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Why are so many companies trying to standardize their global marketing mixes? With examples show the limitations to this approach!

Seminar Paper 2003 16 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media

Excerpt

Inhalt

1. Globalisation and Marketing
1.1 The definition of Globalisation
1.2 The necessity of a global Marketing as a result of Globalisation

2. Standardisation as an instrument of global success?
2.1 Standardisation vs. Adaptation/Individualisation
2.1.1 Reasons for standardisation/ global branding
2.1.2 Counterarguments and Barriers to standardization
2.1.2.1 Market characteristics
2.1.2.2 Development Stage
2.1.2.3 Cultural Factors
2.1.2.4 Legal Restrictions
2.2 Cases
2.2.1 IKEA

1. Globalisation and Marketing

1.1 The definition of Globalisation

As I start off I will try to define the word “globalisation”, so I can move on with my argumentation on basis of this definition.

Via internet, just like in several journals, magazines and books, one can find numerous definitions and essays about what “globalisation” is supposed to be.

Just to give the reader some impression on the variety, I wrote down a few of them.

On an official homepage of the Canadian government is written: “The term “globalisation” describes the increased mobility of goods, services, labour, technology and capital throughout the world. Although “globalisation” is not a new development, it’s pace has increased with the advent of new technologies especially in the area of communications.”[1].

At http://www.globalisation101.org you will read “Globalisation is a term used to describe the acceleration and intensification of economic interaction among the people, companies, and governments of different nations.”.

In the opinion of Prof. Werner Antweiler “Globalisation is the process by which nationality and geographic location become increasingly irrelevant for economic activities.”[2].

As you recognize, “Globalisation” is a word which lacks of a definite definition. Hence I have decided to define “Globalisation” as follows.

Globalisation will be seen as a strategy of; on global basis operating corporations, with the focus on the establishment of a worldwide competitive advantage, through the use of local benefits and economies of scale. This definition is build upon the convergence-theory whereafter the interests and desires of various nations draw close. The reason is the technological and economical evolution which gradually makes cultural differences

obsolete.[3]

1.2 The necessity of a global Marketing as a result of Globalisation

During the past two decades the role of global business has changed in a vast way. This change is due to a couple of factors.[4]

- technologies have improved and are still improving incredibly fast
- the global communication-system has speeded up the flow of knowledge and Information, across borderlines
- transportation has become a lot easier and more efficient and cheaper (with the start and development of the European Union for example, duties became widely obsolete)
- changes in several different branches took place, which resulted in the transformation of cheap manufacturing regions into cutting edge high tech production areas (Asia and India for example)
- new markets have been discovered by making trade agreements
- the end of the “cold war” offered China, Vietnam, South-America and Africa just like Eastern Europe the chance to expand into the world market. As you can read in a paper by Quelsh, Joachimsthaler and Nueno “… extraordinary reforms swept the USSR and Eastern Europe, focussing attention on a new, 430 Million person market.” and “Eastern Europe represents not only an important market but also a new low-cost manufacturing opportunity”[5]
- global media has reached global power by spreading news, trends and information across the world and by putting themselves into the position of an opinion leader. According to Martin van Mesdag, watching TV, and the by global media indicated recognition of what happens in the rest of the world, causes an assimilation of behaviour and needs, resulting in better chances for globalisation.[6]

All these points lead to the conclusion that a company which is already working on international or global basis, just like the ones who are planning to do so, will have to find a way to attract the “new customer”. The customer who is influenced by the worldwide communications, who is trying to improve his living standards, seeking for entertainment and enhancement in life. He is the one who needs to be bound to the company or the companies products. He needs to be satisfied and his fast changing wishes must be fulfilled. Especially the wishes he isn’t even aware of yet, because those are the desires that open the gates for the new markets, which have to be found in order to compete on the global market.[7]

It’s a tough journey that leads to success in this endeavour. The number of clever competitors with the same goal is hard to count. For that reason a global orientated, well planned, strategic marketing is essential to reach a good position on the global market. Theodore Levitt explains the need for global marketing as follows. In his view technology “has proletarianized communication, transport, and travel … . Almost everyone everywhere wants all the things they have heard about via the new technologies, … The worlds needs and desires have been irrevocably homogenized.”[8].

Minds and opinions go in two major directions over the discussion of how to be successful in this approach. One side pleads that global marketing needs to be orientated on local differences, which means for every country has to be an individual marketing program that adapts unique cultural factors. For example Fournis notes, according to Subhash C. Jain “ …that customs and traditions tend to persist and therefore the concept of the ‘European consumer’ is a misnomer”[9].

The other side supports the standardization of marketing (marketing mix) and emphasises that marketing know-how can be transferred to other counties. Elinder, again according to Jain, stressed “…emerging similarities among European consumers make uniform advertising both desireable and feasible.”[10]

Both sides will be discussed in the following chapters.

2. Standardisation as an instrument of global success?

2.1 Standardisation vs. Adaptation/Individualisation

In view of the globalisation, managers will have to decide if it is either promising to follow a strategy on the base of standardisation or more useful to go for the possibility of adaptation. David Jobber insisted that it should not be the subject to discuss standardisation and adaptation “as two distinct options” because “few marketing mixes are totally standardized”[11] (examples will be shown in point 2.2). Still standardisation is providing some chances to achieve a significant competitive advantage compared to companies who are working with a multinational concept.

2.1.1 Reasons for standardisation/ global branding

Theodor Levitt’s message in his article “The globalisation of markets” is clear.

The key to global success is low pricing and low pricing can be achieved by standardization. He states: ”When the global producer…offers his lower costs internationally, … He not only reaches into distant markets but also attracts customers who previously held to local preferences and now capitulate to the attraction of lesser prices.”[12]. How does that work?

It is easy to explain. Several points will show you how standardization can decrease the price of standardized products rapidly and increase the chance to compete successful on a global market.

[...]


[1] http://www.canadieneconomy.gc.ca/english/economy/globalization.html

[2] http://www.pacific.commerce.ubc.ca/antweiler/apsc450/slides.pdf

[3] vgl. http://www.gabler.de/wirtschaftslexikon/leseprobe/229.htm

[4] Factors are basically taken from http://viadrina.euv-frankfurt-o.de/~sk/SS99/global/konsum_the.html

[5] vgl. Buzzell Quelsh Bartlett „Global Marketing Management – Cases and Readings 3rd.aditioon”, p. 541

[6] vgl. Martin van Mesdag, “Ist Globales Marketing ein Irrweg?”, in Harvard Business Manager 3.Quart. 1987, p. 13

[7] Theodore Levitt „The globalization of markets“ in Harvard Business Review; p.22-23

[8] Theodore Levitt „The globalization of markets“ in Harvard Business Review; p.13-14

[9] Subhash C . Jain “Standardization of international Marketing Strategy: Some Research Hypotheses” in Journal of Marketing, January 1989, p.72

[10] Subhash C . Jain “Standardization of international Marketing Strategy: Some Research Hypotheses” in Journal of Marketing, January 1989, p.70

[11] vgl. David Jobber „Principles and Practise of Marketing“ p. 711

[12] Theodore Levitt „The globalization of markets“ in Harvard Business Review; p.17

Details

Pages
16
Year
2003
ISBN (eBook)
9783638324069
File size
536 KB
Language
English
Catalog Number
v31375
Institution / College
University of Applied Sciences Ludwigshafen
Grade
2,0
Tags
With Transnationales Marketing

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Title: Why are so many companies trying to standardize their global marketing mixes? With examples show the limitations to this approach!