Marketing Globally

MARKETING 1

GLOBAL MARKETING

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MARKETING 2

Standardization and adaptation strategies

According to Albaum&Duerr(2008), product standardization strategy is the uniform

representation of products in all aspects and regarding the material used to manufacture,

packaging, name of the products in all the markets regardless of the location of the markets in the

world (Albaum, 2016). In contrast, adaptation is the modifications and the change made to

products to adjust to the respective demands in the various locations in the world. In the

marketing process of services and products, companies are faced with a dilemma on whether to

acclimate their product offering or to standardize. Often companies that are beginning to market

their products in foreign countries and those that operate internationally but are considering

expanding their markets are faced with this impasse.

To the managers of global and international companies, standardization of products and services

across cultures is gradually becoming crucial. In the 21

century, the international market is

gaining significant attention by researchers and scholars. According to Belobaba&Odoni (2016)

Administration and the cost benefits of the standardization, strategies has eased the approach in

marketing and consequently made it an eye-catching choice for a majority of the firms

(Belobaba&Odoni2016). Czinkota (2016) argues that it is essential to standardize the rudiments

of the marketing mix as much as possible, the reason being that it is the dominant characteristic

of global marketing (Czinkota,2016).

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Global marketing is considered the best platform on where to maximize the profits while

reducing the cost of production. However, different parts of the globe are inclined to different

cultures and beliefs. Consequently, consumption of the various products will vary. Importantly,

Dana (2009) notes that outcomes must in multiple ways differ from the original ones, as cultures

are intrinsically different regarding language, education, origin, material culture, education, and

aesthetics. This is what thereby motivates multinational corporations to use the adaptation

strategy to maximize the number of people consuming the product.

Product adaptation strategies, on the other hand, are being poised as considerably important

aspects for Multinational Corporations. Despite past researches and studies that have suggested

that standardization enhances the performance outcome of a company, recent theories are of the

view that the result is not always the same. Doole and Lowe (2016) assert that in the current

globalized world, the choices of adaptation of products and that of standardization no longer

being viewed as choices that are inflexible (Lowe, 2016). As an alternative, the hybrid of the two

strategies is being regarded, in consideration of the dependent factors in the market at each

specified time.

Conversely, with the mushrooming of markets that are homogeneous worldwide, it is still a

crucial determinant of whether multinational corporations will adopt the hybrid system or will

prefer to choose either the standardization strategy or the adaptation product. In a research

conducted by McDonalds Company, a multinational food retailer, the conclusion was that the

choice of either of the strategy is not exclusively an all-or-nothing plan, it is a matter of

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degree(Geetanjali, 2010). Therefore, Multinational corporations should strive to harmonize the

two approaches in explicit consideration of the dynamics of the market.

International Market Entry

Strategies for entry into foreign market differs regarding the risk they present, the resources that

ought to be committed the control and the returns they promise after the investment. Export and

import is the market-entry technique that offers the lowest risk regarding investment and also has

the least market control. Glowik (2012) opines that there are six strategies namely: exporting

and importing, licensing, franchising, joint ventures, direct investments and strategic alliances

(Glowik, 2012).

Strategic alliances

A term in marketing used to refer to various cooperative agreements made between firms and

companies. They may entail: formal joint ventures shared research and studies and minority

equity participation. According to Hult& Pride (2013) the strategy in recent times is becoming

increasingly popular and is distinguished through three features; constructed for on short-term

basis, their primary objective is the creation of new products and technologies rather than the

distribution of the existing ones, and they are in firms found in highly industrialized nations

(Hult& Pride 2013).

Exchange in Technology- considered the primary object in a majority of the strategic alliances.

The rationale is that technological advances concern many interdisciplinary increases and it is

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difficult for a single firm to have in possession all the resources and the manpower to conduct its

R&D efforts. Riggs (2013) assets that shorter product life cycles and the need for multinational

companies to stay relevant and competitive through innovation also support the need to have

technology exchange (Riggs, 2013).

As a significant disadvantage, competitive collaboration may lead to cannibalization in the

market. Some of the strategic alliances involve fierce competitors in their specific scopes. The

result according to Wells (2015) is that in most instances, one of the companies, or the strong

company will create an advantage over the other (Wells, 2015).

