The Standardisation vs Adaptation Debate - Coursework Example

hе Stаndаrdisаtiоn versus Аdарtаtiоn Dеbаtе Introduction Whether multinational corporations (MNCs) are supposed to pursue a standardisation strategy or an adaptation approach in their operations is an issue that has been debated for more than 40 years. Given the international nature of their operations, MNCs are always concerned with how their products or services will be perceived by different people in different countries where the MNCs operate. The big question is whether the products or services or the practices used to make or market them should be uniform across the world or if they should be modified to suit the different needs of different regions or countries across the globe. This forms the basis of this essay. In view of this, the essay will discuss the standardisation versus adaptation debate and outline some of the advantages and disadvantages that are associated with the two concepts in regard to the operations of MNCs. Based on the discussion, the essay will provide an opinion on which of the two concepts is the most appropriate approach for the international marketing environment of the twenty-first century. It is argued that there is really no ‘most appropriate’ argument between standardisation and adaptation; and that decisions on which approach to pursue should be made by organisations based on the circumstances that the organisations face in the international market at a given time. The standardisation versus adaptation debate Standardisation and adaptation are two approaches that MNCs can pursue to reach their markets and sell their products or services. Standardisation denotes a unified approach to business across the world, whereas adaptation implies a situation whereby an international firm employs a different approach in every market in which it operates (Ang & Massingham 2007, p. 6). The same authors also point out that the decision on whether to adapt or standardise is commonly made in regard to many operational areas of a business, such as the strategy to adopt, marketing, and human resources. For instance, a company can choose to market its product with one brand name, with the product having uniform features across all markets in the world, or modify the product using different names, different packaging and so forth in different regions. For more than 40 years, practitioners and academicians have debated standardisation versus adaptation of strategies that are used in international marketing (Ryans Jr, Griffith & White 2003, p. 588; Theodosiou & Leonidou, 2003). The focus of the various studies that have been conducted has ranged from targeting various aspects such as the individual elements of marketing (mainly products and advertising) to targeting the whole marketing mix or a company’s business strategy in totality (de Mooij 2010, p. 14). As early as the 1920s, there were contrasting views regarding standardisation of international advertising. For example, in 1923, David Brown and Carl Propson expressed different views on the issue. On one hand, Brown considered human beings as possessing common attributes, thus making it possible for standardisation, but on the other hand, Propson was of the view that adaptation was oftentimes needed to attract different local markets (Ryans Jr, Griffith & White 2003, p. 590). Over the years, three schools of thought arose regarding whether to standardise or adapt marketing operations in foreign markets. These are: the standardisation school of thought and the adaptation school of thought – which constitute the two extreme points of view – and the contingency school of thought, which notes that adaptation and standardisation are two endpoints of the selfsame continuum (Codita 2011, p. 23). Standardisation school of thought Early proponents of the standardisation school of thought, such as Theodore Levitt and Erik Elinder, proposed that convergence of standards of living combined with global companies’ focus on homogenous needs among the world’s population would enable such companies to sell products of high quality at low prices across the world (Codita 2011, p. 25; de Mooij 2010, pp. 14-15). Based on this view, the main driver of standardisation is therefore the growing homogenisation of the needs and wants of consumers across different markets in the world – an occurrence that is attributable to the phenomenon of globalisation. Globalisation can be broadly defined as the process of intensification of social relations across the world, which creates linkages between distant localities in that events in one locality are shaped by those in another locality and vice versa (Codita 2011, p. 25). This is reflected in aspects such as convergence of manufacturing, communication, and transport technologies as well as the increasing mobility of consumers and exposure to mass media. Levitt’s argument that there is an increase in global brands has been criticised based on the point that there has been no empirical increase in global brands such as Coca-Cola and McDonald’s (de Mooij 2010, p. 15). The authors who opposed Levitt’s argument noted that what was common was global branding as opposed to global products, and that the few global products that existed did not necessarily represent a wide diffusion of products across different regions (de Mooij 2010, p. 15). However, it is evident that there are many examples of globalised and standardised products, including electronic equipment, Adidas and Nike shoes, compact discs, cosmetics, toothpaste and some forms of