Standardization and localization in mix cultural markets

In this report, we have addressed three main themes or templates of international/global marketing vis-à-vis standardization versus localization, cultural patterns and its influence on intake and finally the study procedure to take when going into new international markets. In the first place we viewed the debates from both factors of standardization and localization that contributes to the id of advantages and down sides of either strategy. Beneath the cultural routine, we made use of Geert Hofstede model to tell apart national cultures and their results on consumption. Finally, we addressed a very important facet of international marketing - how research should proceed for an business seeking to enter in new international marketplaces. We used a five-step model adopted from Johasson booklet. We finished our discourse with few suggestions.

Standardized and Localized Strategies

Standardization refers to the utilization of the same or similar marketing combine in as many countries throughout the world as possible when a corporation runs beyond its national borders. Businesses that pursue standardization are known as Global Corporations and their strategies are referred to as Global or standardized strategies. Some types of global products include Gillette razor rotor blades, Sony television pieces, Benetton sweaters, computers, aircrafts, most financial institutions and markets, car vehicles, Coca Cola, etc. However, it is worth adding that there surely is no unanimous classification of standardization in the books [1]

The other extreme of standardization is known as localization. Localization is whenever a company modifies its marketing combine in virtually every country that it operates to match national taste, preferences and culture. Most Multinational Corporations (MNC) pursue localized strategy. Examples of localized products include; Honda's European car model "Concerto", P&G's Ariel and Vizir in European countries, the Islamic bank version of most Western Banking institutions in the Arab Gulf region, etc.

The marketing combine (mentioned above) best referred to as the four P's of marketing - Product, Price, Place and Campaign - are the key constants or parameters in standardized and localized strategies respectively. As we have shown in body 1 below, the marketing blend is surrounded by environmental factors such as; the economy, regulation, technology, competition and culture. These makes have resulted into various management orientations that spell out the philosophy of an company as follows;

Ethnocentric - sense that home country is superior compared to the remaining world. Companies with this view are local in mother nature. The Saudi Telephone Company (STC) and its own Al-Jawal mobile services is purely ethnocentric as it concentrates on local culture and maintained their rates high until customers like us outsourced services from call again services through the Internet.

Polycentric - sense that every country is different and marketing techniques are unique for each and every country - this view is mainly held by multinational companies.

Regiocentric- the feeling that regions are unique for example the gulf assistance region differs from other Asian regional economic cooperation. A lot of the Saudi new mobile companies such as Mobily and Zain operate regioncentrically.

Geocentric - the feeling that the whole world is a potential market that requires integrated world market strategies [2]. This view is held by companies known as global companies a few examples of such as Toyota, Coca-cola, Basic Electric (GE), Saudi Aramco oil company, merely to mention a few.

Figure 1: The Marketing Combination or 4 P's of marketing.

With this century's drive towards world market integration in the name of World Trade Corporation (WTO) few companies stay ethnocentric. The choice is now either being polycentric or geocentric. In simple terms should companies go after localization (Polycentric) or standardization (Geocentric)? These environmental pushes have resulted in brutal debates about standardization or localization. The result of these debates is the introduction of the next schools of thoughts -

Globalization: the standardization of products, brands and advertising or marketing procedures across the world.

Localization: the variation of the marketing mix to meet differential environmental pushes of each market.

Adaptation: Varying some elements of the marketing combination to meet specific market causes while maintaining some of the element constant [6]. And therefore a given company will standardize the marketing mix but may modify to the local situation when the necessity arises. Proponents of this approach include; Fatt (1967), Hovell and Walters (1972), Quelch and Hoff (1986), Kreutzer (1988) etc. [Ibid].

Sub-Global: the grouping of international markets into teams which are more or less homogeneous (Regiocentric). Standardization is thus carried out across locations or clusters of countries e. g. europe, the NAFTA, the Gulf Firm Council (GCC) of the Arabs claims etc.

From this, we can categories the institutions of thoughts into three basic communities; standardization, localization, and mixture or compromised (adaptation and sub-global) strategies.