Direct investments in Strategic alliances is the arrangement where a company invests directly

into a product that already exists in a foreign market. The investment entails 100% ownership of

the product, therefore, there is a significant commitment. There live two ways in which a firm

can directly gain entry into a foreign market:

greenfield investment- where a company develops its facilities from the ground.

Acquisition- acquiring an already established product. The method is more common because

unlike greenfield investment, there are fewer risks as the probable outcomes can be easily

estimated.

Joint-ventures

Vega (2016), unlike strategic alliance, joint venture entails formation of a partnership between

the host and the home country firms, and the result is the formation of a third corporation (Vega,

2016). The international company is poised to have better control of the operations and access

the knowledge of the local market. A strategic alliance is limited on the scope as it entail

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investments in technologies and in researches, unlike Joint ventures were two companies agree to

form another group jointly and share in the proceeds.

Franchising

Unlike Strategic alliances, franchising entails a system where autonomous business owners pay a

specified fee and royalties to a parent company to have the right to be identified with their

trademark.

Difficulties in the development of an appropriate pricing method

In recent times, the world is faced with economic, political, and social scenarios that pose a

significant challenge to companies marketing their products. The problems include the

uncertainties that are as a result of political rhetoric and barriers to foreign trade. The recession

in the economy has had adverse effects on firms which as a result have to consider drivers such

as the Gross Domestic Product uncertainty and unpredictability, high inflation, the fiscal

adjustments, growth in the rate of unemployment and the customers' top reduced incomes.

For companies to boost their incomes and maximize all the opportunities, price management is

critical and is a powerful indicia to guide organizations on their pricing strategies. According to

Tripathi&Mukerji (2013), most of the agencies in the world set their price by their fixed costs,

their margins and the price adopted by their competitors (Tripathi& Mukerji2013). Though the

method is easy and quick to apply, it does not take into consideration that the same product

brings intrinsically different benefits to every user.

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Export price appreciation

It is the economic and the physical distance between the consumer and the producer that

provides the atmosphere for the escalation of prices. Compared to the domestic market, this may

mean that a long chain of the distribution and supply in the export industry, therefore, high risks

exist. Foreign governments also tend to impose price controls. Consequently, international firms

face a significant challenge as their profits are dependent on the various partners and institutions

involved in the exportation.

Inflation

In most countries, inflation rates become a huge impediment for international firms. In states

where increase is lush, the setting of prices and successfully controlling them becomes hard.

Most countries also tend imposing price controls to ensure its citizens can afford the products.

Currency movement

Both political and economic factors often cause the constant fluctuation of currencies. In

instances where the rates get unstable, it is difficult to set a price strategy that prevents the

changes from affecting activities of international firms and even the domestic companies.

Transfer pricing

It entails the costs that are incurred as a result of the acquisition of raw materials, finished goods,

and the essential services. Transfer pricing decision requires balancing the interests of the

different partners in the production and the supply chain. Factors that influence transfer pricing

decisions include the conditions of the local markets, the tax regime, imperfections of the market

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and the motivation of the managers in the regional company managers. It is challenging for

multinational companies to continually involve staff in the tax department to track the changes in

the tax regulations.

Anti-dumping laws

Dumping refers to instances where imports are sold at unfairly low prices. In determining the

global pricing policy, multinational companies face challenges when competing firms dump their

products in the various markets. This makes it hard for such an undertaking to settle on a price

that will not lead to a loss. In instances where firms set the prices of their products too high to

ensure they make a profit, this often causes adoption of anti-dumping measures that reduce the

competitive position of the firms.

Role of a country of origin and foreigners liability

For several decades, a lot of research and studies have been done on how the country of origin

affect the perception, attitude and the purchase intentions of a consumer. The general assumption

is that the consumers take the information about the country of origin as a nod regarding the

quality and effectiveness of specific products. Fishbein (2015), country of origin information

mainly involves the belief consumers have about a product and the attitude they develop towards

the product. Han (2011), the belief will lead to the development of a particular relationship

towards a specified product. Levy (2009), the COO effects are usually informed by the technical

complexity of the product, its accessibility and availability, familiarity, cost and in most

instances the serviceability of the foreign product compared to the local product.

