Advantages of standardization in international marketing. Reasons for adopting standardization in International Marketing 2019-03-05

The Disadvantages of a Standardization Business

This is an opposite approach to an adaptation strategy, under which multinational companies differentiate their product and adapt it to fit the unique needs of countries. Taking a business into international market and successfully selling its products and services can attract a range of challenges. Management and Administrative Sciences Review, 2 4 , pp. International Marketing Strategy: Standardization versus Adaptation. So that they can choose the exact product without any confusion.

Advantages And Disadvantages Of Standardization, Essay Sample

However, occurrence of this scenario in real-life situation is difficult and it depends on a wide range of factors such as the nature of industry and product life cycle, research and development budget, the level of infrastructure in the local market, the level of competition and others. Customer service, advertising, distribution and product pricing must be driven by local market conditions to be successful. The strategy of adaptation proves to be effective for mass consumption of products in general, and grocery products in particular as the level of cultural sensitivity towards such types of products tend to be high. That means in terms of target markets, packaging and designs, ingredients, languages, culture and etc the organizations need to come up with different ways so that they can cater different markets in a way where the customer needs and requirements are addressed. Nevertheless, standardization poses a range of shortcomings. Managers need to analyze the behavior of three different types of costs: - Fixed costs; - Variable costs; - Semi-Variable or mixed costs.

Advantage & Disadvantages of Standardisation and Adaptation Strategies Essay

Additional Insights Even companies that desire to standardize may find it difficult to do so in lieu of global restrictions. This research identified the advantages and disadvantages of each method stating that the solution to a successful market approach lies between the two extreme approaches. Companies have also increased their demand for the suppliers that largely depends on the standardization. Therefore, a trade-off has to be evolved to assess the extent of product adaptation in international markets. Families in New York need the same dishwashers as families in Paris. According to him, companies can achieve long-term success by concentrating on what everyone wants rather than worrying about the particulars of what everyone thinks they might like.

The advantages / disadvantages of standardized international marketing

It offers soup and fried rice to cater to Japanese eating habits as well. Rather, they should initiate market research and establish their customers, and their wants and needs. It has resulted in an increase in demand for similar goods across the world. When bundling is applied, it saves a great deal of money. Adaptation strategy usually eliminates the chances of benefiting from the economies of scale.

Economic Benefits of Standardization

Standardization reinforces positive consumer perceptions of your product. For instance, Mattel markets a variety of Barbie dolls to match customer demographics in different markets. Besides, the rapid growth of transport and telecommunications has resulted in increase in trans-national travel among people who exhibit similar tastes and preferences across the markets. Food items and clothing are generally more sensitive to culture whereas products with high technical intensity, such as software, electronic goods, plant, and machinery are hardly sensitive. She has written continually since then and has been a professional editor since 1994. Introduction Modern businesses are granted with vast opportunities in terms of revenue maximisation through entering new markets. For example, if a restaurant specializes in making chicken meal, it might find it hard to adapt in new markets where most customers might prefer things like hamburger; its standardization policies may make it difficult for the business to respond these new customer needs.

The advantages / disadvantages of standardized international marketing

Standardization Versus Adaptation in Global Markets: Is Channel Strategy Different? In response, the company developed a low-cost packaging product and other options that allowed it to offer dramatically less expensive options. There are several product adaption strategies that an entity can use such as product, target market, package and design, ingredients, language, , religion etc. When Does International Marketing Standardization Matter to Firm Performance? Even regulations requiring magazines to display the date after which it should not be put on the book-stand are not uncommon in a number of high-income countries. Because the label of the Red bull which is being sold in North America consist of red and silver for which the red bull stands for action and the silver background stands for the youth spirituality and spirit. As a result, various research studies have been done on whether companies need to standardize or adapt certain behaviours in international market.

Importance And Advantages Of Standardization

Moreover, product modification or adaptation approach will results in a boost in sales volume of the company in international market; by highly meeting the wants and needs of the consumers, but reflecting on the competing companies; and by also retention of the current customers through frequently updating the product. Advantages and Disadvantages of Adaptation Customization is also commonly considered an adaptation. The business thus benefits from both the economics of buying products in bulk, which results in a lower cost per unit purchase and selling products in large quantities. In such cases, similar product may be sold across all markets. This paper seeks to analyse the issues of adaptation customization and standardization global strategy within international marketing strategies and proposes specific approaches that can help companies compete efficiently and effectively within these global setting.

Economic Benefits of Standardization

Moreover, standardisation can prove to be particularly effective for highly sophisticated and complex products from technical viewpoint Vrontis et al. When an international company puts forth all its efforts of the extreme side of either strategy, it normally becomes incoherent and unfeasible. Companies intending to expand internationally need not to treat the world as one singular market. Chinese and most East Asian people are shorter in size while Europeans and Germans are generally taller. Selling one unified product lacks uniqueness. The ability to identify itself with similar characteristics regardless of where the consumer is helps create a positive image of the product and attract customer loyalty. The challenge for a marketing strategy is to find a way of achieving a sustainable competitive advantage over the other competing products and firms in a market.

Standardisation vs Adaptation in International Marketing

The company opened its theme park in Hong Kong in 2005 applying standardisation strategy to a great extent, through duplication of its theme parks in California and Paris. Loss of Responsiveness When a company expands into new markets, especially in foreign markets, standardization may work against the firm. The other disadvantage of standardization is that it can only work for some businesses and may not work for other businesses. ” Companies are motivated to participate in standardization because they gain an edge over non-participating companies in terms of insider knowledge. The goal of this study is to analyze the degree of standardization vs. The level of sophistication of buyers in adopting new products and processes also varies among countries. For instance, standardization is not appropriate for those businesses that are dealing with customer service and advertising.

Advantages & Disadvantages to International Marketing by Kaytie Smith on Prezi

As managers when choosing a strategy we always need to make sure to choose a strategy in a way where the negative effects are minimized and the positives are maximized. And this decision can make impacts on the organization in terms of the Research and development expenses, finance, production, organization structure, procurement, marketing mix etc. In contrast, there are other sectors where this same action does not apply and thus, this needs to be considered. Other benefits linked to economies of scale consist of reduced investment costs, marketing operational costs, and enhanced research and development. Therefore, the packaging size, weights, and measures of the product need to be modified, depending upon the measurement system followed in the target market. The international firms attempt to retain their country-of-origin CoO image and market, at least the packaging product component, with little customization.