Proponents of Globalization such as Theodore Levitt in his famous article "The globalization of marketplaces"[3] has argued highly that advancements in technology is leading to the convergence of national preferences, financial activities and even culture. Thus, the future success in business belongs to only the global businesses that have recognized that developments in communication, vehicles etc has establish social convergence in motion and is with the capacity of producing mass standardized goods at lower costs. For instance, the Arabs have very rigid culture, however the effect of technology has made lots of changes in the life span styles. We start to see the youngsters traveling big American motor cycles now in Riyadh that was uncommon just ten years ago. Likewise, in Ghana, we see the motor cycles of Japan and bicycles from China now pervading the Ghanaian culture. The director of the Worldwide advertising company: Saatchi & Saatchi, remarked that "I can't go into a gathering nowadays with a major multinational client without getting right down to the basics of how to build up the kind of great advertising that can find all the principal marketplaces of the world" [4]. Other research workers support standardization by by using a three-factor-model that argues such as homogeneity of customer response to the marketing combination, transferability of competitive benefit and similarity/variability in the amount of market (financial) independence [1].

The other school of thought - localization; is presented by management experts such as; Fournis (1962), Boddewyn et al (1986), Schlegelmilch et al (1992), Shoham (1995), Craig et al (1992) [1], Fisher (1984), Kotler (1985), Vedder (1986) [5]; just to refer to a few. This category claim that markets are different and will continue to be different regardless of the effects of technology. They maintain that standardization has many obstacles hence greater profits pertain to localization (adaptation) of products and marketing ways of specific situations [ibid]. The debates on standardization and localization have produced explanations why each side retains on to their views. To enumerate them here would be over tasking the fortitude of the reader. We have implemented Vrontis (2003) body below (figure 2) in summary the views of both philosophies. The reason why given in the figure have led to the identifications of the next benefits and drawbacks for every single strategy.

Figure 2: Vrontis (2003) model rephrased to depict the reason why calling for version (localization) and standardization.

Pros and Negatives of Standardization and Localization

The concentration of the controversy on the problem of standardization versus localization has led both edges to identify advantages and disadvantages of the strategies. Among them are:

Experience transfer: Standardization helps the copy of experience in successful management techniques and marketing strategies across other similar markets [2, 3 & 5] For instance, ABB has efficiently transferred its well-tested management model across its 1, 300 operating subsidiaries in the 140 countries which it performs in [2], BIC has effectively transferred its "throwaway" strategy in lighter razor blade across the world, Philip Morris did similarly using its cowboy image in marketing Marlboro throughout the world [5]. Dell replicated its direct selling practices around the world and produced almost 31% of its sales in abroad market in 1998.

On the other side, localization has been disadvantaged by its request to take care of each market individually. Thus management techniques and marketing programs that are successful in other markets are not always relevant in other market segments. However, localization talks about specific dissimilarities in market conditions and culture to creatively gain market talk about within the context of the local environmental pushes by differing products and/or other elements of the marketing combination. This is expensive and challenging though it could yield positive comes back. For example, if Philip Morris possessed used an attractive woman's poster to advertise its Marlboro, this might have been turned down in Saudi Arabia and most of the Arab countries where one in every three people smokes.

Uniform image: Standardization of the following; programs, process, products, services, advertizing copy etc assist in projecting a standard image of a corporation or its products globally [5]. We are all alert to global brands with the ability to create customer devotion and belongingness. A few of these global brands are Coca-Cola, BMW, Toyota, Mercedes Benz, McDonald, Holiday Inn, Marriott hotel, General Electric, Procter & Gamble, Cisco Systems, Microsoft etc. All these brand names have even images to which clients or customers boast of. Alternatively complete localization cannot produce standard image across the world. However, localization can produce regional or national patriotism and increase sales in specific market segments. For instance, in banking, we've standardized activities. Many of these banking institutions have global branches but when these banks came into the Saudi market, interest founded investment didn't yield good results. This is because of the Islamic opinion that rejects interest base investments. Hence most of the finance institutions as well as their branches in the American countries have presented Islamic bank to tap the money of Muslims.

