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1997
1997
International Promotion:
Standardization or Adaptation?
By Paul Herbig
Abstract:
This manuscript discusses the issue of standardization (globalization) versus adaptation in international promotions. The pros and cons for each side are presented as well as the intermediate position of glocalization, especially as they relate to international promotions. Conclusions are drawn and future implications for are discussed. A future truly global consumer market segment is described.
STANDARDIZATION (GLOBALIZATION)
Ever since the creation of the first multinational around the time of the Sumerians, the ideal world environment for any merchant from any country was one that demanded only one product, designed only one way, priced one price, distributed the same, and promoted the same throughout the known world. This desire is universal, getting the most for the least effort. However, throughout most of history, this was not possible. Even the Romans understood that what was desired by the Gauls would not necessarily work for the Numbians or the Greeks and vice versa. This was the final synopsis for most of the ensuing two millennium. However, the times, they are changing. And according to many business prophets, the world is finally becoming one with itself.
With the advent of the wide availability of fast jet aircraft service and the opening of most countries’ borders, one can practically be at any point on the globe within a day, certainly within two days. Satellite dishes have made communications almost instantaneous even to the most remote parts of the world (The Gulf War was the first 'live' war in history!). Therefore, according to Levitt1, the world is undergoing a “globalization,” a converging of all cultures towards one common global culture. Levitt was not first to argue for standardized marketing, Perlmutter2 and Wind, Douglas, and Perlmutter3 described a similar concept they called geocentric orientation. Levitt’s classic article espouses that different cultural preferences are the vestiges of the past, that the peoples of the globe are becoming more and more alike, and, in general, needs and wants are becoming homogenized. Levitt stated that consumers throughout the world are increasingly motivated by the same desires to modernity, quality, and value: they all want a quality product at a low price. New technology and standardized methods of production have made global marketing programs feasible. Says Levitt: “Only global companies will achieve long-term success by concentrating on what everyone wants rather than worrying about the details of what everyone thinks they might like.” Levitt believed that market segments in a particular market are not unique, but share commonalities with other segments elsewhere: “Everywhere, everything gets more and more like everything else as the world’s preference structure is relentlessly homogenized." Companies must learn to operate as if the world were one large market, ignoring superficial regional and national differences and selling the same products in the same way throughout the world. According to Levitt, companies need to look for similarities instead of differences in the markets in which they operate. Examples Levitt provides include McDonald’s, Coca-Cola, Pepsi-Cola, Marlboro, Revlon, Sony, and Levi's.
Modern marketers, just like their brethren in Sumeria or Rome, wish to believe in this as it would indeed make all their marketing efforts easier. The evidence supporting Levitt's globalization proposition (hereafter referred to as standardization as globalization or globalizing is a vague term that has been previously defined in many other ways) is considerable. Russian youngsters rollerblade by the Kremlin; Moscow subways are filled with English language ads. Shelves of Russian stores are filled with Coca-Cola4. P&G promotes Pampers diapers worldwide with the same slogan for all 56 countries: "Even when they’re wet, they're dry." Three-fourths of all movie tickets sold in Europe in 1995 were for U.S. made movies, up from 56 percent in 1985. Seventy percent of all films shown on European television are from Hollywood. In 1995, for the first year ever, international box office receipts surpassed domestic gross; Hollywood is expecting 20 to 25 percent annual growth in revenue per film in Asia over the next five years5. Kenici Ohmae argues that customers in the Triad are becoming increasingly so much alike, with similar incomes, educational achievements, lifestyles and aspirations that expensive customization of the marketing mix by country is less necessary6. This is true since Western markets offer many commonalities: the nuclear family dominates, most consumers are highly educated, have high incomes, and are similar economically, politically, and culturally7.
Basketball is quickly becoming an American global product. Throughout the world, name recognition exists, uniforms are sold, and fans root for their favorite NBA and college teams. The NBA will open 15 NBA retail stores in Seoul in June 1996 and plans to expand to 60 stores by early 1997 selling NBA licensed products and NBA branded goods manufactured in South Korea8. American pop culture dominates the global youth and young adult markets: the sportswear is American, the sneakers, the sweat shirts, the entertainment comes from Hollywood, the music is American.
Michael Porter9 identified the forces that allow standardization to exist :
1. Growing similarity of countries in terms of available infrastructure, distribution channels, and marketing approaches.
2. Fluid global capital markets: national markets are growing into global markets because of the large flow of funds between countries.
3. Technological restructuring: the reshaping of competition globally as a result of technological revolutions such as microprocessors.
4. The integrating role of technology: reduced cost and increased impact of products have made them accessible to more global consumers.
5. New global competitors.
Global companies view the entire world as one big market believing that political boundaries do not effectively separate different target markets; customers are similar. The global company is more centralized, with the corporate headquarters deciding the overall strategy and the subsidiaries deciding the tactics to be used. A global company seeks to standardize its operations. Some marketing practices are easier to standardize than others (brand name, positioning, service standards, warranties, ad themes are easier to standardize across countries while distribution, personal selling, sales training, pricing, media selection are more difficult to standardize.)10
ADVANTAGES AND DISADVANTAGES
The alternative to standardization is adaptation. Multinational companies who adhere to the adaptation strategy believe each country should be approached separately as a different market. These companies have subsidiaries in each country in which they operate. The power to make decisions is decentralized with the branch in that specific country having a great deal of independence in its activities. When using a multinational strategy, the company enters a foreign country with no presuppositions about the market. The company either buys or conduct its own research to find out exactly what the target market wants. Finally, the company develops the marketing strategy,11 which is typically customized for that particular market. Arguments for standardization are based on economies of scale and enhanced product quality and assumes homogenized world markets and decreased costs result in lower prices and increased sales volumes. Arguments for adaptation are based upon price discrimination and the theory of friction underlying the relations between headquarters and local representatives, and assumes diverging markets and importance of segments12.
