Global marketing standardisation vs adaptation
The world of business and marketing gets more competitive by the day (Crews, C. and Thierer, A. (2003) 272-285). Processes of change such as globalisation and technological advancements pit actors in the business world against each other even more confrontationally (Crews, C. and Thierer, A. (2003) 272-285), as time passes.
Various marketing strategies and mechanisms have evolved as a consequence (Crews, C. and Thierer, A. (2003) 272-285). The actors who employ such methods often hope that the competitive edge may be gained through these means. Among these methods are branding, standardisation and adaptation strategies. These have been employed to directly influence the purchasing behaviour of prospective customers and of customers. There is no question that all of these strategies have significant impact upon the customer mindset and the ultimate strategic and business environment (Crews, C. and Thierer, A. (2003) 272-285), and there is also no question, that without an understanding of these techniques, what they are and how they operate, any business actor who wishes to be successful will be at an acute disadvantage (Crews, C. and Thierer, A. (2003) 272-285). Markets and economies have been heavily influenced through branding and other business optimisation techniques (Crews, C. and Thierer, A. (2003) 272-285) (Cronin, A. (2000) 1-10).
Markets and the environment of business has also been heavily influenced and affected through processes which are termed corporate social responsibility ideas. These have invested the ethos of ethics at the core of many corporations and marketing strategies. They have proven both beneficial and counterproductive to corporate actors and we shall see these arguments made throughout the thesis. It is immutable that the course of business involves the solicitation of custom, and the satisfaction of the most essential gatekeeper of success, the satisfied customer. Yet, this ultimate objective of business and corporate actors is not easily gained.
The customer has changed in response to the changing world. The task for the corporate actor is often merely catch-up, sensitivity and understanding. These seem to be everyday characteristics, however they have proven elusive to many and their absence may spell catastrophic for even the well-resourced businesses. However, there remains a heated debate over which marketing strategies to employ and when, and what the strengths and weaknesses of each approach is. There is also an unresolved debate over which interpretations of how each method should be implemented should be regarded as the most beneficial. This thesis aims to investigate all of the above themes and issues, how they may be considered as abstractions, how they relate to one another, how they affect one another and how they may be integrated within successful marketing campaigns, within the context of global marketing strategies.
Aims of the Thesis
The ultimate aims of the thesis are to achieve a better understanding of the theoretical frameworks which govern the domain of business strategy. This will be considered alongside the field of marketing strategies. Various theoretical terms such as standardisation, adaptation will be looked at and defined, as part of the research. The process of globalisation and how it relates to the other theoretical concepts will also be considered as part of the thesis. These concepts will all be evaluated individually and in the context of global marketing strategies.
Using these concepts as a springboard, the thesis will ultimately aim to focus on particular international marketing issues such as branding, how best to market brands, the various trajectories of purchasing behaviour and customer perspective and how these concepts coalesce within appropriate marketing strategies. These concepts will be considered in terms of how they may assist with international market entry, market research and market mix decisions. The impacts of culture and the significance of culture and marketing communications is another important theme which will be considered both directly and indirectly as an underpinning of the thesis.
The measurement of success in the contemporary business environment is increasingly being denominated in global financial performance of companies. For this reason the thesis will involve six case studies of companies who employ various marketing and business strategies. The case studies will be evaluative and will be integrated throughout the thesis as past of the discussion about how each method of marketing strategy identified may be evaluated. Each case study will involve a multi national, internationally recognised corporate actor, for whom the replication of successful business and marketing strategies and models can yield heavy gains, or equally heavy losses.
The stakes are high for these types of companies and they typically go to huge lengths to ensure the success of marketing campaigns, and this is why these types of companies will be focused on as part of the research. In general terms, and by means of an introduction, the concept of a business strategy, the concept of a brand and how these concepts relate to one another will be given some consideration. These concepts will be discussed within the particular context of marketing strategy, and the global marketing environment will be assessed in these theoretical terms. The next section will explain the methodological background to the thesis.