Economies of level: One of the strongest arguments put forward by proponents of standardization is the fact it leads to economies of scale in production and marketing [2, 3, 5] It really is argued that modern technology designed to produce large range of standardize goods is capable of reaching cheaper costs within a wide range of volume than a production collection that is flexible to specific small-scale productions. For example, Matsushitta Electric Company from its world-scale factories in Japan has achieved range economies by exporting VCRs, TVs and other consumer electronics products throughout the world. Proponents of localization have made counter quarrels that modern tools do enable adaptable automation of nonstandardize goods at a substantial cost-savings. Furthermore, production costs are only partial and not major costs in deciding total delivering cost to the best customer. For example distribution cost that are more difficult to standardize are different for different marketplaces which could form a major cost part for the company.

Governmental and trade restrictions: Standardization is faced with a huge barrier in countries where governments and trade constraints by means of tariff, product, prices or promotional regulation etc exist. A recent example is the situation of Black Berry mobile in the Saudi market. The Saudi federal has requested that if Dark colored Berry's texts aren't accessible by the local interchange it shall ban the sales of African american Berry. In such circumstances localization has advantages over standardization.

Nature of marketing infrastructure: Differences in the marketing infrastructure between countries may impede the use of standardization [5]. For example, in the U. S. , Japan, Australia and a great many other countries including Ghana, Tv set advertising forms a significant marketing medium. The use of Tv set advertising is significantly censured in Saudi Arabia, Scandinavia and other countries as well. Similarly, the utilization of print medium is bound to only a few in sub Saharan Africa anticipated to high literacy rate. Localization could be more conducive in markets where marketing infrastructure are incredibly different from other market segments.

Differences in customer pursuits and response patterns: Though proponents of standardization have argued that technology has made customers needs to converge, this is only partially true. There is still differences in customer hobbies and response habits in many aspects. Generally speaking, localization avoids having potential clients reject the merchandise beyond control when variations do exist in customer interests etc. For instance, Coca-Cola has two formulas across the world - sugars type and corn syrup type. Packaging however, consist of the contour bottle design and the strong ribbon but it is personalized with the country's local language and measured as other drink bottles or cans in that country. This is the demonstration of "the ability to think globally and take action locally" a strategy refer to as global localization [2]. Types of this practice next to the Coca-Cola we just pointed out include;

Philadelphia Cream Mozzarella cheese: 14% fewer calories from fat in Italy

Hellmann's Mayo: Ѕ the saturated fat in London

Kellogg's All-Bran bar: the sodium in Mexico

Kraft's Lunchables: 56% more fat in US

What we've mentioned so far are only the main benefits and drawbacks of both strategies. You can find many more for this but for brevity of the text what is shown is sufficient showing the complete picture of the debates. The culmination of the debates is the result of a third school of thought that called for combination - version in certain aspects and standardization using aspects. Secondly, the degree of mixture is subject to the sort of product.

Cultural Routine in a World and its effects on Consumption

Culture is "ways of living" developed by a group of people consisting of both mindful and unconscious prices, ideas, beliefs, behaviour and symbols that form the patterns of the group and transmitted from one generation to some other [2]. The role of culture is to govern how things are done in a society. One of the most influential organizational sociologist - Geert Hofstede identified culture as "the collective coding of the mind that distinguishes the members of one category of folks from those of another" [7]. Geert Hofstede made a great research on countrywide cultural patterns by using subsidiaries of a sizable multinational corporation (IBM) in 64 countries. The next cultural differences were identified to be the underlining ethnical dissimilarities in societies;

Small verse large power distance: This is actually the extent to that your less powerful users of a business or society accept and expect that power is distributed unequally. It is true that electric power inequality is a fact of individuals societies and anybody of international experience will remember that 'all societies are unequal, however, many will be more unequal than others' to estimate Owell. Within the western societies you can find small vitality distance which makes people expect and agree to power relationships that are more consultative and democratic. Hence people in small power distance societies relate with each other more as equals no matter formal positions. In civilizations with large power distance such as within most of the third world countries, the less powerful accept ability relationships that are autocratic or paternalistic. This facet of culture can affect consumer action is other ways. For example, goods that are icons of affluence might not be purchased by the less powerful users of a world in a sizable ability distance culture.

