Going Global, Acting Local - Communicating Global Brands to Global Markets - Assignment Example

? Going global, acting local - communicating global brands to global markets of the Table of Contents Table of Contents 2 Introduction 3 Global, Local and Glocal Strategies 3 Globalization 3 Localization 5 Glocalization 7 Macro factor that may affect Zara in future 8 Recommendations 9 REFERENCES 10 Introduction In the present era the major challenge for the global corporation is to decide and adapt to a marketing strategy. The aim of the global marketing strategies is to maximize homogenization, standardization and integration of the marketing activities such that it caters to all the markets throughout the globe (Kotler, 2009). However in order to make the brands successful, the global marketers address a number of issues related to the marketing strategy. For instance the issues related to the differences in the cultural, political, social and economical factors. This report highlights on the Global, Local and Glocal Strategies followed by various brands. Global, Local and Glocal Strategies The theory of standardization for the marketing activities works on a marketing level but is often seen to lack richness of details that is needed to act at a tactical and operative level. Marketers of multinational organizations are facing difficulties in creating products and advertising programs that can communicate effectively with the diversified target markets. To provide a solution to this problem and assist in this task various frameworks have been developed that would determine the degree of effort required and which effort to follow global, local or mixed. Globalization Robertson (1992, cited by Waters, 2002) stated that globalization can be defined as a concept that leads to compression of the world and at the same time intensifies consciousness. Speaking broadly two complementary disciplines namely sociology and political economy are seen to make significant contribution to the study of globalization (Coca-Stefaniak & Parker, 2010). From the political economic point of view globalization is defined as an integration of nation economies with the global economies through investment and trade further advanced by technology, “the process is driven by the theory of comparative advantage, the goal of international competitiveness and the growth model” (Hines, 2000, p. 4). A more diverse viewpoint has been presented from the sociology view point. Ritzer (2004) and Giddens (1991) has seen globalization as standardised and homogenised phenomenon and finally construed by Albrow (1992, p. 248) as “the process whereby the population of the world is increasingly bonded into a single society”. Hence globalization addresses the business issue by taking a product to the global market (Pym, 2009). While designing marketing strategy the whole world is viewed as a single entity and standardised products are developed and marketed in the same way everywhere (Vignali, 2001). Zara is a leading international fashion clothing retailer and one of the successful and fastest growing companies in Spain (Hill & Jones, 2009). The designers at Zara create approximately 40,000 new designs every year from which only 10,000 are selected. Zara offers clothing for men (about 22% of sales), women (about 58%) and children (about 20%) (Torun, 2007). It is well known for its fashion sensitive product being manufactured internally. The products offered by Zara are designed as such that it matches with the climatic, cultural and physical differences of the country like small size cloths for people of Japan, cloths matching to the different seasons of South America and special cloths for women in the Arab countries. However 85% to 90% of the basic designs available at Zara are common for all the countries in which it serves (Ghemawat And Nueno, 2006). This commonality is due to the regular interaction between La Coruna, the creative team and the local store managers. About 10%-15% of the product offered by Zara does not differ from country to country; they are retrieved from the same menu of products. The products developed by Zara are not designed to meet the requirement of any particular country. The management of the company believes that the standardization strategy followed by Zara has become much easier with time since the tastes of people from various nations are now seen to merge together. Lingering distinction permitted products that are not selling well in one market would be sold in other market. Thus Zara follows global strategy to sell its product worldwide. Zara’s consumers are seen to visits the stores more frequently than any other retailer. The purchase decisions are also made faster, which helps in moving the stocks faster and avoids restocking of it (Grant, 2010). It is regarded to be a pioneer of fast fashion principle who provides a variety of ways in which retailers can source globally. Localization Though globalization is an interesting topic but the offers a very limited description for the behaviour of the organization (Humbert, 1993). Despite of the growth of local format of promotion and retailing, the concept of localization is gaining very less importance as compared to the globalization strategies followed by the multinational organizations. Localization involves placing the product to the targeted locale where it is sold after making it culturally and linguistically appropriate (Pym, 2009). Though localization manifests more potential by explaining the business model in terms of environmentally and socially friendly but it has suffered in knowledge part due to lack of strategic concept in business and management literature. AirAsia was originally launched as the subsidiary of Malaysian Airlines and was re-launched into private company in the year 2001 (Delfmann, 2005). The airline after getting restructured started to position itself as cost focused airlines serving Asia, which is the primary market it serves (AirAsia, 2006). Right from the very beginning AirAsia used innovative and new cost optimizing techniques while designing its products. In order to attract maximum customer, AirAsia has integrated itself to provide low cost products and services. The product of the company comes with the special feature of no-frill that operates from three hubs like Bangkok, Kuala Lumpur and Johor Baru (Nankervis, 2005). The strategy remains consistent irrespective of the country they serve. By reducing the cost they serve huge catchment areas. Traditional tickets costs more due to the system of printing, processing and then delivering. But this airline has removed these intermediaries and has not only saved cost but has also provided the customer with low cost