The methodology which will be used to achieve the aims laid out in the introduction will be primarily qualitative in nature. The qualitative paradigm of research argues that research may be carried out using the researcher as a means of research, through which to gather data which is subjectively formulated and controlled (Darlington, Y. and Scott, D. (2002) 122-125). Conversely, quantitative research refers to methods of data collection which involve stricture and objectivity (Darlington, Y. and Scott, D. (2002) 122-125). The quantitative paradigm of research is therefore more rigid and ordered than its qualitative counterpart (Darlington, Y. and Scott, D. (2002) 122-125). This however, does not imply an absence of scientific veracity within the qualitative arm of research; it merely alludes to a variation in the processes which are used in data collection (Darlington, Y. and Scott, D. (2002) 122-125). The collection of qualitative data therefore may be influenced by subjective viewpoint (Darlington, Y. and Scott, D. (2002) 122-125), and thus the outcome of the research is always more open to question on the grounds of subjectivity (Darlington, Y. and Scott, D. (2002) 122-125).
Quantitative data, on the other hand seeks to exclude the possibility of error (Darlington, Y. and Scott, D. (2002) 122-125), and sees the introduction of subjectivity, at the research stage as a flaw in research design which detracts from the possibility of obtaining reliable and uniform results (Darlington, Y. and Scott, D. (2002) 122-125). In overall terms therefore the qualitative paradigm of research is more akin to an exercise of trail and error where concepts and attitudes are probed and a final conclusion drawn as a product of the researcher’s own opinion (Darlington, Y. and Scott, D. (2002) 122-125). In overall terms the quantitative paradigm of research seeks to hypothesis from the beginning of the investigation and then endeavours to prove or disprove the hypothesis using objective scientific means (Darlington, Y. and Scott, D. (2002) 122-125).
Case studies of six different companies will be looked at in an effort to apply the different theoretical frameworks which will be looked at throughout the thesis. These six companies are McDonald’s, Virgin, Aviva, EMI Records, Dell and Orange. The financial performance of these companies will be analysed qualitatively throughout the thesis and this will be accompanied with a detailed analysis of the strategies employed by each company and whether they are more aligned to the standardisation approach or the adaptation approach to business strategy. Therefore theoretical frameworks identified as part of the thesis will be contextualised with contemporary financial data.
Case studies will be used to gather information and assimilate all of the theoretical underpinning of the research within a contemporary business framework. Case studies have been chosen as it is felt that the ultimate aims of the thesis may be met through the focus on small-scale highly specific qualitative sources of information. The subjects of the case studies have been derived from the international business corporate environment. This focus was chosen as the writer felt that it would be more advantageous to select these sorts of organisations over smaller global companies, as it is arguable that more attention is given to business modelling within these organisations.
How Theoretical Frameworks can assist with international market entry, market research and marketing mix decisions.
What is a Business/Marketing Strategy?
A business and marketing strategy involves devising a systematic way of optimising the sales of a particular product and or service (Crews, C. and Thierer, A. (2003) 272-285). This involves the planning and research of how best to introduce a particular product and or service within a given context such as a country or a market. Strategy involves consideration of factors such as the quality, price and durability of a given product and or service and the identification of market cleavages containing those who may be the most interested or susceptible to targeted marketing strategies. As an abstract concept strategy also involves recognition of what the weaknesses of a business might be. Factors such as an ineffective method of communicating with customers, an ineffectual record of retaining customers, bad or ineffectual public relations, bad or ineffectual marketing relations, bad press, low staff morale, poor organisational capacity can represent weaknesses in these terms, and the list is far from exhaustive.
Devising a business strategy involves the compilation of detailed data about markets, customers, customer and prospective customer preferences and compiling a detailed plan as to how best to integrate both sets of data within a plan aimed at maximising sales, customer satisfaction, customer loyalty, amongst other factors and ultimately augmenting the profits of the company (Barrett, B. et al. (1998) 15 and 147).
