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understand the importance of international and global aspects of marketing to International and global marketing activities continue to grow to the extent that. Svend Hollensen / 29th January Hollensen: Global Marketing, 7th edition, Pearson, Published end of May, Frontcover: 1 What's new in the. GLOBAL MARKETING. Introduction. One of the most common paths to growth for brands is to expand to new geographic markets. International Marketing.
High income country entrepreneurs quickly realise that the markets to which they are selling often have lower production costs and so production is initiated abroad for the new products, so starts the second stage. In the second stage of the cycle, foreign and high income country production begins to supply the same export market. As foreign producers begin to expand and gain more experience, their competition displaces the high income export production source. At this point high income countries often decide to invest in foreign countries to protect their share.
The Importance of Global Marketing
As foreign producers expand, their growing economies of scale make them a competitive source for third country markets where they compete with high income exporters. The final phase of the cycle occurs when the foreign producer achieves such a scale and experience that it starts exporting to the original high income producer at a production cost lower than its original high income producer at a production cost lower than its original high income supplier.
High income producers, once enjoying a monopoly in their own market, now face competition at home. The cycle continues as the production capability in the product extends from other advanced countries to less developed countries at home, then in international trade, and finally, in other advanced countries home markets.
Case 1. Non more than the textiles industry, specially cotton. In the early and mid twentieth century the UK was a major producer of cotton textile materials, primarily based on its access to cheap raw materials from its Commonwealth countries and its relatively cheap labour.
However, its former colonies like India, Pakistan and certain African countries, which were sources of cotton in themselves realised that they had the labour and materials on their doorstep conducive to domestic production. They began to do so. Such was their success in supplying their own huge markets that their production costs dropped dramatically with growing economies of scale.
Soon they were able to support cloth and finished good back to the UK, which by now had experienced growing production costs due to rising labour costs and failing market share. Now the UK has little cotton materials production and it served by many countries over the world, including its former colonies and Commonwealth countries.
Whilst the underlying assumption behind the International Product Trade Cycle is that the cycle begins with the export of new product ideas from high income countries to low income importers, then low income countries begin production of the product etc. In this case, the Trade Cycle ceases to be the underpinning concept. This may be due to a number of factors like lack of access to capital to build the facilities to respond to the import, lack of skills or that the costs of local production cannot get down to the level of costs of the imported product.
In this case, product substitution between the exporter and importer may also take place. A classic example of this phenomenon is the case of Zimbabwe Sunsplash fruit juice drinks. When Zimbabwe embarked on its World Bank sponsored structural adjustment programme in , Zimbabwe steadily moved from a command to a market economy, part of which allowed foreign importers.
In a short space of time, market share for Sunsplash fell from 1 million litres annually to a mere litres. On this reduced volume, coupled with higher transport costs, the company simply could not compete and closed its doors in January However reduction in income and transport costs were not the only problems.
Expenses like high interest rates were an inhibiting factor. The company needed to make the transition to aseptic packaging which would alleviate the need for chemical preservations and enhance unrefrigerated shelf life.
The new packaging would have greatly enhanced the product and generated export potential. Orientation of management: Perlmutter1 identified distinctive "orientations" of management of international organisations.
His "EPRG" scheme identified four types of attitudes or orientations associated with successive stages in the evolution of international operations. The latter two are based on similarities and differences in markets, capitalising on similarities to obtain cost benefits, but recognising differences. Market forces and development Over the last few decades internationalism has grown because of a number of market factors which have been driving development forward, over and above those factors which have been attempting to restrain it.
These include market and marketing related variables. Many global opportunities have arisen because of the clustering of market opportunities worldwide. Organisations have found that similar basic segments exist worldwide and, therefore, can be met with a global orientation. Cotton, as an ingredient in shirtings, suitings, and curtain material can be globally marketed as natural and fashionable. One can see in the streets of New York, London, Kuala Lumpar or Harare, youth with the same style and brand of basketball shirts or American Football shorts.
