However, the borderline lies as the former focuses broadly on firm’s operations while the latter narrowly involves factors within the marketing mix that directly influences the customer behavior. Although this distinction is used to promote accuracy across the paper, there will be instances that corporate strategies, at least in their concept, can provide the necessary platform of discussion. With respect to product, standardized marketing differs from its opposite extreme concentrated marketing as products are introduced to a foreign country without any change*.
Although the strategy is cheaper due to absence of research and development and other operational modifications, it can be expensive and unprofitable in the long-run. . Campbell Soup Company lost millions of dollars in England by using this strategy. This is where customization and customerization become crucial wherein decentralization about product features and designs are made suited to local customers. Nokia adjusted the voice recognition capability of cellular phones in the Asian market to adapt to its crowded streets while Mister Donut’s coffee cup and donuts were made smaller and lighter for an average Japanese consumer.
Also, the adaptation implemented by Hyatt Hotels in Singapore with regards to feng shui was deemed to boost the profitability business. Lying in the middle, differentiated marketing seeks to achieve both the efficiency of standardized and local responsiveness of concentrated. As a result, the necessity for product invention plays vital role not only for faster reaction to market needs but also permanent realization of profits. The National Cash Register Company adjusted to relativity of product life cycle across different countries which constituted backward invention.
It sold crank-operated cash register at cheaper price compared to global pricing to anticipate the local response to relatively unknown machine. Forward invention, on the other hand, gave Toyota a rationale to design specific vehicles to suit the budget of less developed countries. Although this strategy is very promising in the long-run, start-up product innovation/ research and substantial financing connotes risky venture to partake. With respect to promotion, the three strategies can be distinguished in the methods of branding, product name, advertisement and the use of media.
The cost-effectiveness inherent to standardized marketing differs from concentrated as the former can take one message to reflect its intention. Considered an inappropriate promotional tool due to unique cultural and language nation factors, there are few global firms that use the former absolutely. Exxon’s “Put a tiger in your tank” was internationally recognized with still minor variations. In the contrary, the latter adapt or limit taboos and language context in the local market to avoid discouraging meaning like Dairy Association’s “Mist Stick” translation to German as “manure stick”.
To prevent futility of promotions even tendency to adversely affect behavior, Carlsberg adapted the copy to suit the culture not for the whole country but to cities and its close neighbors. Differentiated marketing is the broad version of concentrated particularly in geographical markets as it tends to be national-bounded. The best illustration can be observed in different country restrictions on advertising. Cigarettes and alcohol companies must select another kind of media aside from television in countries such as Norway, Belgium and France since the legal system does not allow such its airing.
In addition, Saudi Arabia does not allow them to present women in advertisement. As a result, not only differentiated is costly compared to the other strategies it also requires resourcefulness on the part of promoters. On other hand, relative to counterparts, the cost of advertisement has its larger return on exposure (upper hand against concentrated) and flexibility (against standardized). With respect to pricing, standardized model will price the same-level across different countries while concentrated can obtain at varied pricing according to internal and external factors to the firm.
Standardized pricing is more resistant to government scrutiny since it inhibits dumping practices which is considered an unethical business practice. As a result, concentrated and differentiated pricing are more volatile for policing firms or governments especially in the growing presence of dumping areas and gray market. Stelco sued dumping practices in 2000 in a Canadian tribunal to resolve unhealthy competition form cut-price steel imports allegedly from the United States. The profit-based motive of cross-country distributors enabled them to establish price distortion.
However, there are times that distortion is fair translation of cost incurred. Standardized pricing would be impractical for firms who usually ships merchandize form different country locations. In effect, the exporting firms have the right to increase the price due to transportation and tariff expenses. On the other hand, technology-based firms have the opportunity to use standardized pricing and still be operationally healthy and ethical which can be difficult and doubtful from the other models. On-line training that can be shared through internet-connection can have the same service charge across different countries.
On a different approach, General Electric Company maintained a standardized pricing to its top 100 customers by augmenting service-oriented activities to counter the call for commodity prices of its products. As a result, it was able to prevent devaluation of its produce and even increase its profit margin to a record high. With respect to place, the choice of marketing model depends on the capability of the firm to establish retailing stores abroad and the complexity/ simplicity of distribution channels in the local market.
For non-commodity goods, standardized place will depend on the former to remain competitive, if not possible. McDonalds have been expanding to numerous countries, although the home office still dictated accreditation of franchisee or building a subsidiary. In commodity products, Procter & Gamble had to address the issue of huge mark-up in the price of its soaps due to complicated distribution system in Japan which has at least five stages of channels before selling it to end users. In this case, concentrated place is likely to gain success in the local market that will also necessitate price escalation.
Multinationals in India, which is characterized by millions of independent retailers selling commodity products, will also gain advantage when it used concentrated place. On the other hand, in automobiles, the use of differentiated place emphasized both the importance of having controlled host country office and adapted structure of channels. General Motors had ordered its country managers to coordinate its actions to top-managers in the headquarters to monitor sales but still they can respond to local distribution patterns.
As a result, the consolidated performance of the firm improved. Differentiated place involves flexible coordination with the home office and host distributions. As long as the latter follows the regulation of the headquarters, the model will still be operational. Consequently, to exploit the advantages and anticipate disadvantages of the three models, there is a need to describe the required/ existing organizational structure to determine the firm’s appropriate marketing strategy.
Concentrated model is likely to have operational decisions decentralized to overseas units to comply with local requirements such as cultural, political, economic and legal issues. Country units focus in competition with local firms and can win such competition because of its higher attention to local desires and needs making them customized. However, the model undermines the cost-effectiveness of economies of scale while coordination problems may arise due to unique mind-set of local and home administrators. Second, the standardized model has a centralized and controlled strategy maker through the home office initiative.
The home office aspires integration and interdependence among subsidiaries to intensify the efficiency in producing the same products using the same technology and machineries with little need of research or product modification. At the rare times it developed a new product, its value to the firm is positively disproportionate as subsidiaries would impart the products success if the market respond to this innovation. Due to sharing of resources, coordination costs that can have internal/ personal costs increases.
The model also undermines the potential of securing higher profits through local responsiveness while products tend to be mass-produced. Lastly, differentiated model would likely have flexible coordination between home office and subsidiaries. This allows the communication lop to be completed making its possible for a responsive home and subsidiary offices. Reconciliation, both financial and business, is important to have optimal gain in global efficiency and local responsiveness. As standardize model requires cooperation, this model has great emphasis on collaboration.