Devising a business strategy also involves understanding the mindset of customers and prospective customers, so an understanding of human behaviours and how this impacts purchasing behaviour must form part of any effective marketing or business strategy (Barrett, B. et al. (1998) 15 and 147). The factors which may be seen to be very relevant within this context are human perceptions of beauty, youth, status, quality, good service, reliability and durability (Barrett, B. et al. (1998) 15 and 147). It may be argued that the adage ‘the customer is always right’ is appropriately married to the notion of an effective marketing or business strategy, since it is the perception which counts, not the ethics of the perception, its political correctness, its nobility or its veracity (Barrett, B. et al. (1998) 15 and 147).
Marketing and business strategies increasingly seek to align the strategic aims of a company, the aims in terms of profitability and functionality with the aims of specific marketing campaigns. Marketing strategies are often considered by groups of project managers who have a semi-autonomous role within the company and for whom, it is necessary to liaise with senior management about the ultimate resources and man-power which will be devoted to the business and marketing objectives. The marketing strategy is a complex phenomenon. It is difficult to define because it is difficult to replicate, or indeed encapsulate.
Rather marketing strategies are often conceived on a pragmatic basis, with the actors involved gaining perspective from others in the field, similarly piloted projects and how these have or have not been successful. The concept of a business strategy is very much shaped by the actors who are involved in the process. Conversely, as we shall see discussed in the thesis a marketing strategy may be conceived in a more prescriptive fashion. Actors may seek to follow a plan of action which has been used for example within another country and hope to reproduce the same benefits. These ideas may prove difficult to implement as, while the process of evaluation, in terms of the outcome of the project is probably more easy to ‘pin-down’ the process of evaluation as the project is ‘live’ is not something which is as open to evaluation, as the project is in many ways immutably drawn.
Marketing and business strategies are very competitor orientated and in many ways the contemporary business environment is predicated upon the knowledge of what direct competitors are working on. In this sense, the marketing strategy of any one company or corporate actor will rarely be singular; rather it will be exposed to other actors in the field who may seek to reproduce or to imitate it. This is very different from the situation where a product is considered within the same scenario, since a product may be copyrighted or protected with patenting processes. These principles may not apply in the same way to the idea of a marketing strategy. The world of marketing strategy is fast-paced and the disadvantages which may arise from competitors imitating the project implementation design often have to be accepted as part of the world of business. The disadvantages are of course; also offset within this context, since marketing strategists will rarely be in the situation where their inspirations and ideas are not augmented by those of others.
Globalisation refers to the idea that the world is more interconnected and cohesive than it has been historically (Gattiker, U. (2001) 3-4). The effects of this process may therefore be descried as a higher incidence of movement between particular cultures and more mixed populations. Concepts are more likely to have global resonance and significance in a globalise world. What used to be targeting of sectoral cleavages by necessity has been replaced by a choice which is available to business actors; and this choice involves global messaging or more localised efforts to communication business messages to prospective customers, and customers (Barrett, B. et al. (1998) 15 and 147) (Gattiker, U. (2001) 3-4).
A number of factors have influenced the development of this process. Perhaps the most significant of these is the rise of technological developments, one important example of this being the internet. The internet has been defined as follows: ‘The Internet is not one place or one company. It is a descriptive term for a web of thousands of interconnected broad- and narrow-band telephone, satellite, and wireless networks built on existing and planned communication technology. This infrastructure is a network of networks, reaching out and connecting separate islands of computer, telephone, and cable resources into a seamless web. It connects businesses, governments, institutions, and individuals to a wide range of information-based services, ranging from entertainment (e.g., pay-per-view movies, online music videos), education, and culture to data banks, cyberspace commerce, banking and other services… (Gattiker, U. (2001) 3-4)’.
The internet has facilitated communications (Gattiker, U. (2001) 3-4), as have inventions and innovations (Howes, D. (1996) Chapter One, Inge, M. 1-20, Jennings, B. and Heath, R. (2000) Chapters 1-5), such as the mobile telephone, video-messaging and conferencing, electronic mail, instant messaging, internet ‘blogs’ to name just a few (Gattiker, U. (2001) 3-4) (Crews, C. and Thierer, A. (2003) 272-285). The fact that travel is more readily available and more accessible than ever before has also facilitated the process of interconnection (Gattiker, U. (2001) 3-7). As a secondary result of this increased level of cohesion in terms of communication, it has become possible for different nationalities and cultures to operate more closely together particularly within the sphere of business (Crews, C. and Thierer, A. (2003) 272-285).