Coca Cola can be universally advertised as "Adds Life" or appeal to a basic instinct " You can't beat the Feeling" or "Come alive" as with the case of Pepsi.
One can question "what feeling? The more culturally unbounded the product is, the more a global clustering can take place and the more a standardised approach can be made in the design of marketing programmes.
This standardised approach can be aided and abetted with technology. Technology has been one of the single most powerful driving forces to internationalism. Rarely is technology culturally bound. A new pesticide is available almost globally to any agricultural organisation as long as it has the means to download it. Computers in agriculture and other applications are used universally with IBM and Macintosh becoming household names.
The need to recoup large costs of research and development in new products may force organisations to look at global markets to recoup their investment. This is certainly true of many veterinary products. Farm machinery, for example, requires volume to generate profits for the development of new products. Communications and transport are shrinking the global market place. In many cases this may mean an adaption in advertising appeals or messages as well as packaging and instructions.
Nestle will not be in a hurry to repeat its disastrous experience of the "Infant formula" saga, whereby it failed to realise that the ability to find, boiled water for its preparations, coupled with the literacy level to read the instructions properly, were not universal phenomenon.
Marketing globally also provides the marketer with five types of "leverage" or "advantages", those of experience, scale, resource utilisation and global strategy. If it consumes a third of the world's cocoa output annually, then it is in a position to dominate terms.
This also has its dangers. The greatest lift to producers of raw agricultural products has been the almost universal necessity to consume their produce. If one considers the whole range of materials from their raw to value added state there is hardly a market segment which cannot be tapped globally. Take, for example, oranges. Not only are Brazilian, Israeli, South African and Spanish oranges in demand in their raw state worldwide, but their downstream developments are equally in demand.
Orange juice, concentrates, segments and orange pigments are globally demanded. In addition the ancillary products and services required to make the orange industry work, find themselves equally in global demand. So insecticides, chemicals, machinery, transport services, financial institutions, warehousing, packaging and a whole range of other production and marketing services are in demand, many provided by global organisations like Beyer, British Airways and Barclays Bank.
Of course, many raw materials are at the mercy of world prices, and so many developing countries find themselves at the mercy of supply and demand fluctuations.
But this highlights one important global lesson - the need to study markets carefully. Tobacco producing countries of the world are finding this out. With a growing trend away from tobacco products in the west, new markets or increasing volumes into consuming markets have to be prospected and developed.
Many agricultural commodities take time to mature. An orange grove will mature after five years.
By that time another country may plant or have its trees mature. Unless these developments are picked up by global intelligence the plans for a big profit may be not realised as the extra volume supplied depresses prices. The unexpected release of Chinese tobacco depressed the tobacco price well below expectations, leaving farms with stock and large interest carrying production loans. A number of suppliers of agricultural produce can take advantage of "off season" in other countries, or the fact that they produce speciality products.
In fact the case of Kenya vegetables to Europe is a classic, covering many of the factors which have just been discussed-improved technology, emerging global segments, shrinking communications gaps and the drive to diversify product ranges. Kenya took advantage of: a increased health consciousness, increased affluence and foreign travel of West European consumers; b improved technologies and distribution arrangements for fresh products in Western Europe; c the emergence of large immigrant populations in several European countries: d programmes of diversification by agricultural export countries and e increased uplift facilities and cold store technologies between Europe and Kenya.
Exports started in , via the Horticultural Cooperation Union, which pioneered the European "off season" trade by sending small consignments of green beans, sweet peppers, chillies and other commodities to a London based broker who sold them to up market hotels, restaurants and department stores.
From these beginnings Kenya has continued to give high quality, high value commodities, servicing niche markets. Under the colonialists, production remained small, under the misguided reasoning that Kenya was too far from major markets. So irrigation for production was limited and the markets served were tourists and the settlers in Kenya itseff. The s saw an increased trade as private investment in irrigation expanded, and air freight space increased, the introduction of wide bodied aircraft, and trading relationships grew with European distributors.
