1. Global Marketing: Standardization or Adaptation?
Michele Fedor, USA
International Marketing Specialist
16 November 2012
VUZF University
Business 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. 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?
All encompassing definition

4. Global Business
Framework

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 traditions
These 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 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

7. EPRG Characteristics Ethnocentric Polycentric Regiocentric Geocentric
Source: Multinational Organization Development, 1979, Perlmutter, H.D.

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?

9. Global Marketing Strategy
Definitions

10. Global Marketing Strategy
Marketing Mix
4 P’s
Product/Service
Price
Place/Distribution
Promotion

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 market
Assessment of the economic, political, legal & cultural environment
Selection of appropriate markets
Market entry strategy
Marketing Mix

12. Global Marketing Strategy
Standardization or Adaptation?

13. Global Village
Globalization implies we are becoming more alike, one “global village”…

14. Global Village

15. Global Village Bulgaria and Macedonia are the same?
British English and American English?
Women’s role in car buying?
Bathing suits in different countries?

16. Global Village

17. Global Village Globalization Does not imply homogenized markets
Does imply that we are interconnected

18. Standardization or Adaption?

19. Standardization or Adaption?
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

20. 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

21. 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

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 WWII
Yunker, 2002

25. 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

26. 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
packaging.html?pg=all

27. 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

28. 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

29. Standardization or Adaption?

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 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

32. 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

33. Glocalization Objective of Glocalization Think Global, Act Local
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

34. Global Marketing Strategy Framework
Standardized Communication Strategy
Localized
Communication Strategy
Standardized Product/Service
Global Strategy
Glocal Strategy
Product/Service
Local Strategy

35. 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

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 sales
Maintains the fun, family oriented “twist, lick, dunk” communications strategy
Product adapted to the market
w0k

37. 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.

38. 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%

39. Glocalization - Kraft

40. Glocalization - Kraft Showing breastfeeding
Sugary cookie in baby’s hand
Pulled off Facebook, labeled “NSFW” (not suitable for work)
Censored in other media

41. 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)

42. 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
EfTkc

43. Glocalization - Mattel
Mattel’s Barbie
2 years later, the store is closed
Was 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’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

45. Thank You!

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, 2011
Strategic 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