Standardization Theory in Global Marketing Strategies

The aim of this paper is to examine the principle of global standardization in global marketing campaigns and to explain the normalization process. This article is a philosophical work focused on prior work on standardization theory. A three-factor model was used to plan the unification of global marketing campaigns (Puka, 2013). These considerations include customer similarity in response to the marketing mix, homogeneity within the scale of economic independence, and movement of competitive advantage. The model explains standardization and its complexities by using feedback effects (Doole & Lowe, 2012). There is, however, a need for further empirical tests of the model through the development of valid and reliable measures of the three aspects. In addition, the model can be utilized in future studies to outline the effect of a variable on an organization’s ability to adopt a standardized international marketing strategy. Practically, the implication would be that the model helps in making decisions regarding standardization within a global marketing setting.

Introduction

There has been reported improvement in international trade, a rise in the intermingling of major economies around the world and the progress of globalization. These developments imply that decisions regarding standardization of marketing strategies may remain relevant topics for marketing practice and educational research. Pušk (2013) asserts that despite the critical studies on standardization of marketing strategies over an extended period, the theoretical basis for standardization studies is still weak. A few attempts have been reported to designing a conceptual structure, which would inform on standardization matters. Additionally, the current theoretical basis of standardization focuses on the views of customer homogeneity and the progress towards uniformity (Mellahi,2010). Whereas that correlation among consumers is very significant, the aspects of marketing strategy exceed customer’s consideration. Particularly, competition is high in the formation of marketing strategy and therefore affects decisions concerning the level of standardization in regards to marketing strategy. In this work, a unification framework is created while acknowledging the significance of customer homogeneity tries to exceed the focus on customer identity through the assimilation of theories of competition. The framework recognizes three complex ideas as critical to the process of standardization. These are the similarity in consumers’ reaction to the mix in marketing, homogeneity within the scale of economic freedom and change of competitive advantage. The three ideas act as important drivers of the range of standardization (Mellahi,2010). The three constructs are also responsible for driving the scale of standardization and act as moderating elements through which more elements affect uniformity. By analyzing these ideas, it is possible to explain how the effects of feedback connect with the ideas in configuring the development of standardization.

Literature Review

Global standardization refers to the capacity to apply standard marketing globally. Until today, standardization lacks standard interpretation of standardization. The conflicting definitions of the term in clued the view of standardization as a traditional marketing plan and as a common trend of allocation of resources among elements of marketing mix. Standardization is perceived as a traditional marketing plan because the style of resource allocation constitutes only a single feature of marketing, albeit a crucial one (Suzuki,2011). Just like there have been varied explanations of standardization, studies done before have also had varied interpretations regarding the advantages or limitations of standardization and if standardization is a proper strategy. Studies concerning benefits of standardization of marketing strategies have progressed in three divergent directions. One class of research supports standardization approach; a second category supports adaptation plan while the third group of research centers on creating a contingent structure that recommends scales of standardization. The primary argument for unification was suggested by Mellahi (2010), who stated that globalization forces controlled by technology were standardizing markets and that individuals in charge of marketing ought to utilize this pattern by adopting a standardized marketing strategy. Using the “Triad” market comprising of Japan, USA, and Europe as an example it was proposed that these markets displayed homogeneity and because they constitute key markets within the global economy, it was appropriate to adopt a standardization strategy (Mitic, 2013).

