REVIEW ESSAY MARKET

ADAPTATIONISSUE:

STANDARDIZATION VERSUS

ADAPTATION

SUBMITTED BY:

SHRUTI DWIVEDI MA (FMG)

PEARL ACADEMY OF FASHION

INTRODUCTION

The four main fields of the Marketing mix.

The term "marketing mix" was first used in 1953 when Neil Borden, in his American Marketing Association presidential address, took the recipe idea to another level and coined the term "MARKETING-MIX",.E. Jerome McCarthy, who was a very famous marketer proposed a 4 P classification in 1960, which has been widely used ever since.

Four P's

Elements of the marketing mix are referred to as 'the four Ps' :

PRODUCT – It is a tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are the service based ones like the tourism industry & the hotel industry or codes-based products like mobile phone load and credits. Simplest examples of mass produced tangible objects are cars and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. Packaging is an important aspect and needs to be taken into consideration. Every product has its own life-cycle characterized by its growth, maturity and decline when market gets saturated. To retain its competitiveness in the market, product differentiation is required and is one of the major strategy to differentiate from its competitors.

Here are some examples of the product decisions to be made:

Brand name Functionality Styling Quality Safety Packaging Repairs and Support Warranty Accessories and services

Price – The price is the monetory amount the customer pays for the product. It is determined keeping in mind a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. the price of product may vary depending upon the business it is doing in the market and if other brands have the same product.

Some examples of pricing decisions to be made include:

Pricing strategy (skim, penetration, etc.) Suggested retail price Volume discounts and wholesale pricing Cash and early payment discounts Seasonal pricing Bundling Price flexibility Price discrimination

Place – Place represents the location from where a product can be purchased by the consumer. It’s commonly referred to as the distribution channel. that includes any physical store as well as virtual stores on the Internet. But Place is not only a point of purchase where it is available .Place is also how the product takes place or creates its image in the mind of customers depending upon the perception of customers. Distribution is about getting the products to the customer. Some examples of distribution decisions include:

Distribution channels Market coverage (inclusive, selective, or exclusive distribution) Specific channel members Inventory management Warehousing Distribution centers Order processing Transportation Reverse logistics

Promotion- represents all of the communications that a marketer uses in the market. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. Advertising covers all communication that is paid for, from cinema commercials, radio and Internet adverts through print media and billboards. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals,

exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparent informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations. Promotional strategy (push, pull, etc.)

Advertising Personal selling & sales force Sales promotions Public relations & publicity Marketing communications budget

http://www.netmba.com/marketing/mix/

Extended Marketing Mix (3 Ps)

Recently three more Ps have been added to the marketing mix namely People, Process and Physical Evidence. This new marketing mix is known as Extended Marketing Mix.

People:- All individuals involved with consumption of a product or service are important. For example workers, management, consumers etc

Process:- It is the Procedure, mechanism and flow of activities by which services are used up.

Physical Evidence:- its The environment in which the service or product is delivered. Tangibles are the one which helps in ways to communicate and intangibles is the knowledge of the people around us.

Four Cs(1) in 7Cs compass model

The afore mentioned marketing mix was product centric. A new formal approach was applied to come up with a customer-focused marketing mix is known as the Four Cs (Commodity, Cost, Channel, Communication) in “7Cs compass model.” Japanese Professor Koichi Shimizu proposed this four Cs classification in 1973.

This concept is basically the four Ps renamed and also reworded to provide the marketing mix a customer focus. The four Cs Model shows a demand or a customer centric version alternative to the well-known four Ps which can be seen as a supply side model (product, price, place, promotion) of marketing management. The Four Cs model is more consumer-oriented and attempts to better fit the movement from mass marketing to symbiotic marketing.

1. Commodity : (Original meaning in Latin: Commodus=convenient) the product for the consumers or citizens. a commodity can also be described as a raw material such as oil, metal ores and wheat.The price of these commodities tend to change on a daily basis, due to the continuous demand and supply of these commodities.

2. Cost : (Original meaning in Latin: Constare= It makes sacrifices) sum total of all costs and expenses incurred. i.e producing cost, selling cost, purchasing cost and social cost.

3. Channel : (Original meaning is a Canal)Flow or movement of the commodity : through marketing channels.

4. Communication : (Original meaning in Latin:Communio=sharing of meaning) marketing communication. building a bridge to fill up the gap between the consumer and d producer : It doesn't promote the sales.