Whether a company should standardize or adapt its marketing mix has become one of the most burning strategy issues for managers around the world. Companies using a standardized strategy can achieve the benefits of cost reductions, improved quality of products and programs, enhanced customer preference, and increased competitive leverage13. Global marketing strives for efficiencies of scale by developing a standardized product of dependable quality to be sold at a reasonable price to a global market. This strategy emphasizes cultural similarities regardless of the geographic areas consumers are located. This strategy results in higher profits, lower real costs, global sourcing, homogeneity of consumer behavior, political and legal environmental compatibility, global corporate orientation, economies of scale and, and a global corporate philosophy and orientation14. A standardized strategy can also reduce costs by enhancing bargaining power with suppliers, unions, and governments by threatening them to switch production from one country to another.
Companies can achieve economies of scale by creating a standard product that will sell worldwide15. Polaroid claims to have achieved economies of scale by entering foreign markets. McCann-Erickson claims to have saved $90 million in production costs for the advertising program it developed for Coca-Cola by carrying over certain elements of the program on a global basis over a twenty year period. Colgate Palmolive introduced its Colgate tartar control toothpaste in over 40 countries, each of which could choose one of two ads. For every country where the same commercial runs, it saves $1 to $2 million in production costs alone. It has also saved millions by standardizing the look and packaging of certain brands. A standardized strategy uses fewer products. This reduction in the product line allows the company to improve the products that they offer by specializing in how to make the product better more efficiently.
A consistent company’s image across boundaries can increase customer preference since the image that the customer has of the company is reinforced. Advantages of standardization exist for those products that appeal to mobile users, tourists, or businesspersons. These customers enjoy the consistency of standardized product offerings such as Gillette, Kodak, and Hilton as they move from country to country. A strong standardized and consistent American image can also be advantageous overseas and lead to a standardization strategy; examples include Levis, Wrigley, KFC, McDonalds, Coca-Cola, Burger King, and Pizza Hut. Their marketing mix is essentially the same with few distinctions as required by the different environments. A standardized strategy also provides more points from which to attack competitors. By entering markets in the home market of the competitor or in other markets, companies can weaken competitors. The strategy can also be used in order to prevent competitors to enter a market if a company is able to enter early and effectively because it strengthens the company in that particular market.
The main problem with standardized strategies is that they are very difficult to implement and an unsuccessful standardized strategy could lead to catastrophic results for the company. The main difficulties that a global corporation will face are cultural differences, legal differences, language and communication problems, geography, parallel imports, and hedging. Ford attempted to create a world car only to find even a pan-European car was not doable as needs (e.g., air conditioning versus heating) differed tremendously across that one small continent. Terpstra said "It is the international differences in buyer behavior, rather than the similarities which posse stumbling blocks to successful international marketing. Thus the differences must receive disproportionate attention from the marketer." As it has been remarked: an American and a Japanese are 95 percent similar and 5 percent different in everything that matters. Disadvantages of a standardization strategy are that a company becomes less responsive to local needs, distances oneself from market/customer, reduces adaption to local behavior, and often becomes less competitive locally16.
Cultural Differences and Standardization
As noted previously, cultural differences abound. To not be aware of or take cultural differences into account has been fatal reasoning for many organizations. Tyson customizes more than 5,000 products to satisfy local taste preferences in 57 countries. Nestle instant coffee is produced in 200 different blends globally. Even where the basic American concept plays well abroad, the programs often require a good deal of adapting or reshooting. Five different versions of Price is Right exist, each with local participants and local hosts. Series such as the Honeymooners are licensed and then translated into the local language, casted using local actors, and sold to local networks. The award-winning Budweiser commercial using frogs to croak out the brand name, used coqui in Puerto Rico (the Puerto Rican mascot) rather than frogs because Puerto Ricans view frogs as unclean.
Coca-Cola introduced the two liter bottle in Spain without realizing that Spanish refrigerators are smaller than in other countries. The outcome was that the bottles did not fit in the refrigerators, and Coca-Cola had to design another bottle. Sales were lost over the period when the bottle was redesigned. Coca-Cola simply cannot be promoted the same way on a global basis since it is not perceived the same way by consumers across the globe: Spanish Coke enthusiasts see Coke as an excellent mixer; Italians replace wine with Coke as a dinner drink, the Chinese view Coke as a refined luxury drink for only the most fortunate.
The different laws that govern countries are important for the global company simply because it inhibits their capability to standardize. For example, according to Islamic law financial interest is considered as usury, and therefore illegal. When dealing with countries following the Islamic code, banks will buy shares in the company’s corporation with the agreement that after a certain period of time, the corporation will buy the shares back at the price of the loan plus the interest for the period. Even countries that have the same legal system will have differences in the particulars of the law. As an example, England and the United States base their system in common law, but comparative advertising in England is illegal while it is frequently used in the United States.