Globalisation has joined local communities, regional communities with the global economy and the rest of the world. The idea that business cannot be due simply due to physical separation, or that business may be thwarted due to physical separateness is slowly becoming a thing of the past. Globalisation has made the internet a source of income, and even in less direct logistical terms, the internet is a mode of business transaction. Various secure methods of transaction are now possible via the internet, and in a sense these functionalities of the internet represent another lifting of the barriers which were once imposed due to physical separation.
However, conversely the internet, and the globlised features and interconnectedness which it is married to are not full-proof. The globilised world is one which incorporates arguably higher degrees of risk. The dangers associated with systems failure, technological hitches or indeed the lack of internet security which can be problematic for business remain as features of the internet which suspend its effectiveness or trustworthiness somewhat. Nevertheless, Globalisation may be regarded as a process which has shaped and influenced many of the concepts which will be analysed as part of this thesis. Globalisation has enabled business targets to be realised more readily on a global scale (Crews, C. and Thierer, A. (2003) 272-285) (Gattiker, U. (2001) 3-4).
Standardisation and Adaptation
Standardisation and Adaptation are both theoretical frameworks which are used to describe the processes of strategic change within corporate organisations. This section will define and explain these concepts and will outline the approach which will be taken throughout the thesis in relation to the wider relationship between these two and business and marketing strategies. Quantitative data will be looked at but the main thrust of the analysis will be the qualitative extrapolation of any data, since this approach is arguably more compatible with the ultimate aims of the thesis. These results will be extrapolated to give a more in depth insight into the current debate about which approach to business strategy; adaptation or standardisation is the most effective method of advancing and realising business and marketing objectives within the ultimate parameters of business success.
What is Standardisation?
Standardisation is the generic label given to extending and applying domestic standards relating to products to target markets, even where these are located in foreign markets. As a theory, it postulates that products sell more successfully when they are marketed uniformly in a targeted manner. This concept facilitates the process of branding since there will be little variation between the strategies employed in marketing strategies across different countries, thus the product which is targeted at the market is often basically uniform in terms of tangible and intangible features (Bergersen and Zierfuss (2004) 39). Many commentators including (Bergersen and Zierfuss (2004) 39) have highlighted the similarities between standardisation and globalisation, and have further argued that the process of market homogenisation facilitates market standardisation (Bergersen and Zierfuss (2004) 39).
The process of globalisation has been regarded by some as a vehicle for the standardisation model of business strategy. It may be argued that globalisation, by its very nature is denominated in similarities, and therefore the most effective way to take advantage of how globalisation has increased the marketability of products is to maximise their recognisability by adopting a uniform approach to the marketing strategy which introduces the product to the market in the first place (Barrett, B. et al. (1998) 15 and 147). However, this is an obvious rationale, and it is not one which offers a robust support of the standardisation model. Essentially the standardisation model presupposes that the strategy which introduces products into the global market is high risk and therefore it is advisable for costs to be kept down through preserving the uniform nature of the product itself.
This is the essence of how the standardisation model may be defended. However, this essential strength of standardisation is refutable by those who have argued that to assess risk is these terms is counterproductive, as economising in this way may thwart the actual availability of the product itself which is the mechanism through which the initial cost of the product research, development and marketing may be recovered. The main advantages of the standardisation model may be regarded as the pooling of knowledge and the reduction of costs within the promotion of the product at market level. It has also been argued that standardisation indirectly increases product visibility and recognition, and that it increases product safety thus stimulating customer loyalty (Bergersen and Zierfuss (2004) 39).
What is Adaptation?