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The analysis of products varies according to the extent of similarity. Lamp (2009) Country of

origin in evaluation is used as a method of stereotyping products. It feeds the consumers with

various features of the host country’s cultural, economic and the political system in comparison

with the foreign country. Amusingly, studies Altares (2008), reports that most of the consumers

globally have limited knowledge on the state of origin of most products and brands. Nonetheless,

without consideration on whether a consumer can identify the multinationals corporation origin,

the majority of the COO researches and studies have proved that COO is a crucial factor in the

determination of the attitudes of a consumer, their behavior as well as their purchase intentions.

Hymer (1960), indicated that foreign multinational organizations are faced with additional costs

that are usually not incurred by the local agencies. The liabilities are brought about by the

following factors: unfamiliarity of the Multinational corporation with the environment in which

they are establishing operations, discrimination by consumers, government agencies, suppliers

and much more and the additional costs that are as a result of operating internationally. Meziar

(2005), additional costs incurred as result of being a foreigner reduce the competitive nature of a

firm compared to domestic companies that are well established.

Upon entry into a new market, Multinational corporations are faced with unique setbacks that

stem from the difference in the culture of the consumers' preferences and likes and the lack of

well-established roots in foreign countries. Cassin (1976) found that due to the unfamiliarity with

the cultural, social, political and economic factors of a foreign country, Foreigners often find it

hard doing business.

As a result, before entering new markets, foreigners need to be adequately equipped through the

gaining of the proper knowledge of the proportions of the Liability of foreigner’s concept.

MARKETING 10

Internationalization stages

There are four phases of international marketing namely: ethnocentrism, polycentrism, region

centrism and geocentrism.

Domestic companies

Most of the companies have their back ground as local companies. The orientation of local

companies is ethnocentrism. An internal company's operations are local because it is yet to

consider operations outside its territories. As a company grows, it reaches its primary goals and

strategically opts to gain entry into new markets. The company may increase its operations by

extending its products to foreign countries through exportation of licensing and franchising.

Nonetheless, the company despite its growth is primarily domestic and the orientation is

ethnocentric.

International company

Usually the second stage in the development of a company. Marketing is extended from the

domestic market to foreign markets. The orientation is still ethnocentric.

Multinational company.

Represents stage three.On the orientation shifting to polycentric, the international company gains

the status of a multinational company. In this stage, the company frames a new strategy for each

country.

Global company/ transnational

Represents stage four. The company will either have a worldwide sourcing strategy or a global

marketing strategy but can never have both. The transnational company is stage five. It is a firm

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that is dominant in most markets and industries globally. It has investments operations and sales

in a lot of countries.

Region centric orientation

It is the transitional stage between the polycentric stage and the geocentric stage. It has various

groups of same regions that possess similar features. A multinational corporation will have

vested interests in both public acceptance and profit making and therefore will put into effect a

strategy that allows it to address both local and regional problems and needs. Market

segmentation is crucial to identifying markets with the same features. Operational policies are

made in total regard to the whole region rather than a specific country.An example is the General

motors which have different strategies and products for consumers in America, Asia, Europe and

in Africa.

Geocentric orientation

This is where a company's management faces opportunities on a global scale. Contrary to

looking at how business is conducted in the specific country, it focuses on how to do businesses

in any part of the world. In geocentrism, there is a belief that any part of the world is a potential

market and consequently, puts strategies that will be effective and profitable in every market. In

geocentrism, authority is not based at the headquarters nor is it at the subsidiaries but equally

between the two levels to ensure collaboration and hence more production.

Geocentrism makes it easier to have a business to be highly competitive despite the location. It

also helps in the creation of ways of doing business that is effective to different styles of

communication in different countries hence making it easier to have subsidiaries and also

promote proper communication.

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As a key setback, in geocentric, it is hard to find managers that are capable of adopting multiple

styles. A company will also lose the status of being an expert in one country or region.