products. Complementary meals are omitted in the no-frill service. The passengers are given the choice of purchasing variety of food at a low price while on board. At the same time outside foods and drinks are also not allowed due to the down time efficiency. Besides offering low cost air ticket as their primary product they also have some other ranges of products like Xpress boarding service, check-in services through internet, Citibank-AirAsia Credit Card, mileage programs etc. The AirAsiaMegastore.com is an online store that offers the customers to buy not only the collectibles of Airasia but also products of other merchant partner like “fashion and lifestyle products, travel paraphernalia, computers, it gadgets, books, Cds and even home decor and appliances” (AirAsia.com, 2010, p. 70). The company provides the same product for every region thus allowing it to gain more from the developed region as compared to the developing region. AirAsia also runs a programme named “One Million Free Seats campaign” (AirAsia.com, 2010, p. 118), which is dedicated to serve the underserved, since they commit to share their success with the community and also upholds their tagline “’Now Everyone Can Fly” (AirAsia.com, 2010, p. 118). This shows how the company has implemented its marketing strategy using its product to serve all the sections of the society in order to maximize its profit. Thus using a local strategy, AirAsia has succeeded in gaining massive advantage over its competitors. Though selling standardized services and products or adopting to the local needs were good strategies but the customers have failed to find any connection between the communication and generic products. Now the products that were synonyms of “localization” or “globalization” has now taken a different approach. For instance Coca-Cola who was regarded to an epitome of globalization now feels that standardization of products has run its course. They feel that the world has changed but they have not. The consumers around the world are now in search of greater local sensitivity, flexibility and responsiveness, whereas the global companies are only looking towards standardizing practices and consolidating their decision making. The next significant revolutionary step is thinking global but acting local. Glocalization It is a combination of both globalization and localization. In simple terms it refers to creation of services and products that are customized to suit the local taste and culture, intended to offer to the global market (Pink & Noblit, 2007). Glocalization signifies interpenetration of the local and the global resulting into different outcome for the different geographic areas (Ritzer & Atalay, 2010). The successful organization develops the “glocal” strategy by using their global experience and tailoring and customising their products and services in the manner that would appeal to the local markets. McDonald’s Corporation is one of the world’s most renowned fast food chains, symbolized by the golden arch (McDonald's, 2013; Briscoe, Schuler and Tarique, 2012). As they are operating in various countries so they need to adapt their services and products to suit the economic, political and cultural structure of that country. In case of product McDonald’s produce a set of standardised product that suits the taste of the entire customer no matter from where they are. McDonalds believes that standardization apart from adding to cost savings measures also ensures success in adapting to the environment of the country in which it serves. Adaptation becomes important since it caters to the customer’s preference, taste, customs and law. Thus McDonald’s follows both standardization and adaptation, which signifies that it follows Glocal strategy. For instance after initial protest in Israel McDonald’s started serving Big Mc without cheese thus separating dairy product from meat. McDonald’s in India serves mutton based Maharaja Mac and Vegetable McNuggets, owning to the fact that in a country where Hindus do not eat beef, Muslims do not eat pork and Jains do not eat any type of meat, such kind of strategy in product designing was necessary. There are also many other examples whether McDonald’s have made changes in their menu to meet the demand of the customers. For example in tropical market guava juices were added into the menu, for Germany wine, Turkey it was chilled yoghurt drinks and for Italy it was cold pasta. Despite of the recent additions and alterations, the structure of menu at McDonald’s remains the same all over the world, primarily dealing with burger, fries, sandwiches and drinks (Vignali, 2001). Macro factor that may affect Zara in future In the fashion industry raw material and labour cost is an important factor. In most of the developing countries like India and China, raw material comes at lower price and labour costs are also low. Moreover these countries are also seen to deliver quality material. Zara the pioneer of fast fashion and international fashion retailer has kept half of its production in Spain and Portugal that has earned it a reputation of exception from globalization. This has lead to the expectation that high quality garment’s production will remain as the industrialised core. But the present scenario where the supplier firm in the countries like Turkey, Morocco and India, has shown competencies regarding delivering good quality garments that also with greater speed and flexibility has made Zara to source their production from these countries. But this strategy may hamper the image of Zara, who was regarded to be a contrarian, who does not follow other retailers. At the same time the reputation of creating quality products also seemed to be fading (Tokatli, 2008). Recommendations Zara can eradicate this problem by ensuring that though they are sourcing their products from the developing countries they are still maintaining the image of delivering quality product. They may ensure this by asking the suppliers to provide samples before actually going for manufacturing. These samples would help them to check the quality and if necessary make certain changes. The company should also see that if any new technology is used in any particular production centre, then it should be implemented in all other sourcing centre. At the same time they also need to deliver their products and services on time at competitive price personalized for local markets, in order to avoid stiff competition. REFERENCES Albrow, M. (1992). Globalization. in Bottomore, T.B. and Outhwaite, W. (Eds), Blackwell Dictionary of the Twentieth Century Social Thought. Oxford: Basil Blackwell. AirAsia.com. (2010). AisAsia Berhad Annual Report 2010. 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