Kenya, emerged as a major supplier of high quality sweet peppers, courgettes and French beans and a major supplier of "Asian" vegetables okra, chillies etc. Kenya was favoured because of its ability to supply all year round - a competitive edge over other suppliers.
Whilst the UK dominated, Kenya began supplying to other European markets. Kenya's comparative advantage was based on its low labour costs, the country's location and its diverse agro-ecological conditions.
An Executive Digest
These facilitated the development of a diversified product range, all year round supply and better qualities due to labour intensity at harvest time. Kenya's airfreight costs were kept low due to government intervention, but lower costs of production were not its strength. This lay in its ability for continuance of supply, better quality and Kenyan knowledge of the European immigrant population.
Kenya's rapidly growing tourist trade also accelerated its canning industry and was able to take surplus production. In the 's Kenya had its ups and downs. Whilst losing out on temperature vegetables courgettes etc to lower cost Mediterranean countries, it increased its share in French beans and other speciality vegetables significantly getting direct entry into the supermarket chains and also Kenya broke into tropical fruits and cut flowers - a major success.
With the development and organisation or many small "outgrowers", channelled into the export market and thus widening the export base, the industry now provides an important source of income and employment. It also has a highly developed information system, coordinated though the Kenya Horticultural Crops Development Authority.
Kenya is thus a classic case in its export vegetable industry of taking advantage of global market forces. However, ft has to look to its laurels as Zimbabwe is rapidly beginning to develop as another source of flowers and vegetables, particularly the former.
Whilst the forces, market and otherwise, have been overwhelming in their push to globalisation, there remain a number of negatives. Many organisations have been put off or have not bothered going into global industry due to a variety of factors. Some have found the need to adapt the marketing mix, especially in many culture bound products, too daunting.
Similarly brands with a strong local history may not easily transfer to other markets. National Breweries of Zimbabwe, for example, may not find their Chibuku brand of beer brewed especially for the locals an easy transboundary traveller. More often than not sheer management myopia may set in and management may fail to seize the export opportunity although products may be likely candidates. Similarly organisations may refuse to devolve activities to local subsidiaries.
Other negative forces may be created by Governments. Simply by creating barriers to entry, local enterprises may be protected from international competition as well as the local market. This is typical of many developing countries, anxious to get their fledging industries off the ground. The international economic system Several factors have contributed to the growth of the international economy post World War II.
Until the world economy traded on a gold and foreign exchange base. This affected liquidity drastically. Now an international reserve facility is available. Recently, the World Bank has taken a very active role in the reconstruction and development of developing country economies, a point which will be expanded on later.
GATT had the intention of producing a set of rules and principles to liberalise trade. The most favoured nation concept MFN , whereby each country agrees to extend to all countries the most favourable terms that it negotiates with any country, helped reduce barriers.
The "round" of talks began with Kennedy in the 60s and Tokyo of the 70s. The latest round, Uruguay, was recently concluded in April and ratified by most countries in early Despite these trade agreements, non tariff barriers like exclusion deals, standards and administrative delays are more difficult to deal with. Under this deal, African and Caribbean countries enjoy favoured status with EU member countries. Relative global peace has engendered confidence in world trade.
Encouraged by this and the availability of finance, global corporations have been able to expand into many markets. The break up of the former Soviet Union has opened up vast opportunities to investors, aided by the World Bank and the European Development Bank. This atmosphere of peace has also allowed the steady upward trend of domestic growth and again opened up market opportunities domestically to foreign firms.
Peace in Mozambique, the "normalisation" of South Africa, and peace in Vietnam as examples have opened up the way for domestic growth and also, therefore, foreign investment.
The liberation of economies under World Bank sponsored structural adjustment programmes have also given opportunities. Sometimes, market opportunities open up through "Acts of God". The great drought of in Southern Africa, necessitated a large influx of foreign produce, especially yellow maize from the USA and South America. Not only did this give a market for maize only, but opened up opportunities for transport businesses and services to serve the drought stricken areas.