Individualism versus collectivism: How much participants of the culture define themselves aside from their group people. In individualist culture (e. g. american culture), people are anticipated to build up and display their own specific personalities and choose their own affiliations. In collectivist culture (e. g. sub Saharan African culture), people are described and act largely as a member of the long-term group such as family, spiritual group or tribal group. For a good example, an estate creator in Ghana or any of the sub-Saharan African countries will loss market by making solo or two small rooms flats (rentals) because such premises cannot entertain extended family members. Alternatively, in Europe where in fact the culture is individualistic, such small flats are common and successful.

Masculinity versus femininity: The value placed on traditionally male or female prices. In 'masculine' civilizations, men are expected to be competitive, assertive, ambitious, and be worried about the accumulation of wealth and material possessions while women fulfill the role of nurturer such to be concern with the welfare of children. In 'womanly' ethnicities, the jobs of men and women overlap, with neither gender exhibiting more control over other. For example, my local culture in the north region of Ghana is masculine hence done of my immediate sisters was delivered to institution. Thus, in masculine culture, feminine education will not be rewarding and educationalists must target at the male population. Any communal gathering that will make women and men interact is discouraged in Saudi Arabia. Businesses, that are of this type won't flourish in Saudi Arabia.

Weak versus uncertainty avoidance: That is nervous about a society's tolerance for uncertainty and ambiguity. It displays the amount a culture programs its customers to feel either uneasy or comfortable in unstructured situations. The doubt accepting cultures are more tolerant of views not the same as what they are being used to; they make an effort to have as few rules as is possible. Uncertainty avoiding ethnicities try to lessen the possibility of unstructured situations by tight laws and guidelines, safety and security measures [8]. A business such as Microsoft that will require employees to be ground breaking might not succeed in doubt avoidance culture because employees will dread to make flaws and cause the business loss of money.

Long versus short-term orientation: This is actually the amount of importance a culture attaches to the near future versus the past and present. This previous aspect was added to Hofstede model at a much later time. For example, in ethnicities that are focused toward the future, corporations can buy investors who are prepared to wait for several years for capital appreciation. In a brief term focused culture, corporations must use a every year dividend insurance plan to attract investors.

From a marketing perspective, it is important for marketers to understand the above social patterns also to known the degree of homogeneity and dissimilarities of national cultures. Also important is how these social habits govern consumer patterns in different markets. The basic fact here's that; market segments in the 21st century are global and yet cross-culture markets. To be aware of and hypersensitive to the cultural differences is a major idea for success in the 21st Century current market. This is because; both consumer behavior and business methods are performed to a greater amount by the culture within which they take place. Thus, the role of culture in any culture is to determine how things are done - appropriate and unacceptable activities. For instance, culture defines satisfactory purchasing and product-use habit for both consumers and business. Using business present as a classic example, in ethnicities where a business gift idea is expected however, not provided becomes demeaning to the web host. In African for example, business presents generate an responsibility which is therefore desirable to give it. Alternatively, in the traditional western culture business present might be observed as antitrust violation hence presenting a business surprise could be interpreted as improper. Secondly, components of the marketing mixture are affected by the culture. For instance, promotion is inspired by the language, new product approval is affected by certainty avoidance index of the culture, and circulation is influenced by social corporations such as collectivism versus individualism. One third point to consider is that marketing also affects culture by means of ethnic borrowing and change. Looking at the dressing design of Saudi youngsters, one won't fail to see the influence of european culture slowly but surely invading the nationwide culture. Nonetheless, cultures may change little by little and specific product usage such as traditional western design of dressing in the Arab countries may be visited with level of resistance. We therefore advise that any company heading overseas should be mindful of the next realities;

Develop ethnic empathy - identify, understand and respect another's culture and difference

Develop ethnical neutrality - realize that difference is definitely not better or worse.