Communication is one of the biggest barriers that a company has to face when they become global. When advertising, global companies need to know what is the message that they are trying to convey and what is the message that they are actually conveying. When American Airlines translated the commercial “Fly in leather” to Latin American countries, the output sent was to encourage people to fly naked. Chevrolet kept the American name for the model Nova to sell it in Mexico: Nova in Spanish means "does not go." Parker made a fool of its brand when their ball-point advertising “Use Parker and avoid embarrassing situations” was translated in Spanish improperly: consumers heard that using Parker reduces the possibility of pregnancies. Four different ways exist to say tire in Spanish depending on where one is: Spanish call it neumatico, Peruvians caucho, Mexicans llanta, and Argentineans goma. Concepts and the way that they are expressed differ between cultures.
For another example, the concept of affection is universal but the form in which it is expressed is different across cultures. Kissing, an expression of affection in the West, is alien to many Eastern cultures and even taboo in some17. In English-speaking-Canada, chocolate snacks are considered kid stuff but in Quebec, in French-speaking Canada, chocolate snacks are considered as serious snacks for all ages. Meanwhile, Koreans find American chocolate bars too sweet. Not unexpectedly, studies have found that most important reason for companies not to standardize were due to differences in consumer tastes and habits and competition18. Although Hollywood seems to be the universal entertainment, refreshments differ considerably across borders: Chileans like sweet popcorn while coffee accounts for 10 percent of concession sales in Mexico; Samoans like Mochi Crunch, a rice cracker, and dried squid chunks while Polynesians prefer packaged betel nut flavored with lime19.
The distribution of products is probably the hardest task for a company to be able to standardize. The physical terrain and climate of a country are important environmental considerations. Altitude, humidity, and temperature are climatic features that affect the uses and functions of products and equipment. Products need to be modified to work properly in different environments. Rolls-Royce found that fully armor-plated cars from England required extensive body works and renovations after a short time in Canada; It was not the cold that damaged the cars but the salted sand spread to keep the streets passable throughout the four or five months of virtually continuous snow. The fenders and doorside panels corroded and rusted and the oil system leaked. Another important feature of geography is the distribution of products: Colombia is made up of vast mountains and the cities are connected by roads in which going 25 miles per hour seems like a heroic task.
Table 1 summarizes when to use standardization and when adaptation is preferred.
Table 1
When Standardization is preferred
•high costs of adaptation
•primarily industrial products
•convergence and similar taste in diverse country markets
•predominant use in urban environments
•marketing to predominantly similar countries
•centralized management
•strong country of origin image and effect
•scale of economies in production, R&D and marketing
•meeting competition when competitors produce standardized products
•consumer mobility
•if positive home country image (country of origin) effect exists
Where Adaptation is advantageous
•differences in technical standards
•primarily consumer and personal use products
•variations in consumer needs
•variations in conditions of use
•variations in ability to buy, differences in income levels
•variations in technical sophistication, skill levels of users
•strong cultural differences
•local environment induced adaptation , differences in raw materials availability, government required standards and regulations
•use by competitors.
•variations in national habits (clothes are worn longer between washings than in US; in some European countries boiling water is used for washing; washing by stream)
STANDARDIZATION IN PROMOTION.
The promotion mix is composed of advertising, personal selling, publicity, and sales promotion. International promotion has generated considerable discussion since the 1960s, mainly concerning whether international companies should adapt or standardize their foreign advertising messages. A successful global marketing strategy consists of having a common brand name, packaging and communication. Companies need to distinguish between prototype standardization and pattern standardization in global advertising. Prototype standardization only adapts to the extent to changes to avoid any problem in translation. On the other hand, pattern standardization states that the same basic creative theme is used in most markets but other executional elements are adapted when necessary. In other words, pattern standardization is tied to glocalization while prototype standardization is tied to true globalization.
International advertising enjoys the benefits of “decision simplification, ease in execution, cost reductions, operational efficiency, uniform worldwide image, and consistency in customer servicing”20.
a. Decision simplification.
Standardized marketing facilitates the decision making because marketers stop looking for different messages. The job of marketers shifts in how to adapt the global theme to the different countries and cultures that the message will appeal to.
b. Ease in execution.
Once the company has a global theme, it is easy to send the messages across the intended audience. Care should be taken when adapting the message for different markets in order to make sure that the company’s image is not damaged and that the intended message reach the customer.
c. Cost reductions
d. Operational efficiency
Operational efficiency is achieved because of the elimination of duplication of efforts done in each subsidiary. The base for the promotional campaign is set up and the subsidiaries adapt it as necessary.
e. Uniform worldwide image
By having a standardized advertising campaign, the company achieves a global image. This lead to the question of standardized branding. This is the issue of whether a company should use the same brand name everywhere in the world. The candy company Mars used different names across countries and it created confusion. Now, Mars is using the same brand name across countries. This way, companies are able to have an uniform brand image. A standardized brand offers more market efficiency by reducing advertising cost and inventory cost, but its use is a function of the degree of market and consumer heterogeneity across countries. However, some brands need to change the name because of meanings in the local language. Mitsubishi sold the Mitsubishi Pajero in almost every country, except in markets where there are Spanish customers due to the significance in translation.