Speedy communications like air transportation and electronic data transmission and technology have "shrunk" the world. Costs and time have reduced enormously and with the advent of television, people can see what is happening elsewhere and this can cause desire levels to rise dramatically.
Global Marketing Strategy
Only recently has television been introduced into Tanzania, for example, and this has brought the world and its markets, closer to the average Tanzanian. No doubt a great impetus to global trade was brought about by the development of economic blocs, and, conversely, by the collapse of others.
Finkelstein, S. The DaimlerChrysler merger. Tuck School of Business. Lazer, W. Global marketing management: Journal of International Marketing, 8 1 , 65—77; Meyer, K. Global focusing: Journal of Man- agement Studies, 43 5 , — Opportunity or Threat? Globalization—the trend toward a single integrated and interdependent world—is driven by international trade and made possible largely by information technology.
Globalization may be understood by different perspectives. To the economist, glo- balization refers to the emergence of global markets. On the other hand, sociologists see globalization as the convergence of lifestyles and social values. To the political scientist, globalization reduces national sovereignty. While aspects of globalization have been around for more than a hundred years, one of the first to recognize it as such was Marshall McLuhan.
This linkage, while having positive benefits, also carries responsibilities on a global level. This contraction has come about because air, sea, and communication costs have declined significantly during the twentieth century. Freight costs declined owing mainly to containerization of cargo, which increased from about 20 percent of total cargo in to about 65 percent in Communication costs declined owing to improvements in information technology.
What are the opportunities driven by globalization? Nevertheless, globalization has its detractors, as evidenced by the some 40, protestors who interrupted the Third Ministerial Conference of the World Trade Organization held in Seattle in late Much of the discontent con- cerns the fact that the benefits of globalization have not been spread equally among peoples and countries. Yet most people around the world have positive attitudes toward globalization.
The majority of 38, people in 35 out of 44 developed and developing countries sur- veyed by the Pew Global Attitudes Project7 believed that the growth in trade was very good or somewhat good for their country. While it is not surprising that Americans and Europeans hold positive attitudes toward globalization, it is surprising to find that African and Asian respondents had equally if not stronger support for globalization as compared to people in more developed countries.
The Global Marketing Approach How to take advantage of the opportunities offered by technological breakthroughs and the growth of both developed and emerging markets have become a critical task for management, requiring a global approach to marketing strategy develop- ment and implementation.
A global approach requires the firm to focus its efforts worldwide, rather than developing marketing strategies on a country-by-country basis. It also requires the coordination and integration of production, marketing, and other functional activities across countries.
For many firms, a global marketing 6. McLuhan, M. Understanding media. New York: The Pew Global Attitudes Project. Views of a changing world. Specifically, the objective of global marketing is to attain worldwide coordina- tion, rationalization, and integration of all marketing activities including target market selection, marketing-mix decisions, and organizational design and control mechanisms.
Imple- menting a global strategy depends on the distance or closeness between regions and countries. A framework for measuring distances is discussed below.
Cultural, Administrative, Geographic, and Economic. Admin- istrative distance measures differences in laws, political risk, and government structure. Geographic distance includes country size, infrastructure, climate, and remoteness from neighboring countries. Economic distance refers to differences in national income, costs of doing business, prices, and availability of human and natural resources.
These factors affect not only differences between countries but also between industries. Which of these factors is most important to international marketing decisions? It depends. For example, two countries might be close to each other geographically, but administrative distance might be large because of political hostility. In other cases, cultural distance might be the dominant factor in creating distance between two coun- tries, for example, in the case of food products.
In other cases, economic distance may be too great to overcome, such as low consumer income, unless products can be tailored down and priced accordingly.
The relevance of these differences will be 8. Douglas, S. Evolution of global marketing strategy: Columbia Journal of World Business, 47— Sheth, J. The antecedents and consequences of integrated global marketing.