The primary arguments of the advocates of standardization consequently base of the presumption of creating a homogenized demand across the world. This homogenized market reveals itself within an international customer demand for small cost and high quality owing to the effects of technology. Additionally, it is argued that organizations could utilize technology to use a standardized way of creating high-quality products and affordable costs for global markets (Doole, 2012). Nonetheless, other studies have suggested that markets remain to differ despite globalization forces. Hollensen (2017) asserts that the manifestation of standardization was weak and that competition in the world markets did not require uniformity. Even within nations or markets that seem to share a common culture including the European Union, the disparity in consumer needs remain. Furthermore, in markets with homogenous consumer needs, there were still imbalances in the criteria used by customers to decide. Similarly, the advantages and feasibility of standardization were questioned considering that in numerous contexts the production costs may not significantly contribute to the total costs for the organization to gain from economies of scale. Also, standardization may not be feasible due other the many differences seen between countries and the numerous constraints experienced by many markets. Studies for a contingent perception of standardization have recognized various aspects upon which standardization would be possible. These aspects are many including environmental elements like economic, political and legal, economic aspects of economies of scale, organization features like firm orientation and financial issues like economies of scale (Doyle, 2013).

A five-aspect taxonomy that effects standardization was developed which includes nature of commodity-related aspect, target market aspects, organizational aspects, product quality aspects and market position aspect (Puška, 2013).Despite the suggested framework being useful in laying the basis for standardization, there has been hardly any efforts to improve the structure. Also, owing to the previous emphasis on the centrality of consumer homogeneity towards the debate of standardization, the significance of competition although viewed as a factor, appears to be disregarded. In this work, the primary role of competition in any regard of standardization strategy will be depicted. Besides the lack of focus on competition in previous studies on standardization, the high number of aspects which have been recognized in the literature as affecting uniformity, suggest that there is a need for a planning structure which is conceptually cheap and realistically helpful in addressing the issue .Ideologies of bounded rationality, as well as the application of mental models in simplifying the environment by managers, propose that a minority of decision makers in marketing would consider all these aspects in making standardization decisions (Mitic,2013).

Different researchers advocate for the belief that executives contemplate only a few variables in making decisions of standardization. Discussions in the following text suggest and form a conceptual foundation to deal with the issue of integration and cheapness. The framework recognizes three main complex factors centered on the environment, competition, and consumer (Mellahi,2010). In this structure, standardization is described as a continuous sequence placing adaptation of all marketing elements at the beginning at the starting point and normalization of all factors of marketing plan at the end.

Conceptual Framework

The perception that competition is key to marketing strategy within a market-oriented economy is highly appreciated by most of marketing practitioners and academics (Doole, 2012). This notion creates the foundation for numerous field of studies such as marketing orientation, theories of competition, consumer behavior and relationship marketing. Mitic (2013) reports that in conceptualizing global marketing strategy, three different viewpoints are combined namely integration, configuration-coordination and standardization. Ideologies of competition also propose among the primary goals of the organization generally and specifically marketing strategy is to build sustainable competitive advantage. A group’s expansion of its markets across new geographical areas in the world prompts a major question of whether the organization can continue to use its current marketing strategy to build sustainable competitive advantage (Puška, 2013). If the team can preserve its competitive advantage using its current marketing strategy, it will be possible to facilitate a standardization strategy. Despite the significant role played by competition in marketing strategy, studies on the function of competitiveness in standardization are said to be comparatively scarce. The limited competition aspects which have been recognized as operating in standardization comprise of market competitiveness, the number of competitors and market share(Hollensen, 2017). Provided the importance of competition in marketing strategy the comparatively weak focus on competition in studies on standardization ought to be rectified. Furthermore, the competitive elements which have previously been reviewed in studies; market competitiveness and market position constitute the results of what is regarded an essential issue in standardization; the mobility of competitive advantage. Mitic (2013) argues that standardization is majorly dependent on an organization’s capability to shift its competitive advantage between market “M” and “N” and not the presence of competitive advantage in any of the two markets by itself. If the level of shifting competitive advantage between the two market rises, the facilitation of standardization strategies occurs.