It is hard to develop an universal brand name. Exxon placed a high degree of research into their brand name because they wanted to make sure that it had a different meaning in any language. It has recently been discovered that Exxon does mean something in a language spoken by African tribes in the Congo.
f. Consistency in customer servicing.
The advantage is that customers traveling across boundaries know what they expect from the company. Furthermore, the company can set the guidelines for customer service across the world. Companies such as McDonalds, Burger King, and Wendy’s have been very successful at having a consistent image as well as customer service.
Barriers
The barriers to standardized advertising include language differences, government controls, media availability, cultural differences, and agency availability.
a. Language differences.
This is the most obvious impediment in international promotion. A firm encounters more than the problem of different languages in different countries, it encounters multiple dialects and even multiple languages within the same country (India is an obvious example with 22 languages and over 100 dialects). Gillette is big on globalization but its standard "Gillette, the best a man can get" campaign had to be modified in France. The slogan there was "la perfection, au masculin," meaning "perfection, male-style." The change was necessary because the word perfection in French takes the feminine article (la) and could not be used by itself21.
b. Government Controls
A wide variety of ways exist that marketers can transmit their messages globally. Likewise, a wide variety of rules and regulations exist that can control what goes into those messages and how those messages can be sent. In Germany, it is illegal to do comparative advertising. In China, advertising has to be truthful providing proof to back up what is being advertised. In Spain, advertising of toys should have the range of prices available so parents know in advance if they can afford to buy them. In the United States, the Truth in Lending Act requires that every financial institution disclose interest charges in the form of Annual Percentage Rate. Not paying close attention to these regulations and control can result in legal problems as well as negative publicity.
c. Media Availability
Markets that have the highest proportional spending on television include Peru (84 percent of all advertising dollars are spent on television advertising), Mexico (73 percent) and Venezuela (67 percent). Markets with the highest proportional spending on print advertisement included Kuwait (91 percent), Norway (71 percent) and Sweden (77 percent). In Germany, outdoor advertising accounts for only 3 percent of the media spending versus 48 percent in Bolivia22. Whether these skewed results are due to governmental restrictions, cultural prerogatives, or economic level of development is irrelevant. These dramatic variances in media preference limits standardization.
Availability of media is another concern for standardization advocants. In parts of Africa, mass media either does not exist or is decades behind the industrialized nations. In India and Nigeria, advertising in movie theaters is popular and takes the place of non-existent mass media. In many countries, few methods exist to check what is the actual coverage of the intended media. For example, Brazil may have five television networks but just one of them, Rede Globo TV accounts for nearly 70 percent of all television advertising spending in the country.
d. Cultural Differences
Cultural differences can create problems when potential customers translate the message into their own cognition. Nonverbal or visual advertising is the most likely form of advertising that can be used globally. However, even body motions can be interpreted differently among cultures. The use of symbols, however popular as a means to counter language problems, can run into difficulties as symbols and their interpretations vary from culture to culture. When Scott Paper Products (Scott towels) are sold overseas, they feature a symbolic icon— a towel and arrow that suggests absorption. However, symbols too can have translation problems: Always packages feature a dove, in the U.S. it symbolizes peace and serenity; in Japan, however, the dove is the symbol of death. The Swastika is associated with Nazi Germany for most Western societies, thus it is a negative image; however in many Asian societies, it is a sign of good luck and perfectly acceptable to have on a package. Gerber found out the hard way that in low literacy countries pictures and symbols are taken literally when they introduced baby food in jars to Africa with its standard picture of a baby on the label; the mostly uneducated consumers thought the jars contained ground-up babies. Marketers should avoid using triangular shapes in Hong Kong, Korea or Taiwan, as the triangle is considered a negative shape in those countries.
e. Agency Availability
The agency that a company uses may not be in the country intended or the services it provides may not be adequate for the company's purposes.
HARVEY’S MODEL
Michael Harvey23 proposes a descriptive model to allow advertisers to make a decision on what aspects of the advertising process can be standardized for their products.
There are six predictor variables that influence the advertising process in foreign markets.
1. Product variables The degree of product universality influences appropriateness of standardization of various elements in the advertising process. The more culture-bound the product is, the more difficult it is to transfer promotional strategy. Food is very hard to standardize because of the cultural differences. McDonalds has been able to succeed in most of the world, but in India, they do not sell beef products. On the other hand, there are some products in which is very hard to compete without using a global strategy. Nokia, the Swedish maker of cellular phones found out that the only way they can compete with Motorola is by using a global strategy. Although technical standards are different in Europe, the United States, and Japan, Motorola designs its mobile phones to be as similar as possible to reduce manufacturing costs and Nokia had to follow suit 24.
2. Competitive variables. The structure of the competitive environment and mix between domestic and foreign competitors. For example, IBM's operation in Japan lost market share in mainframes largely because competitors undersold the company. IBM's reaction to this was to respond through aggressive promotion of its own, which resulted in slowly regaining its lost share.
3. Organizational experience and Control Variables. The level of international experience and the degree of centralization. It is easier to use a globalize strategy for centralized companies than for decentralized companies because the resistance from the local units is smaller.
4. Infrastructure Variables. The ability to standardize elements in the advertising process in foreign markets depends to a degree on the similarity of the infrastructure, such as media, advertising agencies, and production facilities between economies.
5. Governmental Variables. The restrictions placed ion mass communications in each foreign market would tend to alter the appropriateness of standardized advertising.
