Standardization and Adaptation According to the International Markets - Essay Example

Introduction One of the key debates in terms of whether to standardize or adapt according to the international markets has remained a key concern for the international firms. Organizations operating at the global level have to actually decide upon which of the two strategies to choose while keeping in view the overall costs and benefits. What is critical to note however, is the fact that organizations have to decide based upon the hierarchy of the different brand strategies out of which the firm has to actually choose and implement at the global level. It is also critical to note that the debate of the standardization versus adaptation is largely rooted into the overall discussion on the globalization and anti-globalization debate. Despite the increase in the overall anti-globalization sentiments across the globe there are still efforts towards the standardization as well as the adaptation of the brands across regions. The debate therefore between the localization and the offering of the standardize products across all the regions largely depends upon how the organizations take into consideration different factors. Though both the approaches towards the brand strategy also required to be explored from the perspective of how they may have an impact on the marketing as well as the financial outcomes for the organizations. This paper will discuss and explore the issue of how the standardization as well as adaptation may have on the marketing outcomes such as prices, premium, market shares besides discussing as to how the same can have an impact on the financial performance of the organization. Standardization/Customization and Marketing/financial outcomes Branding itself has become one of the challenging aspects of managing the overall marketing strategy of the firm. Marketers have to actually now shift from the product standardization to the brand standardization as increased awareness of the global consumers actually require firms to cater to the uniform needs of the consumers also. Branding as a process actually refers to the process of connecting the name and the reputation to a person or an item. As such, the overall breadth and scope of the branding has expanded and often covers the products and even different product ranges. (Whitelock and Fastoso et al., 2007, pp. 252--270) Increasingly, international marketing experts believe that the share of the globally standardized brands is increasing at relatively greater pace. The entry of luxury brands into Asian markets speaks volumes about the penetration of the global brands into the markets which were previously not served by these brands. The debate on the market driven globalization or standardization of the brands is deeply rooted into the assumption that the international brands clearly ignore the national habits, regional tastes as well as diversity which can add more value to the overall product offerings of the global brands. Another important and relatively critical argument is that of the market convergence at the global level i.e. markets such as Japan, US and EU approximately work in same way with same level of technology, consumer preferences and awareness. Due to rapid globalization, market convergence in these markets therefore have allowed international firms to standardize some of the aspects of their brands and achieve same degree of marketing outcomes such as charging premium prices, offering similar products through uniform advertising and promotional tactics.  (Vrontis and Thrassou et al., 2009, pp. 477--500) The standardization versus customization debate also needs to be viewed from the perspective of whether the consumers are becoming similar across the regions or not. This argument is relatively plausible given the fact that consumers are increasingly becoming aware of the global brands and overall easy information flow has made it possible for the global consumers to seek such global brands. The singularity of the markets is an important aspect of assessing the overall performance of the brands in terms of both the marketing and financial outcomes. Markets such as European Union actually offer a key example of how unified markets spread across various countries can offer marketers an opportunity to standardize and vary different aspects of their brand management across regions. Most of the globally recognized brands tend to change the language as one of the variables and relatively standardize all other features of their brand management in order to standardize their products in relatively unified markets.  (Erdogmus and Bodur et al., 2010, pp. 1410--1436) It is also critical to understand that brand perception is important aspect when international firms have to decide between the standardization and the adaptation. Brand perception becomes more critical when brands from developed countries are being marketed in the developing markets such as India. (Foscht and Maloles III et al., 2008, pp. 131--142) Brand perception, in case of standardization, contributes towards the pricing and buying decisions. If the brand perception is lower in international markets as compared to the parent countries, it becomes relatively difficult for firms to convince consumers for making purchase decisions. For countries like India where consumers are relatively tough and have lower perceptions of the brand quality, pricing and product development decisions by the firms are radically altered. Maxwell(2001) therefore argues that despite the fact that firms may standardize/adapt their brands across different geographical regions, consumption still remains one of the heterogeneous aspect of the international brand management. As such, it is important to actually focus on the cultural aspects of the consumption before international firms start to decide about whether to standardize or adapt. In such markets, it is therefore critical that brand awareness is created first through price promotion as well as the distribution networks.  (Taher and El Basha, 2006, pp. 331--340) The overall debate on the standardization and customization of the brands remained one of the hotly debated topics over the last many years. Due to complexities of the global operations of the firms, it has become relatively more challenging for firms to actually develop strategies which can address this issue effectively. Normally large organizations operating at the global level have to enter into the new markets based upon their previous brand strengths and positioning in the market. However, as the consumer preferences, choices and tastes vary across the regions, it becomes relatively difficult for the firms to decide as to whether to enter and operate into the new and existing markets based upon their existing branding strategies. (Szymanski and Bharadwaj et al., 1993, pp. 1--17) The choice therefore depends largely upon a complex web of factors which contribute towards the decision to actually whether to standardize or customize in different regions where the firm is actually operating. (Conrad, 2013) The overall debate of the standardization as well as the customization of the brands needs to be viewed more from the perspective of the regionalization rather than globalization. Organizations, over the period of time, have been able to develop the strategies which allow them to replicate the success of the global brands across various markets. It is also however, important to notice that before international firms actually need to develop better understanding of the competing relationship between the brand standardization/adaptation and various financial and marketing outcomes. One of the key reasons as to why international organizations may enter into brand standardization is the achievement of economies of scale. Economies of scale actually can help firms to play on the basis of the pricing and product outcomes. Economies of scale actually brands to further penetrate into the existing and new markets and achieve the required level of brand acceptability and penetration. Standardization therefore allows international firms to actually replicate some of the successful features of their global brands locally.  (Schuh, 2007, pp. 274--291) Some of the elements of the brands which can be standardized by the firms include aesthetics, name, advertising campaign as well as the design side of the brand. As such, the overall standardization of the brands actually results into harmonization of the products by standardizing as many aspects of the brand as possible. What is also critical to understand that there is clear evidence which suggests that introducing new products or brands with their own unique selling propositions may actually result into the cannibalization impact besides incurring more cost to actually raise the awareness through advertising and promotional activities? Standardization of the products can also actually result into the better coordination of the product distribution network as organizations can easily screen out the characteristics required for the successful management of the overall supply chain of the firm. Having a well-developed distribution network can actually help firms to reduce the costs while at the same time ensure smooth operations of the overall distribution network operated at the global level. (Diehl and Karmasin, 2013) Standardization of the brands can actually help firms to create a consistent image across the markets which can translate into higher sales and revenues for the firm. This can also be the result of the fact that standardization actually allows firms to pool their production facilities while at the same time, reducing the costs. These factors combine together to offer an added incentive to the international firms in terms of having better sales when brands are standardized across different markets. It is also critical to note that the brand standardization across different markets needs to be particularly viewed from the perspective of the brand universals i.e. the elements which are invariant regardless of the overall cultural context in which brand is being marketed. Consumers tend to actually focus on both the standardized/universal features as well as that of the customized features while making the purchasing decisions. The buying decisions of the consumers are largely based upon those elements of the brands which are actually universal in nature. (Koubaa, 2008, pp. 139--155) Standardization therefore tends to have an impact on the various marketing outcomes in terms of those elements which are universal in nature. Consumers tend to expect the same quality as the one offered in the primary markets of the brands and based their buying decisions on the same. This however, also depends upon the degree of similarities between the markets where the brands are being marketed. Markets such as US and Western European markets share a lot of similar political, economic and cultural traits besides having other similar characteristics such as the extent of their education. This therefore makes it relatively easier for international firms to offer standardized products across such regions and expect the similar level of impact on the various marketing outcomes. (Medina and Duffy, 1998, pp. 223--243) US multinationals operating in both the Europe as well as the Latin America tend to have different standardization/adaptation strategies. This clearly suggests that the international firms tend to develop different standardization/adaptation strategies across different geographical regions while at the same time retaining some of the universal characteristics of the brands across different regional markets. It is therefore concluded that the impact of both the standardization as well as that of customization across the regions which share the similar political, social, cultural and other aspects tend to have similar whereas in those markets which differ on various characteristics however, tend to show different responses towards these factors when evaluating the performance of brands in terms of their impact on the marketing outcomes. Bengtsson, Bardhi, & Venkatraman, (2010) argue that when standardized global brands are marketed across different regions with different cultures, consumers tend to develop different cultural contexts of such brands. The creation of divergent brand meanings across regions therefore results into invoking different feelings as well as meanings which are being attached with the brands. In developed world, same global brands are often viewed as symbols of corporate excessiveness whereas in developing markets, same brands are linked with comfort and predictability. (Tsai and Men, 2012, pp. 42--58) In terms of the luxury brands, the standardization of the brands across all the regions becomes a necessity. Luxury brands such as Prada etc have to offer standardize products across all the regions and still achieve the same level of impact on the marketing as well as financial impacts. In luxury brands market, the overall impact of the brand standardization/adaptation however, depends heavily upon the brand imagery as well as image congruity. If the brand image of the luxury brands is not relatively stronger, luxury brands may also not be able to translate their brand success across different regions regardless of the fact as to whether they are able to standardize or customize their brands across the regions. Localization of the global brands has relatively greater influence in media and other related industries. The case of Star TV is one of critical examples of how the localization of the contents can actually help increase the market share as well as the financial performance of the firm. Star TV is a Hong Kong based firm however, it has extensive presence in countries like India where it is offering localized contents in local languages despite the fact that Star TV started as an English language TV channel. (Ramamurti and Singh, 2009) For large multinational firms operating across different regions, standardization of the brands actually result into improved financial performance. The case of Japanese and US based brands operating in EU with standardized advertising and other aspects of the brands clearly sold easily as compared to those brands which are being localized despite being global in nature.  (Khan and Naumann et al., 2009, pp. 376--396) McDonald Corporation is one of the important examples of how the standardization across the geographical markets can have positive impact on both the marketing as well as financial outcomes for the firm. McDonald has standardized its technology, customer services, product offerings as well as cleanliness across all regions. It further standardizes its positioning as well as distributing aspects of the brand also. It is however, also critical to note that the McDonald, one of the top 10 brands in the world has been able to successfully standardize its brands across different regions however, with slighter variations and changes in certain particular areas. One of the keys to the success of McDonald is how it has actually been able to standardize certain elements of its brand i.e. the aesthetics, the feel and the look of its restaurants is same across all the regions. McDonald also implements same procedure for product delivery i.e. preparing the meal in front of the customer and serving it on the counter. What is however, also critical to note that McDonald has also been able to adapt or customize certain elements of its product design as a part of managing its overall brand across different regions. McDonalds does not sell pork and alcoholic beverages in Muslim countries while at the same time it also restrains from selling beef products in India where it is religiously not allowed to it. As such, by customizing certain elements of the product while keeping other marketing mix elements standardized, McDonalds has been able to penetrate into the new and developing markets. The fact that McDonalds is the recognizable brand all over the world despite certain product variations across different regions clearly outlines as to how the planned and careful combination of both the standardization as well as adaptation can actually help firms to improve sales and charge premium prices across all regions. The case of McDonald is also critical in the sense that it has varied the pricing of its products according to the region also. Though it charges premium prices across all regions however, some of its products are cheaper at some regions whereas the same products are being offered at premium prices in other regions. (Pearl, 2011) Apple Inc. is also another international organization which has standardized almost all aspects of its brands across all regions. What is critical to note that unlike McDonalds, Apple has standardized almost all aspects of brands including the pricing, product and promotional activities? Apple’s flagship product iPhone is sold at the same price across all the markets while it is exactly being offered in the same product offering. Apple was once the largest organization in the industry with the highest level of market capitalization despite the fact that it offered standardized and identical product across all the regions. This has allowed Apple to create an impression of quality and aesthetics regarding its products which invariably translated into charging higher pricing premiums and more revenues and profitability for the firm. (Steenkamp, 2014, pp. 5--29) Apple adapted the pricing strategy of charging premium prices however; it adapted a two tiered strategy for its distribution. It patched up with the major telecom companies in markets like US and EU whereas in other markets, it offered same products however without actually binding customers to link with any particular telecom company. It markets like China and India; it has been able to offer same products at same prices without actually developing any new distribution network. (Meierer, 2011) This suggests that international firms can enjoy higher premium prices which can be translated into higher revenues as well as more market capitalization. This is also due to the fact that global brands, at some point exhaust their original markets and therefore may need new markets to actually grow and expand. Successfully finding new markets and following the same branding strategy these firms can actually achieve higher financial performance as well as better pricing outcomes.  (Powers and Loyka, 2007, pp. 678--694) Conclusion Brand standardization as well as customization has an impact on both the marketing as well as financial outcomes for the international firms. International organizations such as McDonald and Apple have been able to translate their brand success into charging premium prices, developing efficient distribution networks while at the same time achieving higher level of revenue, profitability as well as market capitalization. It is however, important to note that the decision of whether to standardize or adapt to the local conditions depends upon lot of other factors. Cultural and other similarities between the markets is the key to understand when deciding about whether to go for any of the strategy. Market convergence in relatively developed markets has actually allowed marketers to standardize across markets such as US, Japan and European Union whereas in other markets such as India and China, brand managers have to adapt. Having cultural differences and different brand perceptions actually result into different marketing and financial outcomes for the firms. In order to achieve favorable marketing and financial outcomes in regions with different cultural variables, it is important for the firms to adapt to the local environment. McDonald has been able to achieve the same feat by localizing its menus in different markets while at the same time retaining most of its global brand features wherever it operates. Apple Inc on the other hand however, has been successfully executing complete standardization of its brand across all Regions. References Bengtsson, A., Bardhi, F. and Venkatraman, M. 2010. How global brands travel with consumers: an examination of the relationship between brand consistency and meaning across national boundaries.International Marketing Review, 27 (5), pp. 519--540. Conrad, C. A. 2013. The new brand spirit. Farnham: Gower. Diehl, S. and Karmasin, M. 2013. Media and convergence management. Berlin: Springer. Erdogmus, I. E., Bodur, M. and Yilmaz, C. 2010. 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