(Framework of ７ Cs compass model )

(C1): Corporation and competitor : The core of 4Cs is corporation and organization, while the core of 4Ps is customers who are the targets for attacks or defences.

(C2) : Commodity, (C3) : Cost, (C4) : Channel, (C5) : Communication (C6) : Consumer (Needle of compass to Consumer)

The factors related to customers can be explained by the first character of four directions marked on the compass model, i.e : N = Needs, W = Wants, S = Security and E = Education (consumer education).

(C7) : Circumstances (Needle of compass to Circumstances )

In addition to the customer, there are various uncontrollable external environmental factors encircling the companies. Again it can also be explained by the first character of the four directions marked on the compass model --- N = National and International C, W=Weather, S = Social and Cultural C, E = Economic (Circumstances). http://en.wikipedia.org/wiki/Marketing_mix

Four Cs（2）

Robert F. Lauterborn again proposed a four Cs(2) classification much later in 1993.as already explained The Four Cs model is more consumer-oriented rather than product oriented and attempts to fit the movement from mass marketing to niche marketing in a better manner. The Product part of the Four Ps model is evidently replaced by Consumer or Consumer Models, hence shifting the focus to satisfying the consumer needs. Another C replacement for Product is Capable. By defining product offerings as individual capabilities which when combined and focused to a specific industry, creates a custom solution rather than pigeon-holing a customer into a product. Pricing is replaced by Cost reflecting the total cost of ownership. Many factors affect Cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service. Placement is replaced by Convenience. With the rise of internet and hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors. Finally, the Promotions feature is replaced by Communication which represents a broader focus than simply Promotions. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the firm and the consumer. the four Ps are (product, promotion, price, place http://en.wikipedia.org/wiki/Marketing_mix

STANDARDIZATION

Developing standardized Products marketed worldwide With a standard marketingMix

Essence of massmarketing

ADAPTATION

Adjusting the marketing mix elements to each target market Essence of segmentation Think globally, act locally

REASONS PULLING TOWARDS ADAPTATION

1. Market development2. Economic differences3. Culture

Product

Price

Place

promotion

4. Differences in customer perception5. Competition6. Differences in physical conditions7. Laws8. Level of customer similarity9. Political environment10.Marketing infrastructure

REASONS PULLING TOWARDS STANDARDIZATION1. Economies of scale in production, research and development and promotion2. Global uniformity and image3. Consistency with the mobile consumer4. Easier planning and control5. Stock costs reduction6. Synergetic and transferable experience

THE ADAPTATION/STANDARDIZATION DEBATEThis issue of whether to take up adaptation or standardization of marketing strategies to international markets emerged in the global business literature scenario during the 1960s. During the initial days proponents of standardization argued that strategy founded on basic human-nature appeals for example nurturing mother-child relationships; desire for a better life, beauty, health, andfreedom) could be as effective across the globe as across various US regions (Elinder,1961, 1965). Jain(1989)defined standardization as a common marketing program on a world wide basis, while Cavusgil and Zou(1994) viewed the issue under general “degree” of adaptation and Szymanski et al.(1993,p.1) view marketing strategy standardization as THE “standardization of the pattern of resource allocation among marketing mix variables across national markets “. Subsequent research (Dunn, 1966) demonstrated that key market andeconomic data (e.g. degree of competition, level of education of consumers, standard ofliving and economic development) should be taken into consideration to discover the correct and appropriate balance between the two extremes of adaptation and standardization. After a lot of extensive research in the following decades (Sorenson and Wiechmann, 1975; Levitt, 1983; Ozsomer et al., 1991), its understood that several internal and external forces influence the degree of standardization/adaptation (Theodosiou and Leonidou, 2003). As such, there is no absolutely correct or right strategy but each strategy could be the right combination of ingredients that are optimum under specific internal and external forces (Katsikeas et al., 2006).

ENVIRONMENTAL FACTORS Environmental factors are external conditions which are beyond the control of the firm. They include SOCIAL, ECONOMIC, and POLITICAL factors, which are quite dynamic, interactive, and culturally contingent and affect marketing strategy most of the time. Many Previous marketingresearch have suggested that at least five environmental factors may influence the standardization or the adaptation strategy of a brand, namely : religion, language, education, technology, and the economy. RELIGION. Many international marketing blunders are the result of religious insensitivity (Wind 1986). Religion can make certain items in a society taboo. Products with names that buyers believe connote these taboos may be unacceptable, and sales may lag. For example, in many Islamic countries, alcohol is forbidden due to religious reasons. , Selling edible food items with the Budweiser brand name, even though the food contains no alcohol, may be unacceptable