clothing (Pride & Ferrell 2006, p. 135). Adaptation school of thought The adaptation point of view arose as a counterargument to the stance taken by advocates of standardisation. Adaptation proponents opined that existing differences between nations with regard to aspects such as language, culture, legal and political systems, economic development, customer behaviour, marketing infrastructure, competitive situation and usage patterns, necessitate the adjustment of firms’ marketing strategies to suit local market conditions (Codita 2011, p. 26; Onkvisit & Shaw 2004, p. 457). Opponents of standardisation also argue that the rise of global markets is not the outcome of a “pull” from consumers with similar interests, but rather a “push” by companies attempting to harmonise their processes all through the value chain (Codita 2011, p. 26). While some authors (e.g. Cavusgil 1997, p. 575) appreciate that a borderless world is emerging due to forces such as technological advances and regional integration, others (e.g. Kotabe & Jiang 2009, p. 465) suggest that business activities are regional as opposed to global. What is clear is that adaptation advocates are of the view that marketing programmes need to be local issues; that is, the best product strategy should be one that differs from market to market (Codita 2011, p. 26). For example, Onkvisit and Shaw (2004, p. 457) note that Shiseido, a Japanese giant cosmetics company, performed poorly in its initial attempt to enter the United States market since its advertisements included only Japanese models. A better approach would have been for the company to include US models in its adverts since it was targeting the US market. Contingency school of thought Lastly, the contingency or compromise school of thought is based on the opinion that adaptation and standardisation should not be viewed in isolation from each other but as two endpoints of the same process (Melewar & Vemmervik 2004, p. 867). Essentially, the compromise approach recognises local differences and cautions against automatic adoption of standardisation, but it also holds that in some cases it may be desirable to adopt the same marketing strategies everywhere (Onkvisit & Shaw 2004, p. 457). Thus, the compromise school of thought implies that different circumstances will determine whether an organisation that operates globally adopts standardisation or adaptation. Advantages and disadvantages of standardisation The main advantages of standardisation are savings in terms of production as well as marketing costs (Czinkota & Ronkainen 2007, p. 328). Codita (2011, p. 25) emphasises the same point by noting that the most significant benefit of standardisation is the realisation of economic benefits, particularly economies of scale and savings in terms of production and research and development costs. For instance, standardised products that are sold across the world, such as Coca-Cola, Colgate, Gillette razor blades and Kellogg’s Corn Flakes, enable the respective companies to attain economies of scale by employing the same raw materials, plants, equipment and processes in their production and marketing activities (Mueller 2011, p. 27). Standardisation also enables effective scheduling and control and facilitates more consistency in terms of the products that are offered to customers as well as more consistent company and brand images (Kitchen & de Pelsmacker 2004, p. 38; Melewar & Vemmervik 2004, p. 863). There are also some disadvantages that are associated with standardisation. For example, standardising leads to consumers having very few differentiated products from which to choose, particularly if standardisation obstructs the development of new products or services (Fujimoto 1999, p. 51). For instance, Coca-Cola’s dominance as a global brand makes many competitors in the soft drink market across the world less effective at capturing a significant market share. This can be linked to the notion that some companies that standardise their products engage in practices such as price discrimination, which disfavours local companies (Codita 2011, p. 26). Another problem that is associated with standardisation is that it is not possible to achieve complete standardisation of the marketing mix all over different countries. This is because of aspects such as regulations in different countries, which may require different standards even for the same product (Govindarajan 2007, pp. 43-44). Advantages and disadvantages of adaptation Since adaptation involves making some changes on products as well as the strategies used to market them, one major advantage associated this approach is that it is likely to create greater response from customers (Sahaf 2008, p. 213). Adaptation of products and their marketing mix also enables companies to be in a better position to comply with different government and regulatory influences that exist in different countries or regions (Czinkota & Ronkainen 2007, p. 328). As well, since adaptation focuses on the needs of local consumers in a particular market or region, the adapted products or services are likely to be more sensitive to the particular targeted areas, which makes them more competitive locally (Czinkota & Ronkainen 2007, p. 328). This is because the customisation of products in accordance with the needs of customers coupled with local promotion and advertising could increase the motivation to buy (Codita 2011, p. 26). Companies such as Nestle and Unilever have been using the strategy of adaptation in different parts of the world (Sahaf 2008, p. 