C - Standardization vs. Adaptation Flashcards
Market Segmentation
Subdividing a market into subgroups which are - with respect to the market reaction - internally homogeneous and externally heterogeneous
Market Segmentation
Approaches for segmentation
- socio-demographic
- socio-economic
- psychographic, life-style
- behavioral
- geographic-regional
- > culture?
Market Segmentation
Criteria to decide on segmentation
- identification of segments
- accessibility
- relevance (economic effect) -> only segments if it leads to higher sales
- stability -> segments should be rather longterm
-> Fulfilled for culture?
Market Segmentation
Is it reasonable to segment markets by culture?
Identification of segments:
Accessibility:
Relevance (economic effect):
Stability of segments:
Identification of segments:
ok, but …
… concept of culture: Nation = culture? Measurement?
… not as easy to identify as gender but you can identify
Accessibility:
ok, but …
… nation = culture?
Relevance (economic effect):
ok, but …
… depends on product category
Stability of segments:
ok, but …
… value change -> culture is quite stable but it can change
Segmentation within a country
Ethno-Marketing
Adaption of the marketing mix to a target whose direct or indirect country of origin is different to the country in which they live and in which they mainly consume.
Cultural Specific Approach for different segments
Segmentation within a country
Ethno-Marketing
Is it always reasonable to adapt to ethnic groups within a country?
Whether or not ethno marketing is successful depends on the identification of the target group with their country of origin and country of living.
Segmentation within a country
Ethno-Marketing
Disassimilated, integrated, deculturized, assimilated
Disassimilated
ICO: high
ICL: low
Integrated
ICO: high
ICL: high
Deculturized
ICO: low
ICL: low
Assimilated
ICO: low
ICL: high
ICO = identification with country of origin ICL = identification with country of living
Basic Strategic Decisions
Basic Problem: To standardize or to adapt?
Strategic Options
What are the two basic types of National Operations?
Cost leadership
- reducing costs making use of the experience curve
Quality leadership
- fulfill the specific needs of different target groups by differentiation (adjust to different consumer preferences)
Basic Problem: To standardize or to adapt?
Strategic Options
Cost Leadership
Strategy, when using Cost Leadership
- homogeneous marketing-mix
- “economies of scale”
Basic Problem: To standardize or to adapt?
Strategic Options
Cost Leadership
Advantages of Cost Leadership
- price advantage
- market growth
- market share
- market entry barrier (low price level)
Basic Problem: To standardize or to adapt?
Strategic Options
Cost Leadership
International operations resulting from cost leadership
Standardization
Basic Problem: To standardize or to adapt?
Strategic Options
Quality Leadership
Strategy, when using quality leadership
- target-specific marketing mix
- unique products / quality
Basic Problem: To standardize or to adapt?
Strategic Options
Quality Leadership
Advantages of quality leadership
- customer loyalty
- image
- higher willingness to pay
- incentive for innovation
Basic Problem: To standardize or to adapt?
Strategic Options
Quality Leadership
International Operations resulting from quality leadership
Adaption
Standardization / Adaption Debate
Standardization
Necessary conditions and beneficial conditions for using standardization
Necessary conditions
- approximation of people’s needs and behavior
- existence of sufficiently large transnational market segments
Beneficial conditions
- improved transport and communication options
- international mobility
Standardization / Adaption Debate
Standardization
Anticipated consequences when using standardization
- economies of scale
- acceleration of the introduction of new products into international markets
- efficient management of international businesses
- increased handling volume
- worldwide knowledge transfer
Standardization / Adaption Debate
Adaption
Necessary conditions and beneficial conditions, when using adaptation
Necessary conditions
- external factors (cultural behavior, legal conditions)
- appropriate internal organizational structure (e.g. separation into divisions)
Beneficial conditions
- “mass customization” (e.g. flexible production systems)
- disadvantages of standardization (e.g. no USP)
Standardization / Adaption Debate
Adaption
Anticipated consequences
- higher market share in local markets
- higher motivation of local managers
- higher flexibility to handle unexpected changes in local markets
Ongoing standardization
Convergence proposition (Levitt 1963)
(Strong influence on the globalization debate)
Price/cost advantage Proposition
(if more people can afford it, more homogeneous behavior)
-> Convergence Proposition
(If they behave more or less the same in different countries you can standardize)
-> Standadization Proposition
(if it’s standardized you can centralize the firm because you are doing the same in every market)
-> Price/cost advantage proposition
(if you centralize you don’t need people in every market -> less costs)
- -> self reinforcing process
- -> pro Standardization
Ongoing standardization
Convergence proposition (Levitt 1963)
Pro and contra
Pro:
bigger clusters
contra:
generation can be different, only economic perspective
External factors
Role of industry type
A multinational enterprise (MNE) performs somewhere in this range:
multidomestic industries global industries
External factors
Role of industry type
What are Multidomestic industries?
Description, Examples, International strategy
Description:
Competition in one country is independent of competition in other countries.
Examples:
Retailing, distribution, insurance
International strategy:
Series of domestic strategies
External factors
Role of industry type
Global industries
Description, Examples, International strategy
Description:
Competitive position in one country is significantly influenced by its position in other countries.
Examples:
Airlines, semiconductors, copiers
International strategy:
Must integrate activities on a worldwide basis
Global Marketing Strategy
Glocalization
Mix of Globalization (Standardization) and Localization (Differentiation)
Global + Local = Glocal
Think globally, act locally.
Global Marketing Strategy
Glocalization
Globalization (Standardization)
- global low-cost production and selling
- global roll-out of concepts/highspeed
- low complexity
Global Marketing Strategy
Glocalization
Localization (Differentitation)
- culturally close to consumer
- flexible response to local consumer needs
- regional and local market penetration
Contingency Approach
From the S / D Debate to the strategy of differentiated adaption
Contingency Variables:
- macro economic
- micro economic
- company-specific
- product-specific
Cultural commonalities and cultural differences determine the strategy of adapted standardization
-> with this strategy the advantages of standardization as well as the advantages of adaption can be used
Positioning in the Dimensional Culture Space
Hofstede Culture Profiles
masculinity vs. femininity
collectivism vs. individualism
strong vs. weak uncertainty avoidance
strong vs. weak power distance
Comparative Analysis
Basic Idea of the comparative approach
- finding universal vs. culture-specific determinants and correlates of consumer behavior
- comparison as the method to gain knowledge
