global marketing: standardization or adaptation? michele fedor, usa international marketing...
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GLOBAL MARKETING: STANDARDIZATION OR ADAPTATION?Michele Fedor, USA
International Marketing Specialist
16 November 2012
VUZF University Business Strategies Class of Prof. Evgeni Evgeniev
: 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
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?
Framework
Global Business
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?
Definitions
Global Marketing Strategy
Global Marketing Strategy
Marketing Mix 4 P’s
Product/ServicePricePlace/DistributionPromotion
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
Standardization or Adaptation?
Global Marketing Strategy
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
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-food-packaging.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/QHIAHJ6nw0k
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/Ys3xDCEfTkc
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
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
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 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