213). Adaptation also has several disadvantages. One of these is evidently the high cost involved in planning and research to ensure that a particular product and its marketing mix meet the needs of a specific group or groups of people. As opposed to standardisation where planning will be based on a market that is assumed to be homogenous, adaptation requires planning and research to consider the needs of different markets, which could be countries or regions. Also, closely related to the high costs are delays associated with the adaptation process (Sinha & Sinha 2008, p. 229). Notably, since researching and planning for the needs of different markets takes time, there are likely to be delays in both production and marketing of products that are adapted to suit specific markets. Which argument is most appropriate for the international marketing environment of the twenty-first century? Based on the analysis and review of literature on the standardisation versus adaptation debate, it can be said that between the two concepts, no one argument is most appropriate for the international marketing environment of the 21st century. This is because standardisation and adaptation are concepts that have their own merits and demerits and are applicable in different situations. This standpoint is supported by findings of an article by Theodosiou and Leonidou (2003), where the authors analysed 36 studies on the standardisation and adaptation debate and concluded that the decision whether to standardise or adapt marketing operations to attain better business performance is largely dependent on the situation that a company is faced with in a particular market at a given time. Remarkably, standardisation is applicable where markets are alike, where countries have comparable customer behaviour, where worldwide customers are the basis for identifying market segments, where products have cultural compatibility, and where there are comparable marketing infrastructures between different countries among other attributes (Onkvisit & Shaw 2004, pp. 457-458). On the other hand, adaptation appreciates the differences that exist in different regions in terms of culture, language, economic development, customer behaviour, marketing infrastructure, and so on. Even though the 21st century marketing environment can be regarded as globalised, there are still some differences such as culture, income levels, and language that make different products to be perceived differently in different countries or regions. Consequently, some products can be said to be ‘global’ products while others are unique to different regions. This means that even in the 21st century, MNCs have to consider the situations in which they are operating in order to decide whether to standardise or adapt their operations. This is the view that is espoused by the contingency school of thought. Conclusion In conclusion, proponents of standardisation assume that globalisation has caused convergence of markets and that there is increasing homogeneity of consumer needs across the world such that consumers in different regions can be treated to similar products. On the other hand, proponents of adaptation are of the view that there exist differences (cultural, economic, political and others) between different countries, which must be considered when deciding what products and marketing mix to deploy in a particular region. Both standardisation and adaptation have different advantages and disadvantages which must be considered in the 21st century marketing environment. Hence, firms must consider their situation when deciding on whether to standardise or adapt their operations since both concepts are part of the same continuum as posited in the compromise school of thought. References Ang Z & Massingham, P 2007, ‘National culture and the standardization versus adaptation of knowledge management’, Journal of Knowledge Management, vol. 11, no. 2, pp. 5-21. Cavusgil, ST 1997, ‘Marketing perspectives and international business: a business commentary’, in B Toyne & D Nigh, International business: an emerging vision, University of South Carolina Press, Columbia, South Carolina. Codita, R 2011, Contingency factors of marketing-mix standardization: German consumer goods companies in Central and Eastern Europe, Springer, Heidelberg. 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Melewar, TC & Vemmervik, C 2004, ‘International advertising strategy: a review, reassessment and recommendation’, Management Decision, vol. 42, no. 7, pp. 863-881. Mueller, B 2011, Dynamics of international advertising: theoretical and practical perspectives, 2nd edn, Peter Lang Publishing, Inc., New York. Onkvisit, S & Shaw, JJ 2004, International marketing: analysis and strategy, 4th edn, Routledge, New York. Pride, WM & Ferrell, OC 2006, Marketing: concepts and strategies, Houghton and Mifflin Company, Boston, MA. Ryans Jr, JK, Griffith, DA & White, DS 2003, ‘Standardization/adaptation of international marketing strategy: necessary conditions for the advancement of knowledge’, International Marketing Review, vol. 20, no. 6, pp. 588-603. Sahaf, MA 2008, Strategic marketing: making decisions for strategic advantage, Prentice-Hall of India Private Ltd, New Delhi. Sinha, PK & Sinha, S 2008, International business management: a global perspective, Excel Book, New Delhi. Theodosiou, M & Leonidou, LC 2003 ‘Standardisation versus adaptation of international marketing strategy: an integrative assessment of the empirical research’, International Business Review, vol. 12, no. 2, pp. 141-171. Read More