when a firm targets a devout population in these countries. Another example is Nike, who in ancient Greece was the goddess of victory. the brand is doing beautifully but In Saudi Arabia, any reference to a god other than in a religious context is frowned on. Consequently, some Saudi Arabian consumers have boycotted Nike products. When Mc Donalds came into the Indian subcontinent, it introduced its first vegetarian burger keeping in mind that the majority of the population followed Hinduism and did not consume meat.LANGUAGE. While expanding ,a brand reaches far and different countries of the world , each country having its own language medium. Language does influence the degree of variation. One aspect of language is pronunciation. Brand names that are hard to pronounce are hard to remember. If buyers have difficulty pronouncing the product name, they may be less likely to ask for the product by name, less likely to discuss the product with others, and less likely to purchase the product. In Chile, people had trouble pronouncing “Schweppes ginger ale,” which forced the company to initiate an advertising campaign to teach consumers how to say it (Hilland Still 1984a). Korea’s Hyundai had difficulty teaching U.S. consumers to pronounce its name correctly (Marconi 1993). Another aspect of language has to do with meaning or translation.Attempting to obtain the same meaning, Hunt-Wesson originally translated its “Big John” brand into the French Canadian “Gros Jos,” a French colloquial expression meaning “woman with large breasts” (Ricks 1983). Pillsbury’s Jolly Green Giant was originally translated literally as “intimidating green ogre” in Saudi Arabia (Hill and Still 1984a).The phonetic sound of a brand may cause difficulties also. Goodyear’s Servitekar tire stores, when pronounced in Japan-ese, means “rusty car” (BusinessWeek 1988). Unilever discovered that its Le Sancy soap sounds phonetically like “death to you” in certain Asian local dialects (Macrae 1991).In Asian-Pacific markets, a choice is sometimes made between the sound and the meaning of a brand name translation to avoid misinterpretation or a negative connotation or to gain a desirable “lucky” name (Schmitt and Pan 1994).If a firm decides to market in host countries that speak the same language as that of the home country where the brand name originated, chances are the brand name will have the same meaning in these countries and will be comprehended in a similar way. However, if internationalization includes entry into countries with different languages, there is a greater chance that the brand name may mean or connote something different in these other languages, and this likelihood increases as the number of languages increases.EDUCATION. The inability to read may affect brand-name comprehensionand retention in the minds of the consumer. Illiteracy can greatly reduce the visualrecognition and comprehension of the brand name, which will obviously affect the consumers attitude toward the brand. Because of consumer illiteracy, many advertising messages have been ineffective (Killough 1978), and this, in turn, caused big companies a lot of problems, even failures.THE ECONOMY. Jain (1989) suggests that standardization is more practical in markets that are economically alike. For example, Michell (1979), studying the effects of differences in economic development between home and host countries, finds that exports of British products have higher standardization in developed countries and higher variation in less developed countries. Boddewyn’s (1981) results indicate that existence of a large income difference among European consumers discourage standardization. The economic level of a country may limit the market segments that can afford a given product or a brand. Poor economic conditions may prevent people in many countries from buying some brands. Firms that market in developing countries may develop cheaper, lower-quality products that the local consumers can better afford. And mostly ,In these cases, the firms may choose not to put their high-quality brand name on their lower-quality line.TECHNOLOGY. Cross-national technological differences can be vast depending upon country to country, its people, its economy and growth rate. But Sandler and Shani (1992) suggest that the increasing availability of technology will result in more homogeneous countries, which will lead to more standardization. Television availability is a critical element in the communication media when standardization is considered. Television enables consumers to both see and hear the

brand and the product, which makes it easier for them to remember and pronounce standardized items. For example, Renault launched a television commercial in the United States to teach people how to pronounce and recognize its standardized brand name. In countries where televisions are less available, fewer people have the benefit of both seeing and hearing the brand name. Therefore, firms with brand names that are difficult to pronounce orread may consider adapting their brand names, especially when the availability of television commercials is limited.