International Marketing Review, 18 1 , 16— Quelch, J. Customizing global marketing. Harvard Business Review, 64, 59—68; Doug- las, S. The myth of globalization. Columbia Journal of World Business, 19— See Chapter 5 for a detailed discussion of these and other trade agreements. Ghemawat, P. Distance still matters: Harvard Business Review, — Adapted from: Berry, H.
An institutional approach to cross-national distance. Journal of International Business Studies, 41 9 , — There are three major differ- ences between the two. Global marketing is characterized by: Greater uncertainty in markets and environments.
Many global strategies do not succeed—either because they are never implemented or because the business environment changes before the strategy can deliver its full effect. In a symposium sponsored by the Wharton School, speakers identified two major factors that determine the future economic environment.
Global markets are more diverse and dynamic than domestic, internal markets. On the downside, economic, legal, social, and cultural differences in global markets make the task of the international marketing manager much more difficult than in a domestic market. While there are similarities across markets, the differences may be Inglehart, R. Human Beliefs and Values. Siglo XXI. La Porta, R. Law and finance. Journal of Political Economy, 6 , — Knowledge Wharton.
Retrieved from http: Laudicina, P. Managing global risk to seize competitive advantage. Ivey Business Journal, 1—7. On the upside, the diversity of global markets exposes multinational com- panies to multiple experiences that can be used to gain competitive advantage over rivals that have not been exposed to the same learning experience.
The transfer and use of such knowledge throughout subsidiaries of a multinational company enables the multinational firm to be a step ahead of rivals. Best practices, for example, can be transferred and shared throughout the organization. Emerging markets provide new opportunities for investment and marketing. For example, the industrialization of China has been unparalleled in the twentieth and twenty-first centuries. China has steadily increased its share of global industrial out- put, including a gradual shift in the production of cheap and simple products to higher quality ones.
Other emerging markets have also shown significant growth. Emerging countries such as China, India, and Poland not only provide opportunities, but also a double challenge for global firms; first, the question of how to penetrate their home markets, and second, how to compete with emerging market firms in global markets. Demographic changes have also been significant. A decline in births and an increase in aging populations has been the case in Europe and Japan.
For example, birthrates in the UK, Japan, and the United States have fallen over the last decade resulting in zero population growth. Some see this as a positive development. Overall population growth is increasing at a slightly declining rate see Figure , but is expected to increase to nine billion people by Yet low birthrates means an aging population, increased pension payments, changes in work patterns, and increased healthcare costs.
These changes will pose a major challenge to consumption-related sectors of the economy and, of course, the demand for specific products and services aimed at an aging population. Data from Internet Geography. As a result, many people skin creams, and hair-replacement products, may in retail sales could find themselves out of a job.
Interactive high-definition televisions will allow you to manipulate a product onscreen, looking at it from different perspectives Source: Campbell, C.
Where the jobs are: Career survival for Canadians or zooming in to examine a detail. Another dynamic aspect of global markets is the problem of global overcapacity in so-called traditional industrial nations such as the United States, Japan, and Western Europe as production increases in the emerging economies of Eastern Europe, China, and India.
Overproduction increases price competition and lowers profits. Global markets are separated by greater geographical and psychological distances. Geographic or Spatial Distance Spatial distances between domestic and global marketing have been reduced by the substitution of IT media for face-to-face contact between downloaders and sellers.
Consum- ers in one area of the world can be in instantaneous communication with sellers in another part of the world through the Internet and videoconferencing.
Transactions that once took a long time to consummate can now be accomplished immediately over the internet. Business meetings that require the presence of people scattered across regions can now be held through videoconferencing, obviating the need for frequent travel by managers. The billions of mobile and online Internet users worldwide are creating huge opportunities for the development of electronic commerce and mobile commerce.
E-commerce revolutionizes the way consumers acquire information about products and services offered globally. The Internet allows manufacturers the alternative to shift from standardization to mass customization of products, as in the case of Dell Computer Corporation, which can offer computers to order.
