Standardized Global Marketing Strategy Example – International Coca-Cola: Like many product companies, Coke has used a mix of standardization and local marketing. For example, the classic red and white colors remain the same worldwide, while the flavor profile is slightly adjusted based on the distribution area.
American companies choose international marketing for many reasons, the most attractive of which are market expansion and new profit opportunities. When a company chooses to market internationally, it must decide whether to adjust its domestic marketing program depending on how much centralized control a company wants to maintain over its marketing. If an organization wants to maintain strong centralized control and uniformity in its products and marketing activities, it chooses a strategy called
Standardized Global Marketing Strategy Example
. When an organization wants to adapt products, messages and marketing activities to the needs and preferences of local markets around the world, it chooses a
Types Of International Strategies
Strategy. You remember our earlier discussion about the unique flavors of Oreo cookies developed for the Chinese market: that is an example of a localization strategy.
To the extent that global consumers desire standardized products, companies may pursue a global standardization strategy. With this approach, a product and the way it is marketed are largely uniform around the world, with little variation in the marketing mix from country to country. Proponents of the standardization strategy argue that companies can gain competitive advantage by offering the optimal combination of price, quality and reliability with products that are identical in design and function around the world; they also argue that consumers will prefer this standardized product to a very local product that is also more expensive.
Standardization can translate into lower operating costs because there are no additional costs associated with developing and marketing unique products tailored to the needs of the local market. It also expands the customer base receptive to a common global product. There is no need to adapt product features, names or other attributes for each new brand, and marketing materials themselves can be reused in different regions of the world. Below are the main benefits of a global standardization strategy:
Companies that follow this approach assume that the needs of consumers around the world are relatively homogeneous and that the same basic marketing mix will work in global markets. These organizations typically have a centralized approach to the marketing function and try to minimize the need to develop local marketing strategies.
Benefits Of A Global Marketing Strategy
Harvard marketing professor Theodore Levitt advocated a standardization strategy in his 1983 article, “The Globalization of Markets”. He argued that technology and global communication helped make global consumer markets open to single, standardized global products. According to Levitt, adopting a standardized global strategy provides a competitive advantage in terms of cost and effectiveness.
At the other end of the spectrum is localization strategy, where companies adapt their products and marketing mix to each target market. Proponents of localization argue that global standardization does not work in reality, and that almost all exported products require one or more adaptations to be successful. A study by Kotler found that 80 percent of US exports require one or more modifications, and the average product requires at least four to five modifications of eleven different elements: labeling, packaging, materials, colors, name, product features, advertising themes, media, performance, price and sales promotion.
The localization strategy recognizes that diversity exists in global markets and that marketers must understand and respond to this diversity in the goods they offer and the way they sell to consumers in these markets. Language, culture, customs, the physical environment, the degree of economic development, social institutions and other factors all contribute to how well a product meets the needs of a local market. Localization can involve: 1) adapting existing products to the needs of the local target market, or 2) creating entirely new products to meet the needs of the local target market.
While localization increases the costs and complexity associated with developing and marketing customized products, its proponents argue that it results in products and marketing strategies that better fit the needs of the local market and, ultimately, greater sales success. A local approach can protect companies from high-profile, catastrophic consequences if a standardized product fails. Standardization is often responsible for marketing abuses, such as offensive marketing images, disastrous naming conventions, and product design problems. The critics argue that the standardization strategy exaggerates how well a single, uniform product and marketing approach will succeed in markets around the world.
International Market Entry Strategies: Foreign Market Entry
In reality, global marketing is not a matter of either/or it requires complete standardization or local control of product and marketing. In fact, a successful global approach can fall anywhere on a spectrum—from tight global coordination on programming details to loose agreements on product ideas. Most organizations believe that flexibility is essential to enable organizations to take advantage of the global opportunities available to them. The right answer for each company depends on its organizational structure, leadership and operations; product category; the affected markets; and other factors. Both strategies offer attractive benefits, but also costs and risks. Most organizations find ways to balance the options available to them with a focus on how to maximize success in their target markets.