FACTORS FAVORING STANDARDIZATION AND FACTORS FAVORING ADAPTATION

STANDARDIZATION The company’s focus on industrial products rather than on consumer products,(business

to business market) for which technical specifications are important, thus it facilitates standardization

Lower costs as a result of economies of scale in production, marketing, and R&D Similarity of consumer tastes and steady consumption patterns across different markets

that have analogous income levels and economic growth High cost involved in adaptation Standardized strategy followed by other existing competitors Centralization of authority for establishing policies and allocating resources Strong linkage of the subsidiary with the headquarters Ethnocentric orientation Foreign and domestic markets for a product are in the same stage of development so its

more or less homogenised. ADAPTATION

The company’s focus on consumer products, which are more susceptible to be influenced by own individual tastes, thus favours adaptation

Possibility of generating higher profits by meeting up with variations in consumer needs and conditions of use (e.g. skill level of users)

Variations in consumer purchasing power Differences in government regulations and policies , e.g. products’ technical standards,

local content laws and tax policies Cultural differences, namely in terms of traditions, Language, tastes and consumption

habits Adaptation strategy followed by competitors Decentralization of authority Independence and autonomy of national subsidiaries, which might develop their own

products Polycentric orientation Foreign and domestic markets for a product are in different stages of development

Sources: Levitt (1983), Jain (1989) and Terpstra et al. (2006)

THEN WHICH MARKETING STRATEGY SHOULD BE ADAPTATION/STANDARDIZATION ADOPTED??Since the appropriate strategy is contingent upon a mixed variety of internal and externalfactors ( Jain, 1989; Theodosiou and Leonidou, 2003), the advantages and disadvantages associated with both adaptation and standardization have been recognised. Hence, looking at all the recent studies in the field, its agreed that when operationalising thisconcept, it is extremely vital to assess the continuum between these two extremes – pure

standardization and pure adaptation. The work of Theodosiou and Leonidou (2003) is one of the most comprehensive review of operationalisation processes conducted till now as to which side of the coin to choose, marketing strategy adaptation or marketing strategy standardization. The vast majority of past studies in this field have been conductedin isolation i.e independently and not based on findings of earlier studies,so this way contributing this way to a greater range and diversity of findings. Hence it is clear that a good marketing strategy is the one which is a balance of both depending upon individual environmental factors, market demand, consumer consumption patterns and so on.

CONCLUSION

The long never ending debate in international marketing as to whether companies shouldstandardise or adapt their marketing approach and market entry methods while expansion continues to be a focus of research in academic literature. It is also of significant and ongoing concern for every international and multinational company and marketing practitioner who is entering the global scenario.it may be concluded that it is irrational for businesses to attempt complete homogenisation of the marketing mix, i.e taking up standardization except under clearly defined sets of circumstances and certain product categories. Yet, it is also true that the global market is becoming more and more uniform as well as homogenised – to such a degree that in fact multinational companies can market their products and services in the same way allover the world by using identical strategies with lower costs and enjoy the benefits of higher margins which hence forth equate to increased profitability.The globalisation of society is a rapidly ongoing phenomenon affectingconsumers and businesses everywhere all over the world. A phenomenon, though, which does not and in the near future ,cannot equate to a globalisation of markets. On the other hand, complete heterogeneity is also a mistake, as many researchers have constantly emphasised, especially where continued and extremely obvious dissimilarities exist between different countries and markets and even more for consumer goods.A crucial question that therefore arises is what should companies do when facing decisions inthis area? The research has shown that on a tactical level (marketing mix) choosing one of the approach and completely ignoring the other is unwise and in all probabilities is likely to damage businesses.It is advisable that companies should standardise tactics where possible andadapt them only where necessary. It is not the same as the term glocalisation (glocalisation refers to both strategy and tactics) which refers to the organisation thatis willing and able to think globally (standardise at a strategic level) and act locally(adapt at a tactical level) to meet the requirements of different nations and cultures since this would mean pure adaptation.Maintining a balance is the need of the hour.While it is logical to standardise where possible, making unwarranted generalisations from one marketing situation to another should be strictly prohibited and avoided at all costs as every market and every customer could be different with its own unique requirements, demands, needs and tastes. Marketers should understand that there exists a very thin line between the benefits of utilising a standardisation, whenpossible and desirable along side with the risks of seeking for a level of homogeneous demand.Marketers are not making one-time choices. Multinational companies focus their attention and resources on aspects of the business that require global standardisation as well as upon aspects that demand local responsiveness., simultaneously, When and where possible.Hence it is clear

that needful processes should be standardised, however, operation in local markets may also necessarily require local flexibility. Multinational companies must strive to find and maintain an correct balance. But This is not an easy task with a straightforward answer , especially when facing the everchanging environmental, competitive and market forces. Thus, deciding on the “balance” between standardisation and adaptation is difficult to achieve and a challenging process of an ongoing nature..a vicious cycle so they say.

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