Advantages Of Standardization

Global strategy

Introduction

Companies are building a diversified customer base by taking advantage of the fact that many barriers to global trade have eased up and a trend of globalisation is in full force. Moreover, maturity in domestic markets is also driving companies to pursuing international markets to gain a competitive advantage and increase in capacity. However, internationalisation usually presents the struggle of how to establish the company’s business and brand in a foreign market. This is brought by since the culture, environment and experiences are usually different in global markets compared to domestic. As companies begin to market its products in a foreign country, one important strategic decision it has to make is whether

There has been research supporting standardization because globalisation has stimulated a union of cultures with similar environmental and customer demand around the world. The bases of the arguments of the supporters of standardization are that needs and wants of the consumer do not vary significantly at the international level. In their view the world is becoming increasingly more similar in relation to the requirements of the customers and environmental factors despite their regional and geographic location. Additionally, trade barriers are getting lower and that technological advance and companies are displaying a global positioning in their strategy. As they believe, creating one strategy for the global market and standardizing the marketing mix elements can achieve consistency with customers as well as lower costs (M. Theodosiou & L.C. Leonidou , 2003a

It is in most cases entirely encouraged as a strategy for penetrating international markets. However, most companies usually attempt to add value primarily by capitalizing on similarities across markets in order to save costs (Rugman & Vibeke, 2004, 16). Adaption has also been studied widely and according to Pankaj Ghemawat (2007), one of the researchers, who classifies Adaptation along with aggregation and arbitrage in a framework he calls the AAA triangle. He points out that adaption is seeking to boost revenues and market share by maximizing a firm’s local relevance.

One company that has adapted to local markets is Heineken. Undoubtedly, it still has its global brand that is standardised however they have come up with a strategy that allows the company to adapt its products to the local market. Additionally, it has customised promotion for some of its markets like USA and UK. By adapting its characteristics to the market’s expected benefits, Heineken has been able to gain momentum in said markets and maintain a strong global presence.

Hence, international marketing strategy, whether standardized or adapted, will lead to superior performance only to the extent that it properly matches the unique set of circumstances that the firm is confronted by within a particular overseas market. (Theodosiou & L.C. Leonidou