Uppsala model

It is an internalization model that relies on knowledge and continuous learning. The assumption

made by the model is that lack of knowledge impedes development of global operations. As a

company is learning about the international environment and receiving more education,

hindrances can be easily bypassed. Doole (2016) the above tentative answer illustrates that the

big companies with a lot of resources can be able to bypass some of this stages and go

international in step. It creates a path to globalization especially when the born global companies

eye the international market despite the fact that they don't have the requisite knowledge. In

markets where the market forces are stable and homogeneous, the use of stored education is

crucial. Glowik (2012) in instances where a firm has already obtained enough knowledge, one

step of gaining entry into a homogenous market is can be affected.

The important scope of Uppsala model is to prove how the knowledge of a company impacts its

influence regarding the investing behavior. Lack of knowledge by a company in new markets

only serves to limit it to follow the international commitment process which is gradual. The more

the knowledge a company possess about a market, the lesser the risks and the stronger the

commitment in the overseas markets.

Network model

The model's emphasis the importance of commercial cognitive an personal relationships between

members. The assumption is that organizational networks are a significant incentive for

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internalization and that companies generate most of their resources through the interactions with

other partners. Companies can be both individually independent and autonomous on the funds

owned and controlled by other firms. Hult (2013), the level of dependency increases as the

operations increase and gradually the resources of a specific firm depend on the resources of the

other, and the benefit is therefore mutual. Glowik (2012), through exchange relationships,

business networks, their interests and needs are harmonized and reconciled through business

interactions.

Transaction model

Assumes that a company internationalizes up to the point the transaction cost balances the

expenses a similar transaction which is market- based. Hollensen (2008) Decision about

internalization is based on critical analysis of the transaction cost in the market. In instances

where the foreign market transaction costs are higher, often a firm will externalize. A company

has business relations with partners through different methods: export, franchising,

subcontracting, licensing and through joint ventures.

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References

ALBAUM, G., DUERR, E., & JOSIASSEN, A. (2016). International marketing and export

management.

http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=141

9707.

BELOBABA, P., ODONI, A. R., & BARNHART, C. (2015). The global airline industry.

http://catalogimages.wiley.com/images/db/jimages/9781118881170.jpg.

CZINKOTA, M. R., & RONKAINEN, I. A. (2016). International marketing.

DANA, L. P. (2000). Global marketing co-operation and networks. New York, International

Business Press.

DOOLE, I., LOWE, R., & KENYON, A. (2016). International marketing strategy: analysis,

development and implementation. Hampshire, UK, Cengage Learning.

FORUM FOR INTERNATIONAL TRADE TRAINING. (2013). International market entry

strategies.

GEETANJALI. (2010). International marketing. Jaipur, Oxford Book Co.

http://site.ebrary.com/id/10417654.

GLOWIK, M., & SMYCZEK, S. (2012). International Marketing Management: Strategies,

Concepts and Cases in Europe. https://doi.org/10.1524/9783486709223.

HULT, G. T. M., PRIDE, W. M., & FERRELL, O. C. (2013). Marketing. South Melbourne,

Victoria, South-Western Cengage Learning.

KEILLOR, B. D. (2013). Marketing in the 21st century and beyond: timeless strategies for

success. Santa Barbara, Calif, Praeger.

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MISKELLY, M., & RIGGS, T. (2013). Encyclopedia of major marketing strategies. Volume 3

Volume 3. Detroit, Gale, Cengage Learning.

MOOIJ, M. K. D. (2010). Global marketing and advertising: understanding cultural paradoxes.

Los Angeles, SAGE.

NIEUWENHUIS, P., & WELLS, P. E. (2015). The global automotive industry.

http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=105

0344.

PALIWODA, S. J. (2013). Perspectives on international marketing reissued. Hoboken, Taylor

and Francis. http://www.123library.org/book_details/?id=58886.

TRIPATHI, P., & MUKERJI, S. (2013). Marketing strategies for higher education institutions:

technological considerations and practices. Hershey, Pa, IGI Global (701 E. Chocolate Avenue,

Hershey, Pennsylvania, 17033, USA).

http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=572

686.

VEGA, E. (2016). International marketing. http://dx.doi.org/10.4135/9781473954502.

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