6. Cultural and Societal Variables. These are needed due to the differences in cultures. The more important variables in this aspect are the consumption criteria, psychological criteria, and general cultural criteria.
The six predictor variables should be evaluated in conjunction with the primary elements of the advertising process, which are research and development, creative, media, production, and post-advertising research. This model provides a means to help international advertising managers implement the results of their analysis of the variables that influence the decision to standardize advertising. The model could become helpful in deciding which approach is appropriate for the company.
STANDARDIZE OR ADAPT? A full decade has passed since Levitt's globalization proposition was issued. How have the multinationals reacted? Have they standardized or adapted? In general, industrial goods are the most likely to be successful in any globalization strategy as are modern technologically advanced consumer durables. Traditional consumer nondurables products are most likely to require customization due to national tastes and habits25. Consumers' perceptions of product preference, brand recognition, and price for a consumer non-durable branded product in diverse countries differs and consumer differences do exist in diverse countries with regard to their perception of a consumer non-durable product26. One splendid example comes from Japan. Gillette has a 10 percent market share in Japan (65-70 percent worldwide); Schick has 62 percent. Schick stresses its Japanese way of marketing (adapt) while Gillette is emphasizing its American roots (standardize) by airing the same ads it runs in the U.S. and selling Sensor in the same packages with the brand names in bold English letters and a Japanese version of it only in tiny letters in a corner. The only difference in the TV ad is that the narrator says “the best a man can get” in Japanese. Schick on the other hand, has not used a foreigner in its ads for the past decade. The Tracer TV ads show a young Japanese actor shaving before taking his dog to the beach. The product is called FX in Japanese because Schick says it is easier for the Japanese to pronounce. Schick sells razors through Seiko and 150,000 wholesalers. Gillette tried to sell razors through its own salespeople , a strategy that failed because Gillette didn’t have the distribution network available to Japanese companies. It doubled its salespeople and entertained wholesalers27. The outcome still has not been decided but Schick has the edge.
Cisco sells an industrial product. Supposedly, it should be able to globalize easily. However, Cisco discovered customer requirements varied from country to country. In Japan, office buildings lack the space for installing electrical equipment; Japanese managers place the routers on office desks. The Japanese also needed smaller routers with noiseless cooling systems that could fit under desks. German customers had specific requirements. French regulators insisted something French be in the product and demanded that Cisco test products at French-based facilities. Twenty-five core categories were finally decided upon for 40 key countries28.
Many reasons exist for a standardization strategy. The homogenization of world cultures support this strategy. Savings in the costs of developing unique products and marketing them justify it. The integration of international markets and the emergence of strong worldwide competition also justifies such a strategy. Parker Pen provides ample ammunition that the opposite may be just as true. Parker had marketing efforts in 154 countries and traditionally had decentralized operations to the individual countries with more than 40 ad agencies responsible for each niche market they were active in. During the 1980s, a centralization strategy was formulated whereupon all of the countries’ marketing activities would be brought under a global umbrella and all aspects of the marketing mix would be standardized from headquarters. Parker believed in the globalization gurus, that cultural and competitive differences were less important than the similarities. Parker chose a single ad agency and decided to use the motto, “Make your mark with a Parker” on a global basis. Graphic layout and photography was identical throughout the world. In the end, the advertising “ tried to say something to everybody and it didn’t say anything to anybody”29. The disastrous campaign resulted in the sale of the writing division, the resignation of the CEO, and the restoration of the decentralization approach.
Are we in fact globalizing? If we are then one ought to see a convergent effect of many cultural indices. Of the many cross cultural studies that have been conducted, several have been longitudinal in nature. Hofstede’s 30,31 analysis of IBM managerial value survey data is the most classic. The results from his work has been replicated and confirmed many times over. In the twenty-plus years since the original study was made, the replications (and even the later duplicate IBM study done by Hofstede) indicate very clearly that 1) no convergence is taking place, that is values of the indices are not collapsing towards a common mean; and 2) if anything there is a divergence occurring, that is to say values even among member countries of the same cluster are becoming more distant—slowly but certainly. Americans, British, Canadians, Australians, and New Zealanders although from the same Anglo background with less than 250 years spread are diverging; it is not only with humor that one speaks of the Americans and British as two nations divided by a common language.
A second argument against the globalization is the increase in ethnic awareness that is becoming almost universal around the world. This can be seen in American Indians drive to regain tribal lands, Afro-Americans heritage pride (the rise of popularity and availability of Black studies on many American colleges), the rise in interest particularly among the assimilated Americans of their family heritage, the breakup of the “republics” within the Soviet Union, and the aggressive campaign in Hawaii to restore Hawaiian native rights. The interest among Americans in knowing their ethnic backgrounds and celebrating “home country” traditions is another supporting plank among this resurrection of ethnic pride.
Why should this be? For hundreds of years America has been the melting pot, the country of assimilation of immigrants from widely diverse countries and cultures. Why should we now see a rejection of the assimilation (as can be also seen in the Southwest and South Florida by the Hispanic Americans who are seen by many as clinging to the native culture and not even attempting assimilation as did the immigrants of the past)? Why the sudden crisis in the Balkans or Russia when it appears every ethnic group wants to succeed and form their own nation? Why now? Why at this point in time?