Discard ethnic transferability - never presume transferability of a thought in one culture to another

Involve ethnic informants- get ethnical informants involved in to the decision-makings.

Market Research for Getting into a New International Market

Most businesses have products that can travel to new geographic marketplaces or even to new industry sections that are yet to be tapped. New marketplaces, wherever they might be; in new countries or new commercial segments do bring some risk. For an venture to enter new international market segments the prerequisites are to identify if an opportunity is out there, define the nature of this opportunity and devise strategic and tactical market access strategies. One term for all these prerequisites is marketing research. For an organization to enter in new international marketplaces, it is vital to conduct market research or marketing research- the task of which differs a whole lot in the literature. We shall choose the five steps process brought up by J. K. Johansson (2000) [9] for stepping into international market segments. These five steps are; country recognition, preliminary testing, in-depth screening, final selection and immediate experience. We will look at each one of these step one after the other.

Country Identification

As we have already seen above, the globe is converging to a worldwide village where prior trade obstacles are being dismantled. Hence the complete globe becomes a market for any organization seeking customers beyond its nationwide borders. The first step in the marketing research to get into international markets should carry on by country id. Here, a general overview of potential new markets is made and a match of heritage, culture or similar business legal systems with those of home country discovered. Thus, a list of potential international market segments is made based upon the data gathered on market opportunities and similarity and difference in economical, politics, linguistic and social systems.

Preliminary Screening

After making the list of potential countries to enter, the next step is to check out your list careful to produce a preliminary screening. Here, the research proceeds by scoring, weighing and rating the countries based mostly upon macro-economic factors such as; money balance, exchange rates, degree of domestic consumption, politics stability etc. The type of market entrance costs should be made, competitive mother nature of the marketplace should be evaluated, market growth probable and legal requirements compared. For example, the countries with the best growth potential will be the rising market economies of Asia, Latin America, Eastern European countries [10] and possibly Africa the sleeping giant. At this juncture, the study should sieve out some countries giving a shorter list of countries for in-depth screening.

In-Depth Screening

The countries which have made it to this stage are all considered feasible for market access. Now using modern information technology, we now acquire and analyze detail information on the prospective market, how to put products in this market and what lengths to adapt varying elements of the marketing blend to local market conditions. Micro-economic factors should be looked at in details trying to find answers to questions such as; what prices can be costed in this country? How are goods and services distributed in this region? Furthermore, it will probably be worth considering the value of the country's market, any tariffs or quotas in operation and similar opportunities or threats to new entrants.

Final Selection

Here, your final short list of potential nations is decided after while reflecting upon strategic goals and then for a match in the countries at hand. The study should concentrate on the activities of competitors or similar home companies that contain already entered the marketplace to get firmer costs in relation to market accessibility. The enterprise involved should also draw from the activities it has had in getting into other nations use what others have discovered. A final rating, rating and weighting can be made based upon more focus requirements.

Direct Experience

The research team or their associates should travel to the nation(s) decided on to get personal experience of the culture and business practices of the nation in question. Within the country, you need to try to discern any similarities or dissimilarities to home market or in countries the venture has already came into. Here one must be careful of falling victim to the self-reference criterion SRC [2] - the tendency to judge others base on your own culture. We've already seen how culture influence intake and one should use the recommendations manufactured in the last section.

Comments and Conclusions

We have learned in this report that although world markets are converging due to improvements in mass communication technology, countrywide differences by using culture will persist to the near future. This calls for the debaters on standardization and localization to simply accept the professionals and cons of each strategy. It really is true that CNN, BBC, MTV, and other global and regional communication marketing have created an environment where certain segments of the population worldwide are developing a common group of expectations, knowledge of common set of symbols, similar choices for products and services, variations still exist in the way a business would maintain its marketing combine across-cultures. Standardization should be achieved to the level that means it is fit in the global marketplaces although some aspects are modified to local market conditions. We have also seen that any company that is culturally myopic is to its own peril. Thus, companies must develop social empathy in order to achieve overseas markets. Going international takes a organized marketing research that will guide the business to selecting market segments to get into.

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