne, 2008, proz.com)
Standardization Blunders


Golf ball manufacturer
packaged golf balls in
packs of four; “four” in
Japanese sounds like
death and items in fours
are unpopular
www.kwintessential.co.uk
Standardization Blunders


Sportswear manufacturer
Umbro named a running
shoe Zyklon; the same
name as the lethal gas used
in extermination camps in
WWII
Yunker, 2002
Standardization Blunders



The American beer
company Coors used the
slogan ‘Turn It Loose’ in its
marketing campaign
Translated into Spanish, it
read "Suffer From
Diarrhoea."
Yunker, 2002
Standardization Blunders





Dutch Company Neerlandia exports
milk powder in tin boxes to African
countries; switched to alu-packs
made of aluminum foil
Local customs officials became
suspicious, believing they contained
illegal drugs
Customers stopped buying the
product; they had been using the tins
as vessels for boiling water and
preparing food, and even as
building material
Neerlandia reverted back to the
reusable tin box packaging
http://www.deseretnews.com/article/705374644/Cultural-tastes-affect-international-foodpackaging.html?pg=all
Adaption

Specialization
 Directly


address consumer preferences
Allows for consideration of cultural, legal, social,
economic issues
Use local marketing knowledge
 More
targeted advertising
 Strategize against competition
 Aware of logistical opportunities
Adaption Blunders


In its 2013 catalog,
Ikea, in a bid to
“localize” for the
Saudi Arabian market,
removed women from
its catalog
Ended up being called
“sexist” and lost face
Standardization or Adaption?
Standardization or Adaption?

Under what circumstance can a company
in Country X sell its product in Country Y
without changing product, price, place, or
promotion and earn a suitable return?
Reality

It is rare to find a completely standardized
marketing mix


The theory of standardization works on a strategic level, often
not suited for the detail required on an operational and
tactical level
Standardization and adaption should be evaluated
as two ends of a spectrum

Which marketing mix elements should be standardized or
adapted and to what extend
Reality

Perspective of Contingency

Instead of total standardization or total adaptation, this
perspective seeks a balance


The degree of standardization is determined by the external
environment and internal organizational factors
“Companies that operate in foreign markets should have
eclectic abilities to seek integration, sensitivity and learning
on the global scale at the same time, and standardization
and adaption should not be evaluated as approaches that
cannot be coordinated.”
Source: Jain, 1989; Cavusgil et al., 1993
Glocalization

Objective of Glocalization
 Find
the optimal combination of integration and
rationalization of operations in a global market
 Find

synergies, adapt for the rest
Think Global, Act Local
 Most
important is to decide which strategic elements
should or must be standardized or adapted and to
what extent, under what conditions and when
Global Marketing Strategy Framework
Standardized
Communication
Strategy
Localized
Communication
Strategy
Standardized
Product/Service
Global Strategy
Glocal Strategy
Localized
Product/Service
Glocal Strategy
Local Strategy
Glocalization




McDonald’s offers beer in Germany, wine in France,
mutton pies in Australia, Veggie McNuggets in India,
Teriyaki Burger in Japan, McLaks in Norway
Nokia offers an anti-dust keypad for its phones that
was made specifically for India
Proctor & Gamble offers Ariel detergent in small
sachets that are affordable in the Nigerian market
PepsiCo’s most popular Lays Chips are: cheese onion in
the UK, lemon in Thailand, Paprika in Germany, seafood
in China
Glocalization - Kraft

Kraft Oreos





Brand turned 100, with $2
billion in sales in 2011
(25% increase)
Emerging markets account
for half of the brand’s
sales
Maintains the fun, family
oriented “twist, lick, dunk”
communications strategy
Product adapted to the
market
http://youtu.be/QHIAHJ6n
w0k
Glocalization - Kraft



Oreo was
underperforming so badly
in China, Kraft was on the
verge of pulling it
Reformulated cookie to be
less sweet and added
flavors/wafer options and
used Yao Ming in ads
Today, China is the second
largest consumer of Oreo
products after the U.S.
Glocalization - Kraft



In India, the cookie was
too bitter; reformulated
and added flavors,
tailored ads to local
consumers, Oreo India
website, social
networking
Lower pricing strategy
(5 and 10 packs), and
local distribution
Between Jan-Sept 2011,
sales grew 40%
Glocalization - Kraft
Glocalization - Kraft




Showing
breastfeeding
Sugary cookie in
baby’s hand
Pulled off Facebook,
labeled “NSFW” (not
suitable for work)
Censored in other
media
Glocalization - Mattel

Mattel’s Barbie
 Sales
rose in Japan
from near zero to 2
million after Mattel
allowed its affiliate to
change Barbie’s
features (closed mouth,
rounder face, bigger
eyes)
Glocalization - Mattel

Mattel’s Barbie

Flagship store opened in
China in 2009 on
Barbie’s 50th birthday

Ambitious marketing
push into world’s most
populous region

http://youtu.be/Ys3xDC
EfTkc
Glocalization - Mattel

Mattel’s Barbie
2
years later, the store
is closed
 Was
 Mattel
it the strategy?
insists it is not
giving up on Barbie;
still sold in more than
1,000 retail outlets
Standardization or Adaption?

Reality is that pure standardization and pure
adaption don’t really exist, and they shouldn’t
 Global

marketing is too complex for simplistic answers
Most important is to decide which strategic elements
should or must be standardized or adapted and to
what extent, under what conditions and when
 Strategy
and execution are equally important
Thank You!
[email protected]
References
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“Cadbury India Records 40% Growth on Aggressive Marketing Drive,” The Economic Times, January 4, 2012
“Global Marketing :Contemporary Theory, Practices and Cases,” Ilan Alon and Eugene Jaffe, 2013, McGraw Hill
“Global Standardization-Courting Danger,” Journal of Consumer Marketing, Vol 3, No 2, Spring 1986
“The Glocal Strategy of Global Brands,” Dumitrescu and Vinerean, Studies in Business and Economics, 2010, vol.
5, issue 3, pages 147-155
“Guidelines for Developing International Marketing Strategies,” Wind, Douglas, Perlmutter, Journal of Marketing,
vol. 37 (April 1973, pp 14-23
“Kraft Foods’s Brand New World.” Chicago Magazine, June 2011
“Pink Escalators & Spa Can’t Save Mattel’s Barbie Megastore,” Investorplace.com, March 7, 2011
Strategic Insights: to Standardize or Localize www.globalizationexecutive.com/articles/Chapter3.pdf
“Standardization/Adaption of Marketing Solutions in Companies Operating in Foreign Markets: An Integrated
Approach,” Engineering Economics, 2008 No 1 (56)
“Standardization of International Marketing Strategy by Firms from a Developing Country,” International
Marketing Review, Vol. 14 No. 2, 1997, pp. 107-123
“To Standardize or Not to Standardize: Marketing Mix Effectiveness in Europe, Marketing Science Institute,
www.msi.org
“Want Some Milk with Your Green Tea Oreos?,” Bloomberg Businessweek, May 7-May13, 2012