Obviously if cultures were converging, were globalizing occurring as predicted, then the opposite reaction would be seen. What actually is occurring is to have been expected if it is a divergent world. An explanation which would seem to fit the facts is that the global age has caused most of the peoples of the world to realize how small the world really is and to instill fears of what it means to them. The return to ethnicity seen can be thought as a means of seeking a self-identity much as a Texan deepens his drawl when he goes to the Northeast or a Bostonian does likewise in Texas. One must have a terra firma to cling to. In a crowd, an individual seeks to reaffirm his own particular identity. And it appears that in this age of global information and travel, a return and a deepening of ethnic awareness and values (hence culture) provide the self awareness and sought after identity to the problem of the ever increasing closer world: “I am not a man of the World; I am a Hawaiian (or German or Scotsman)”; a man of Earth has no cultural history yet I do, so I must be something. This is not contradictory. One can have jet aircraft, faxs, personal computers, satellite dishes and yet not yield one’s own culture. Cultures assimilate institutions into their own environments. Baseball in Japan, although being played by the same (on the surface anyway) set of rules as in America, has been thoroughly Japanesized32.
Naisbitt understood this seemingly contradictory state of affairs. On one hand English has become the language of the international youth culture and American music and entertainment its official logo; Even the slang is American English: ‘rap music’ ‘computer hacking.’ Yet the divergence is seen in the Welsh, Scot, Catalan, Basque, Quebecois, Gaelic, Islamic fundamentalists, the breakup of Yugoslavia and the Soviet Union. The trend of a global culture through transportation and communications advances have resulted in an unexpected backlash. As Naisbitt comments appropriately: ”The more homogeneous our lifestyles become, the more steadfastly we shall cling to our deeper values—religion, language, art and literature. As our outer worlds grow more similar, we will increasingly treasure the traditions that spring from within,” what he calls cultural nationalism33. By threatening the cultural integrity, smaller tribes have begin to reassert their cultural nationalism.
A globalization of values is not generally occurring, the opposite appears to be taking place; cultures are diverging in their attitudes while still modernizing. This is not the first time this phenomena has occurred: the Meiji Japanese managed to modernize their country in the latter half of the nineteenth century without sacrificing their own cultural values; they called this “Western technology with Eastern Morals.” If this is the case, understanding of different cultures will become even more critical to marketeers in the years to come.
Therefore standardization does not appear to be a realistic strategy in many cases. Yet, the pure adaptation strategy is costly and inefficient. Does a middle ground exist? Yes, a grey area exists between the two extremes. It is called Glocalization.
GLOCALIZATION
Due to the difficulties that a globalization strategy face, another term has developed in recent years called glocalization34. Glocalization realizes that perfect standardization at every possible level is practicably impossible due to the constraints discussed above. Instead, glocalization seeks uniformity especially in elements that are strategic such as positioning where the tactical approaches are localized. It is a 'think global, act local' strategy35. Sony sets the long-term strategy from Tokyo, regional managers make their own product decisions locally. Just as it is not safe to say that all groups of people are the same, consumers are beginning to adopt some of the same lifestyles, but culture and traditional values do not disappear. Marketers must consider these differences when creating effective ads and relevant messages. A review of how American multinationals (many of which were used as examples of globalization by Levitt) have actually adapted their operations overseas would be instrumental in conveying the concept. Camel is a well known company for its standardized approach. In most countries Camel cigarettes are promoted as a Turkish blend of cigarettes but in Greece, the promotion is changed to an American blend of cigarettes. Camel's global campaign was adapted to different geographic areas: One part of the campaign was based on wilderness, different types of jungle or local wildlife areas36 according to cultural preferences.
The commercial from Coca Cola that showed 1,000 singing children on a hilltop was edited 21 different ways for broadcast overseas37. Coca Cola ‘s award winning commercial with Mean Joe Greene giving his jersey to a young boy who had offered him a bottle of Coke after a tough game could not be used outside of the U.S. since few foreigners understood football nor knew who Joe Greene was. The theme remained but the boy, the language and the star was changed to accommodate local interests: advertisements in South America used popular Argentinean soccer star Diego Maradona and those in Asia used Thai star Niwat.
Nike created a worldwide advertising program which it tailors to each overseas market. The basic ad is "Bo Knows" with Bo Jackson where recognizable players (internationally) exclaims that Bo knows (in local languages without subtitles). Reebok creates different localized commercials for many country markets and even uses different advertising themes. American Express launched a $100 million campaign in 1994 that covered 30 nations and 60 ads focused on “places you want to go, people you want to be." All spots around the world followed the same formula: Merchants expound on their business philosophies, then talk about the American Express card38.
