Presentation on theme: "Global Marketing: Standardization or Adaptation?"— Presentation transcript:
1 Global Marketing: Standardization or Adaptation? Michele Fedor, USAInternational Marketing Specialist16 November 2012VUZF UniversityBusiness Strategies Class of Prof. Evgeni Evgeniev
2 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
3 GlobalizationThe trend toward a single, integrated and interdependent worldEconomists: emergence of global marketsSociologists: convergence of lifestyles and social valuesPolitical scientists: reduction of national sovereigntyCEO/Marketing Manager?All encompassing definition
5 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 traditionsThese orientations determine the way strategic decisions are made and relationship between headquarters and affiliates
6 Global Business EPRG Ethnocentric (Home Country orientation) Domestic strategies are superior, applied to foreign marketsPolycentric (Host Country Orientation)Decentralized management, affiliates manage their marketGeocentric (World Orientation)Integration of worldwide marketing with no bias towards home or host countryRegiocentric (Regional Orientation)Region viewed as a single market
8 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?
10 Global Marketing Strategy Marketing Mix4 P’sProduct/ServicePricePlace/DistributionPromotion
11 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 marketAssessment of the economic, political, legal & cultural environmentSelection of appropriate marketsMarket entry strategyMarketing Mix
12 Global Marketing Strategy Standardization or Adaptation?
13 Global VillageGlobalization implies we are becoming more alike, one “global village”…
19 Standardization or Adaption? Assumes homogenous markets and in response offers standardized products and services using a standardized marketing mixAdaptionTakes 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
20 Standardization Transfer of company’s best, proven ideas Learning curveEconomies of scaleProduction, Marketing, R&D/developmentSimplificationGreater controlConsistencyEasier to maintain uniform brand identity
21 StandardizationMillward Brown study found that just over one in 10 successful ads did equally well in another countrytruly cost efficient cross-border campaigns?Marketing Science Institute study showed distribution and price sensitivity across European countriesCommodity productMore mass communication, more price sensitiveIncreased distribution of high quality product effective in less economically developed areas
22 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)
23 Standardization Blunders Golf ball manufacturer packaged golf balls in packs of four; “four” in Japanese sounds like death and items in fours are unpopular
24 Standardization Blunders Sportswear manufacturer Umbro named a running shoe Zyklon; the same name as the lethal gas used in extermination camps in WWIIYunker, 2002
25 Standardization Blunders The American beer company Coors used the slogan ‘Turn It Loose’ in its marketing campaignTranslated into Spanish, it read "Suffer From Diarrhoea."Yunker, 2002
26 Standardization Blunders Dutch Company Neerlandia exports milk powder in tin boxes to African countries; switched to alu-packs made of aluminum foilLocal customs officials became suspicious, believing they contained illegal drugsCustomers stopped buying the product; they had been using the tins as vessels for boiling water and preparing food, and even as building materialNeerlandia reverted back to the reusable tin box packagingpackaging.html?pg=all
27 Adaption Specialization Directly address consumer preferencesAllows for consideration of cultural, legal, social, economic issuesUse local marketing knowledgeMore targeted advertisingStrategize against competitionAware of logistical opportunities
28 Adaption BlundersIn its 2013 catalog, Ikea, in a bid to “localize” for the Saudi Arabian market, removed women from its catalogEnded up being called “sexist” and lost face
30 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?
31 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 levelStandardization and adaption should be evaluated as two ends of a spectrumWhich marketing mix elements should be standardized or adapted and to what extend
32 Reality Perspective of Contingency Instead of total standardization or total adaptation, this perspective seeks a balanceThe 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
33 Glocalization Objective of Glocalization Think Global, Act Local Find the optimal combination of integration and rationalization of operations in a global marketFind synergies, adapt for the restThink Global, Act LocalMost important is to decide which strategic elements should or must be standardized or adapted and to what extent, under what conditions and when
34 Global Marketing Strategy Framework Standardized Communication StrategyLocalizedCommunication StrategyStandardized Product/ServiceGlobal StrategyGlocal StrategyProduct/ServiceLocal Strategy
35 GlocalizationMcDonald’s offers beer in Germany, wine in France, mutton pies in Australia, Veggie McNuggets in India, Teriyaki Burger in Japan, McLaks in NorwayNokia offers an anti-dust keypad for its phones that was made specifically for IndiaProctor & Gamble offers Ariel detergent in small sachets that are affordable in the Nigerian marketPepsiCo’s most popular Lays Chips are: cheese onion in the UK, lemon in Thailand, Paprika in Germany, seafood in China
36 Glocalization - Kraft Kraft Oreos Brand turned 100, with $2 billion in sales in (25% increase)Emerging markets account for half of the brand’s salesMaintains the fun, family oriented “twist, lick, dunk” communications strategyProduct adapted to the marketw0k
37 Glocalization - KraftOreo was underperforming so badly in China, Kraft was on the verge of pulling itReformulated cookie to be less sweet and added flavors/wafer options and used Yao Ming in adsToday, China is the second largest consumer of Oreo products after the U.S.
38 Glocalization - KraftIn India, the cookie was too bitter; reformulated and added flavors, tailored ads to local consumers, Oreo India website, social networkingLower pricing strategy (5 and 10 packs), and local distributionBetween Jan-Sept 2011, sales grew 40%
40 Glocalization - Kraft Showing breastfeeding Sugary cookie in baby’s handPulled off Facebook, labeled “NSFW” (not suitable for work)Censored in other media
41 Glocalization - Mattel Mattel’s BarbieSales 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)
42 Glocalization - Mattel Mattel’s BarbieFlagship store opened in China in 2009 on Barbie’s 50th birthdayAmbitious marketing push into world’s most populous regionEfTkc
43 Glocalization - Mattel Mattel’s Barbie2 years later, the store is closedWas it the strategy?Mattel insists it is not giving up on Barbie; still sold in more than 1,000 retail outlets
44 Standardization or Adaption? Reality is that pure standardization and pure adaption don’t really exist, and they shouldn’tGlobal marketing is too complex for simplistic answersMost important is to decide which strategic elements should or must be standardized or adapted and to what extent, under what conditions and whenStrategy and execution are equally important
46 References“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“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, 2011Strategic Insights: to Standardize or Localize“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“To Standardize or Not to Standardize: Marketing Mix Effectiveness in Europe, Marketing Science Institute,“Want Some Milk with Your Green Tea Oreos?,” Bloomberg Businessweek, May 7-May13, 2012
Your consent to our cookies if you continue to use this website.