Few would disagree that fast food chain McDonald’s is a master of global marketing. As you watch this video, you will look for ways in which McDonald’s has combined elements of its global standardization strategy with its localization strategy to penetrate global markets and offer products that perfectly match local needs and preferences.2 Chapter Overview 1 .Information Technology and Global Competition 2. Global Strategy 3. Global Marketing Strategy 4. R&D, Operations, Marketing Interfaces 5. Regionalization of Global Marketing Strategy 6. Competitive Analysis
3 Introduction On a political map, the national borders are as always clear. But on a competitive map, financial, trade and industrial activity across national borders have made those political borders increasingly irrelevant. Not only companies that compete internationally, but also those whose primary market is considered domestic are affected by competition from around the world.
Today we see the emergence of a gross information product, which is disappearing the gross domestic product. Electronic commerce (e-commerce) E-business Faster product distribution worldwide citizenship
How To Build A Go To Market Strategy, With Template & Examples
5 2. Global strategy Global strategy consists of five concepts: 1. Global industry 2. Competitive industry 3. Competitive advantage 4. Hyper-competition 5. Interdependence
That industry where the competitive position of a company in one country is affected by its position in other countries. The first question managers face is the degree of globalization of their industry. Every industry has global or potentially global aspects.
Four forces work together to determine the potential of industry globalization. 1. Market forces 2. Cost forces 3. Government forces 4. Competitive forces
9 2. Global strategy Market forces 1. Per capita income convergence 2. Wealthy consumers in emerging markets 3. Revolution in communication technology 4. Organizations behave as global customers 5. Growth of global and regional channels 6. Creation of global markets 7. Distribution from global and regional media
Global Branding Strategy: Nike Analysis Using 4 Ps
2. Steep experience curve 3. Global procurement efficiency 4. Favorable logistics 5. Difference in costs by country 6. High product development costs 7. Rapidly changing technology 8. Short product life cycles
1. Favorable trade policies 2. Compatible technical standards 3. Global trade regulations 4. High growth/low labor cost developing countries 5. Deregulation/privatization of industry Competitive forces 1. High export and import 2. Competitors from different continents and countries 3 Interdependent countries 4. Globalized competitors
Product Differentiation Niche Strategy Nature of Competitive Industry Structure (Figure 8-2): » Industry Competitors » Potential Revenues » Bargaining Power of Suppliers » Bargaining Power of Buyers » Threats of Substitute Products or Services
Interdependence of modern companies Example: global computer industry Governments also play a larger role and influence parts of the company’s strategy.
What Is Global Marketing? Process, Examples, Advantages & Explanation
Benefits of Global Marketing: Cost Savings Improved Product and Program Effectiveness Improved Customer Preference Increased Competitive Advantage Limitations to Global Marketing: Standardization Vs. adjustment problems Globalization vs. localization Global integration vs. local responsiveness Scale vs. sensitivity
Not every element should be standardized to the same extent (Figure 8-3) The degree of product standardization varies widely based on many factors (Figure 8-4)
Interface R&D/Operations Interface Operations/Marketing Core components Standardization Product design Families Universal products with all functions Universal product with different positioning Marketing/R&D interface
Regional strategies are cross-subsidizing competition for market share to pursue regional production, market and distribution advantages. Problems in Regionalizing Global Marketing Strategy: Cross-Subsidizing Brands Identifying Weak Market Segments Using the “Lead Market” Concept Marketing Strategies for Emerging Markets
Netflix’s Global Expansion And International Market Communication
23 6. competitive analysis SWOT analysis (strengths, weaknesses, opportunities and threats) (see Figure 8-6.) A SWOT analysis divides the information into two main categories: internal and external factors. Based on SWOT analysis, marketing managers can draw up alternative strategies. The purpose of any SWOT analysis should be to isolate the key issues that will be important to the future of the business and that will be addressed by the next marketing strategy.
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