McDonald’s offers a standardized menu but adapts to local environments. A berry-based drink is offered in Brazil; a fruit-based shake is offered in Malaysia, Singapore and Thailand. McDonald’s introduced McChao, a Chinese fried rice, in Japan. It also uses mutton pot pies in Australia and McSpaghetti in the Philippines. McDonald's serves coconut, mango, and tropic mint shakes in Hong Kong. Donald McDonald represents McDonald’s in Japan because the Japanese have difficulty pronouncing the letter R. Wendy’s serves shrimp cake sandwiches in Japan. It adjusted its menu in Quebec to include poutine, a French Canadian dish consisting of fired potatoes covered with cheese curds and brown gravy. McDonald's has recently opened stores in India. Realizing most Indian consumers consider cows sacred and don't eat beef, McDonald's is marketing the Maharaja Mac: two all-mutton patties, special sauce, lettuce, cheese, pickles, onions on a sesame-seed bun. Levi’s allow local manages to make decisions about adapting products to suit local tastes. In Brazil, these decisions involve distribution. There, Levi’s established a chain of 400 Levis’ Only stores, many in small, rural markets. These stores accounted for as much as two-thirds of Levi’s Brazilian sales. James Dean is central figure in all Levis ads in Japan. Indonesia ads show Levi clad teenagers driving around Dubuque, Iowa in 1960s convertibles. Levi's dominates with English language and music. Levis is casual wear in the U.S. while it is upscale fashion statement in Europe. Levi Jeans are made in Japan to satisfy the tighter fit desired by Japanese consumers. Levis developed its Femina jeans featuring curvaceous cuts that provide the ultratight fit traditionally favored by Brazilian women. Campbell's soup is the king of adaptation. Campbell Soup discovered the English prefer a more bitter taste than Americans. The British complained that the soups were too thick (they did not dilute it as they were used to eating the soup without adding water). The Japanese are anti-can (most Japanese walk to the market and don’t like to carry heavy cans). Irish and Italians prefer creamy tomato soup, Germans want rice and Colombians want spice. Australians prefer cream of pumpkin soup. Campbell's advertises its fifteen varieties of soup to Argentineans as the Real Soup, stressing its list of fresh ingredients. It advertises to Polish working mothers by emphasizing its convenience. In Poland, Campbell's introduced eight varieties of condensed zupa and flaki, a peppery tripe soup. The average Pole consumes five bowls of soup a week—three times the American average; 98 percent of Polish soups are homemade.
Campbell's sells soup in Mexico in cans large enough to serve four or five because Mexican families are generally large39. In Mexico, it sells Crema de Chile Pablano. In China, watercress and duck gizzard soup, scallop broth, radish and carrot soup, and pork, fig and date soups are popular. Campbell's opened the Hong Kong kitchen in 1991 to adapt and create recipes for soup to reach the two billion Asian consumers. The Chinese average one bowl of soup a day, among the highest per capital soup eaters in the world. It offers corn and chicken soup in East Asia. However, dog soup and shark’s fin, are out, due to their being endangered species. In Australia's Domino's Pizzas, the favorite pizzas are those with prawns and pineapples. Domino’s Pizza in Japan offers such toppings as grilled chicken, spinach, onion, corn, squid, tuna and corn salad. Pizza Hut offers its Japanese customers barbecue chicken, burdock root, potato, and macaroni salad. PepsiCo created a global brand of Lay's Potato Chips to enter the annual global market of $17 billion. American consumers partake of more than 20 pounds of salty snacks a year, 8 times the world average. Foreign eaters tend to go more for local fare, such as Asian pellet snacks (processed chunks of corn or wheat). After interviewing 100,000 consumers in more than 30 countries in 1995, PepsiCo determined that the potato chip was the most popular snack with a worldwide market of $4 billion. It is marketing all its brands of potato chips under the uniform Lay’s brand name. It also has installed new equipment to its foreign operations to provide quality and consistency similar to that seen in the U.S. Having a unified brand allows the company to buy raw materials in bulk and will cut costs by more than $200 million per year. Nonetheless, local tastes still differ: in Europe, the most popular flavor for potato chips is salt and vinegar; Poles and Hungarians go for paprika flavoring; in Asia, fish flavors top the list. PepsiCo has a shrimp-chip venture in Korea and a squid-peanut snack for Southeast Asia. PepsiCo introduced cheeseless Cheetos in China because the Chinese do not like cheese; 100 million bags were sold in 1995. PepsiCo has launched a seafood-flavored cheetos and is planning to build a new $30 million plant in China to meet the growing demand40.
Unilever’s TV commercials for Dove used the same theme and were identical but the actors were local as was the language used. Mars abandoned successful European brand names in the pursuit of standardized global brands: Raider was renamed Twix; Britain’s Marathon became Snickers and France’s Bonitos became M&M. Unfortunately the path is not as easy with Milky Way and Mars. Both are sold worldwide but they refer to different products in different countries. In the U.S., Milky Way has caramel and chocolate, in Europe it has no caramel while the European version of the Mars bar has no almond. Europeans view peanuts as something you feed horses. To them, Hershey chocolate bars taste bitter41.
Some products have certain core technologies, subassemblies or components that can be standardized on a worldwide basis, while other parts require adaptation to local conditions. Whirlpool washing machines sold in Europe or the United States were not suited to wash the traditional saris worn by Indian women. Whirlpool , in response, created a Western style automatic washing machine that is compact enough to fit into Indian homes and that incorporate specifically designed agitators that will not tangle saris. These handle only half (11 pounds) the capacity of the typical U.S. model. Most of the rest of the machine is built from standardized components. Whirlpool has designed a World Washer, a small stripped down automatic washing machine targeted to meet the needs of developing nations such as Brazil, Mexico and India. This, although being a standardized product, must be customized as local needs arise42. Whirlpool must have regional manufacturing centers due to varying size and varying consumer preferences around the world. Even though the features, dimensions and configurations of machines may vary from market to market (French want top loading washing machines, British want front loading ones. Germans want high speed machines while Italians prefer slower spin speeds), much of the technology and manufacturing processes involved are similar. Even though the products that come out of the Italian and German plans are totally different, the insides don't vary and both can be standardized and simplified into a common platform.