Lazar, I. BCR Magazine. Colony, G. Network strategy service: CIO meets the Internet. The Forrester Report, Internet World Stats www. Miniwatts Marketing Group. Among developed countries, Iceland, Greenland, Norway, and Sweden had penetration rates usage as a percent of population of over 90 percent of the popu- lation by Note that these countries have sparse populations separated by land mass or water, and therefore the use of the Internet and its communication facilities is very important for human contact.
Additional countries with high penetration rates include Germany 79 percent of the population , Japan 78 percent and the United States 77 percent. Considering total Internet users not as a percent of the popula- tion , China has more total Internet users than the United States.
The world total pen- etration rate was An earlier study of the use of telecommunications20 found that recall was better without face-to-face contact, but that persuasion levels were higher in face-to-face communication. One of the most dramatic developments of the start of the new millennium was a shift of advertising expenditure on traditional media to the Internet see Table Advertising on television, radio, and print media is growing slowly, while that on the Internet is increasing at higher rates.
Albertson, L. Telecommunications as a travel substitute—some psychological, organizational, and social aspects. Journal of Communication, 27 2 , 32— Data from eMarketer. In , the UK Internet share of mind a limited list of products or services that a consumer considers downloading was only 1.
Growth of Internet advertising in the United States during the same period was also significant, although less than that of England. In , the United States Internet share of mind was 2. Internet advertising reached double-digit figures in eight countries by the year When operating in foreign environments, management must decide whether to adapt to the host culture, with its language, lifestyle, behavioral standards ethics, for example , and consumer prefer- ences, or operate under the rules and assumptions of the home culture.
Both the adher- ence to host or home managerial styles has been used and can be explained by the EPRG framework discussed below. Before looking at the EPRG framework, however, a definition of psychic and cultural distances is necessary. Cultural distance may be defined as some measure of the extent to which cultures are similar or different. A number of frameworks for this purpose have been sug- gested and will be discussed in Chapter 3.
What is important to understand at this point is that cultural distance is measured on the country level. It is a given and cannot be controlled by management. Psychic distance, on the other hand, exists in the mind of the individual;22 it is the perceptual distance between the home country culture and the host country culture.
Psychic distance occurs when management believes there are significant differences between home and host cultures. Therefore, it is measured on the individual level and not the country level, as is the case with cultural distance.
Table of contents
Both cultural and psychic distances affect how management formulates global marketing strategy. Cultural differences influence consumer behavior and preferences for various products. Culture-bound products such as food and home furnishings may therefore have to be adapted to meet differences in consumer needs. Likewise, psychic Sousa, C. Cultural distance and psychic distance: Journal of International Marketing, 14 1 , 49— While psychic distance is perceptual, and may not accurately reflect actual differences, or lack of them, it nevertheless influences managerial decision making.
According to the framework, there are four approaches or orientations by which a firm is managed in foreign markets. These approaches or orientations also reflect different stages in the internationalization of the firm, from solely a domestic player to a world competitor.
Ethnocentric orientation: In this stage, the focus is on the home market. Firms holding this view believe that domestic strategies are superior to for- eign ones, and therefore are applied in overseas operations as well.
Overseas operations are considered secondary to domestic operations. No systematic marketing screening is made to search for foreign markets. An example of this approach was the initial expansion of the American pharmaceutical company Eli Lilly into overseas markets. It established offices in key markets, hired local nationals to staff them, and maintained tight control by measuring each country on bottom-line profitability. Operations of foreign subsidiaries were limited to downstream activities required to support local sales, while market- ing programs were developed at headquarters.
Polycentric orientation: Unlike ethnocentric firms, those following this approach use decentralized management, allowing affiliates to develop their own marketing strategy.
However, the mindset of management is focused on the host country in the belief that because country markets are dissimilar, marketing strategies must be adapted to the specific needs of each. There is little room in this orientation for standardized marketing. Overseas markets are screened individually.