Adaptation refers to the local and domestic context of business and marketing strategy (Barrett, B. et al. (1998) 15 and 147) (Edgell Becker, P. (1999) 180), and is the direct opposite of the process of standardisation. The process of adaptation refers to the marketing of products within given cultural contexts (Barrett, B. et al. (1998) 15 and 147), where marketing strategy and other business processes tend to vary according to locality and domestic situations (Barrett, B. et al. (1998) 15 and 147) (Crews, C. and Thierer, A. (2003) 272-285).
The term adaptation is often taken to mean the same thing as customisation (Bergersen and Zierfuss (2004) 39), and the general approach within each concept advocates a variation of business process to suit foreign marketing environments and conditions (Barrett, B. et al. (1998) 15 and 147) (Bergersen and Zierfuss (2004) 39). This variation or process of adaptation naturally involves an attunement to local cultural conditions and well as environment and factors such as political conditions (Crews, C. and Thierer, A. (2003) 272-285) (Barrett, B. et al. (1998) 15 and 147).
Advocates of this approach to marketing strategy argue that the adaptation of business processes allows for a more targeted, more effective individual approach to the achievement of business objectives. This follows the argument that in order for a marketing strategy to be effective it must take into account the local context where marketing activities are targeted, and in doing so they are able to attune and bolster the performance of their products in competitive markets (Barrett, B. et al. (1998) 15 and 147).
Commentators such as Onkvist and Shaw ((1990) quoted by Bergersen and Zierfuss (2004) 40) have argued that the standardisation model is a false economy. This postulation is made on the basis that while standardisation may reduce expenditure in the first place, the deficits which adaptation causes are more than compensated for through increased revenue from responsive markets, which have been targeted effectively. In making this argument the arguments, relating to increased levels of homogeneity among customers (Bergersen and Zierfuss (2004) 40) (a process linked with globalisation) which have been advanced by advocates of standardisation are rejected. The contrary suggestion is that customers are becoming more interested in and motivated by diversity and that price is not the most influential factor which influences customer purchasing behaviour (Bergersen and Zierfuss (2004) 40).
Critics of the standardisation and adaptations models have argued that the dichotomy between the two models is a false one. These critics (including Douglas and Wind (1987) quoted by Bergersen and Zierfuss (2004) 40) have argued that the most valuable way to take advantage of the market place in terms of strategy is to adopt a contingency approach which, very pragmatically combines the strengths and weaknesses of each approach and recommends that the approaches should be in a sense merged within one spectrum, with circumstances dictating which approach to lean more towards. Perhaps this argument may have its own weaknesses. It is arguably something of an extrication to critique two schools of thought by saying that they are best merged. Pragmatism is very pertinent to the idea of marketing strategy, however the idea of a strategy is to formulate a plan, and where one cannot see the theoretical parameters of a given plan, this makes it difficult to evaluate and critique it. It also makes it difficult to replicate or to attribute success to anything other that luck or circumstance.
This critique of standardisation and adaptation therefore has no parameters and while it is difficult to criticise an argument which is so abstracted, it is perhaps fair to say that the critiques of standardisation and adaptation, who advocate a replacement model which incorporates the two schools of thought have advanced a facile critique of the separateness of each school, which has not credibly addressed or isolated the weaknesses within each model. It is not therefore particularly credible to argue that the separation between standardisation and adaptation is an artificial one. In any event a theory should not be laid to rest simply because it has weaknesses.
It is acknowledged that perhaps some of these weaknesses would be ironed out with an amalgamation of the two approaches; however this is too abstracted a critique of the two models to really be credible. In any event to advocate an effective replacement of two schools of thought with one which is simply an aggregate version of the two which are the subject of the critique is a weak proposition. This is essentially to mount a critique by saying that one has a choice between the two schools of thought, however, this is an obvious proposition, and it fails to address the individual strengths and weaknesses of either model.