The elements of two global marketers, Coca-Cola and Nestle can be summarized in Table 2. It can be observed from the table that even a company like Coca-Cola, which claims to be global, has adapted considerable elements of its promotional mix in different markets. Standardization to the global marketer, has become more of a philosophy than a practical theory. Glocalization, as the use of a global theme with the adaptation as necessary around the globe to accommodate local tastes and requirements, has become the practical working model for most of the leading global marketers.
CONCLUSIONS
The issue of whether to adapt or to standardize a company’s operations is one of the most important issues in international marketing. Standardization is a philosophy that views the world as one market. This philosophy provides serious advantages that can improve a company’s competitive edge. Although standardization can substantially increase a company’s productivity and profits, the risks incurred if the standardization process is not done correctly can outweigh the benefits. Marketing a single product one way everywhere can scare off customers, alienate employees, and blind a company to its customers' needs. Companies that have succeeded say international marketing works only with some brands, some places, sometimes, and will never replace brands and ads geared to the locals43. The concept of standardization is only a philosophy, one that cannot be used in general in the real world. Glocalization is the working arm of standardization. It realizes that some degree of adaptation is necessary in the real world. Marketing leaders from more than 20 nations recently gathered in Chicago in the fall of 1996 for the first American Marketing Association Global Marketing Leadership conference. The Conference's unofficial marketing mantra became glocalization as even those marketers with brands heralded as global icons act very local44. When BMW launched its Series 7 line with a single ad campaign throughout Europe, it was met with an enormous resistance in every country save Germany: all other European consumers were peeved that the car was shown with German license plates.
Kustin's45 study indicates that over the last 20 years there has been a slow progression of standardization across product categories; however, he indicates the potential for standardization is a function of the product category and the group of markets involved. Child's46 research is extremely illuminating: most of the studies noted that conclude convergence focused on macro issues and the structure and technology of the organizations themselves. Most of the studies that concluded divergence focused on micro level issues and the behavior of people within. He concludes that organizations worldwide are growing more similar while those within organizations are maintaining their cultural uniqueness (a.k.a. Naisbitt).
The applicability of a universal approach for consumer goods appears to be limited to products that have certain characteristics such as universal brand name recognition, minimal product knowledge requirements for consumer use, and product advertisements that demand low information content. Two constraints make globalizing food products especially difficult: 1) recognizability. People want to know what their food is made of and they usually want to know how it is processed. They require recognizability in the appearance, taste, and texture of foods. Consumers impose no such requirements for durables. This usually mean a food or beverage product will not sell in countries where the people are not familiar with its ingredients. Instant coffee is unpopular in Germany, France and Italy where people drink a lot of freshly brewed coffee. 2) age. The more a product is associated with long standing usage habits, the less internationally marketable it usually is. The more recent the product, the more likely it can be globally marketed. Europeans have definite tastes regarding shoes and suits; but casual jeans tend to be universal47.
Consumer products used at home (food and beverages) are often more culturally-grounded than products used outside the home (autos). Products tend to be less culturally-grounded if they are used by young people whose cultural norms are not ingrained, people who are well traveled, and ego-driven consumers who can be reached through myths and fantasies shared across cultures48. The target market for standardization is most often the upper segment of the market (income or education) rather than with the average consumer. Consumers with low status concern, low dogmatism, high education, white collar workers, high income, have fewer cross-cultural differences than other consumer groups49. Only certain products can be marketed similarly, in some places, and only after variables like marketing mix and culture have been analyzed50. Low-priced products (McDonald's) and luxury products (Rolex) can typically be internationalized. Global campaigns appear successful for the following product categories:
•status durable goods (BMW Mercedes Benz)
•nondurable goods with prestige image (Perrier)
•global services with status (American Express Gold Card)
•global retailers that cater to the elite (Tiffany).
Products in between tend to be more culturally-grounded and require varying levels of adaptation to local tastes.
And yet, a worldwide culture with common norms does exist. This group has grown up accustomed to worldwide communications and transportation. The (urban elite) teenage culture shares a youthful lifestyle that values growth and learning with appreciation for future trends, fashion and music. Teenagers are very self-conscious about the way they look. Role models act as an important influence on their choices51; MTV has become the cable company for youth and broadcasts its English language programming throughout the world. Levis has become the clothing of choice among youth while running shoes and printed tee-shirts (usually with English slogans) complete the global youth's uniform. McDonald's restaurants represents the gathering place for youth anywhere around the globe. Coke and Pepsi are engaged in a global battle for the thirst of the world's youth population52. It is projected that in the 1990s, the size of the global teenage market will reach 1.37 billion53. Marketers have been quick to take advantage of this huge and homogeneous market: Benetton introduced colorful Italian knitware based on a global advertising campaign ('The United Colors of Benetton') to global teens; Sony introduced 'My First Sony' line of audio products for youth54.
The youth market is remarkably stable around the world; teens in Tokyo, Chicago, Paris and Sydney have more in common with each other than they do with their parents. The older generations have withdrawn into their shell a.k.a. Naisbitt and his cultural imperialism. The youth, raised in this first truly world culture, have adopted it and are being marketed to in a global way (alas still with some adaptations such as language). Perhaps Levitt was right after all but two generations too soon.
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