Each market operation functions independently without any meaningful coordination or integration between them. Marketing activi- ties are organized and carried out country by country, modifying the marketing mix as necessary to meet the requirements of each market. The UK version was differenti- ated from the American model, not only because the steering apparatus had to be shifted from the right to the left side, but also because the engine displace- ment was greater in the United States, and styling was also different.
Regiocentric orientation: A particular region is viewed as comprising a single market. Thus, regional trade areas such as the European Union and Mercosur may be the focus of marketing activities. An attempt is made to develop and implement marketing strategy for all countries comprising an entire region.
However, unlike the polycentric approach, emphasis is on coor- dination of marketing in the region and standardization whenever possible. Perlmutter, H. The tortuous evolution of the multinational corporation. Columbia Journal of World Business, 4, 9— Malnight, T.
Globalization of an ethnocentric firm: Strategic Management Journal, 16, — About 45 percent of its sales revenues are generated in Japan, with another 39 percent originating in North America. Geocentric orientation: Firms adopting this approach view the world as a potential market. In these markets, an attempt is made to implement global marketing by integrating worldwide operations.
Global products and brands are produced in large volumes in order to achieve scale economies. A stan- dardized product, brand, image, and positioning as well as standardized advertising whenever possible with minimal adaptations are offered in all markets. In both regiocentric and geocentric orientations, the ability to acquire and share knowledge such as best practices among the various components of the global, corporate network is maximized in order to attain and sustain competitive advantage.
Table summarizes product strategy of a multinational firm under each of the above conditions. Developing Global Marketing Strategies In order for firms to successfully compete globally, they must achieve significant com- petitive advantage over their rivals. To do so, a firm must develop a global marketing strategy. There are three approaches to global marketing strategy: The Standardization versus Localization—Adaptation School If we could put together a seminar attended by marketing managers of multinational corporations, one of the main topics for discussion would be whether a standardized marketing approach to markets is preferable to a localized differentiated approach.
A truly globalized marketing strategy would aim to standardize elements of the market- ing mix in all markets served by the company. In reality, it is rare to find a completely standardized marketing mix. Some companies may be able to standardize products but have to localize advertising campaigns. Others may have to localize product strategy but are able to standardize advertising. The Dell Computer Company, for example, standardizes its direct sales strategy in all its markets but localizes advertising strategy.
Polycentric Local product development based on local needs. Regiocentric Standardized within region, but not across regions. Geocentric Global product with local variations. Thomson, A. Figure illustrates that the degree of localization needed depends on the business function performed. Most marketing functions need some sort of adaptation across markets, whereas such functions as finance need very little adjustment.
Brand identity is a function that most companies want to standardize, in order to maintain a uniform image worldwide. When is a standardized strategy preferable? There are several reasons why manu- facturers and service providers prefer standardized marketing strategies on a global basis. In industries that have high devel- opment and set-up costs and rapid technological obsolescence, it is to their advantage to develop standardized products that can be rapidly introduced in a large number of markets in order to recoup investment.
Likewise, in industries where learning curve advantages are important, standardization can lower costs. Global customers can also pressure their suppliers to offer uniform products to their various manufacturing facili- ties that are located in a number of countries. For example, global suppliers of paint products to global car manufacturers must provide a standardized product from their dif- ferent plant locations to ensure that all cars will have the same exterior finish.
Some may design products globally but localize distribution e. Others may have two or more of the listed standardized strategies e. On the other hand, there are factors working against the ability of firms to standard- ize marketing strategies:In India, this is not an option. However, the financial crisis took its toll when, in , Chrysler filed for bankruptcy. Her cousin Jacques, visiting from France, logs on to a consumer electronics site, where he notices an advertisement for a new record- ing gadget developed in Japan but not available in European stores.
Columbia Business School. The transfer and use of such knowledge throughout subsidiaries of a multinational company enables the multinational firm to be a step ahead of rivals. Overproduction increases price competition and lowers profits. Every year, aspiring entrepreneurs create startups with the hope that they will go global almost instantly, but few of them survive.