Perhaps a more credible analysis is advanced more persuasively by Jain (1999, quoted by Bergersen and Zierfuss (2004) 44) who has argued, in favour of the standardisation model. His argument is that there is a measurable relationship between strategy, organisational features, external environment and firm performance (Bergersen and Zierfuss (2004) 44). Jain (1999) advances this argument as a way to qualify the recommendation of Douglas and Wind (1987) as outlined above. Jain’s argument is in turn qualified by Theodosiou and Leonidou (1999) Bergersen and Zierfuss (2004) 45) who argue that the process of measurement is important, and they go further than Jain by proposing which factors would be best to have regard to during the measurement process; these factors include sociocultural (Cerulo, K. (2001) 26), political-legal, and the physical situation of foreign markets.
Branding, its importance and the challenges of the global market
The idea of branding has become critically important in the contemporary world of marketing strategy. This section will deal with defining a brand in abstract terms and a discussion will follow as to how exactly the concept of branding relates to contemporary society and contemporary business and marketing processes within this society. The idea of the brand as it operates in relation to the challenges of the global market will also be considered in this section. A brand is an image or an amalgam of images and ideas which communicate business rationales about products and services to customers, and prospective customers (Barrett, B. et al. (1998) 15 and 147). Typical examples of branding are the Mc Donald’s logo, Nike and the mobile phone company Orange.
Business is a fast paced and highly competitive environment (Barrett, B. et al. (1998) 15 and 147), and in many ways the idea of branding has grown up around these characteristics of contemporary business practices. It is also the case that businesses almost universally need to built and maintain a solid customer base, which means that customer loyalty is routinely encouraged as a method of facilitating better business performance. These characteristics of marketing and business assist with a businesses’ entry into international markets as it augments the recognisability of products and services (Barrett, B. et al. (1998) 15 and 147), thus making the quality of the product or service synonymous with the brand and/or the company.
Branding has also been referred to as corporate advertising. Indeed this is how the company Aviva, have attempted to project their image on the global marketing stage. Here is how the Aviva brand in introduced on their corporate website: ‘The Aviva brand is about life and vitality – helping our 35 million customers worldwide to make the most of their lives.Aviva became the new name for the former CGNU in July 2002. The change represented part of the group’s planned journey towards being recognised as a world-class financial services provider.
The Aviva brand brought together more than 40 different trading names around the world and created further opportunities for the group to harness the benefits of its size and international capabilities. Today the Aviva brand is alive and trading in more than 20 countries with Aviva now the world’s fifth-largest insurance group (based on gross worldwide premiums for the year ended 31 December 2005). Group chief executive Richard Harvey said: “We are creating a new and powerful international financial services brand. “The benefits of this change are significant. We are able to make more of our corporate brand, to the benefit of our trading businesses. We are also making more effective use of our marketing spend, particularly in advertising and sponsorship
In 2005, and 2006, the company ran two successful corporate advertising campaigns, publicising two slogans, one ‘playing fair with your future’, and the other ‘forward thinking’. These advertising campaigns were targeted at through the adaptionist model of business and marketing formula.
The first campaign, ‘forward thinking’ was aimed at opinion formers, investors and the financial community. As a response to poor product performance in the UK (this is discussed in more detail below), Aviva needed to bolster investment from within the UK. The advertising campaign was therefore aimed at attracting the attention of readers of the Economist and the Financial Times with themed articles running in each of these publications. This was combined with billboard campaigns in London, at the Eurostar tunnel and in various underground stations
This may be contrasted with the ‘playing fair with your future’ campaign which was targeted to address concerns in Italy and Spain where industry instability and poor customer morale had been identified. This had essentially arisen from a take over of branches of the Commercial Union in these countries. The Aviva campaign was aimed primarily at grassroots customers, and hence the more customer focused mode of address (playing fair with your future). Aviva Spain won an industry award for their brand campaign, from the magazine Actualidad Economica , and this was seen as highly significant in terms of the overall success of their targeted campaign which aimed to adapt to commercial and economic conditions within local environments, following research into these factors.
Branding must therefore be thought about in the context of the challenges involved in the global marketing environment (Shaw Sailer, S. (1997) 1-15, Sibley, D. (1995) Chapters One and Two)(Smith, H. (1949) Chapters One and Two) (Smith, M. and Kollock, P. (1998) Chapter One, Staley, E. (1939) 1-20). The global