Considerable studies have been done regarding the significance of consumers in making standardization decisions. The level of studies relating to the function of the user in standardization was so enormous that it resulted in the conclusion that the theoretical basis of the uniformity argument focuses on the view of customer homogeneity or/and the shifting to homogeneity (Mellahi, 2010). Evidently, many variables can be used to describe customer correlation. This framework majorly highlights the consumer identity reaction to marketing mix rather than center on customer relationship. Homogeneous consumers like those who share similar demographics regarding income and age may react differently to similar marketing prompts. In this case, such consumers would not qualify a strategy of standardized marketing. Homogeneous consumers may possess varied needs, and different users may possess similar needs (Suzuki, 2011). Nonetheless, consumers regardless of type if their reaction to marketing mix is similar they qualify for the strategy of standardized marketing.

The environment plays a significant role in making decisions of standardization due to the restrictions it places on the organization’s freedom to function (Doyle,2013). Therefore, the similarity of economic freedom across markets causes normalization strategies to be facilitated. Conclusively, the level of marketing standardization would act as a function of customer homogeneity range in response to the similarity of economic freedom within markets, change of competitive advantage and the marketing mix (Doole, 2012). Based on previous discussions, a normative structure for standardization is proposed. This framework comprises of three complicated establishments namely; similarity in economic freedom; the change of competitive advantage and; consumer reaction to the marketing mix. Based on this framework, any aspect will affect standardization only if it affects the three establishments (Doole,2012). For instance, aspects of economies of scale which is a segment of competitive advantage can affect uniformity. This effect will be determined by whether it is felt by the other dimensions. In the normalization setting, it is noted that competition is the greatest hurdle standardization of strategy within industrial commodities. Competitive advantage is drawn from different sources including benefits like superior entrepreneurship, superior skills, superior product quality and excellent infrastructure (Hollensen, 2017). While the perception of competitive advantage can be adopted, the subject of change of competitive advantage is yet to be accepted despite being regarded as the greatest driver of competition across the globe. There is a variety of resource variables which may act as the prospective basis of competitive advantage. These resources may range from raw materials to management and innovation. Provided the availability of these many resources it is important to determine the settings that favor transfer of competitive advantage (Hollensen, 2017).

An organization which has key competencies can comfortably standardize their strategies of marketing unlike those without skills (Suzuki, 2011). For example, a company like Honda can exploit its essential ability of engine model to build technological management and create the standardization of its engines across the world. Likewise, organizations that have a high level of market control can easily transfer competitive advantages over markets and adopt the normalization strategies of marketing unlike those whose market power is little. Evidently, previous studies show that many variables may potentially determine consumer homogeneity response. The separation of the compound establishment of user identity into four aspects of consumer homogeneity reaction to the place, product, promotion, and price constitutes the beginning of understanding the creation (Mellahi,2010). Succeeding classification of determinant elements will need an analysis of the link between the aspects and the depth of consumer homogeneity reaction to the marketing mix. For instance, homogeneity in price responsiveness between consumers from two distinct markets has a high likelihood of affecting the level of consumer identity in response to price. However, there may be hardly an impact on the three aspects. Nonetheless, other factors like education can affect the level of consumer homogeneity reaction to product and promotion but fail to change the degree of customer identity response to place and price.

Several studies analyzing trade across borders have established the link between regulatory environment and economy to be adamant (Mitic,2013). Connections are also observed between regulatory framework and entrepreneurial occurrences. From the Californian consumers traversing the border to Nevada for gambling purposes to Canadians traveling to the USA, to purchase cheaper priced shoes, restrictions bear substantial effects on the capacity of an organization to undergo standardization. The connection between the environment and normalization of market strategy can also be perceived through the set of studies on related marketing processes (Doole, 2012). When marketing techniques are homogeneous within markets, chances of facilitating standardization are higher unlike when there are no similarities. Doyle (2013) asserts that freedom of economy affects the environment by altering the learning and motivation of people, a matter which is of paramount significance in securing economic effectiveness. The presence of homogeneity in economic freedom in markets causes institutions and individuals to experience similar environments .As a result, when other settings allow similarity in customer reaction to the marketing mix, as well as the ease of transfer of competitive advantage, a greater level of homogeneity in freedom of economy will entice the marketer to adopt standardization.

The lack of uniformity within the free economy discourages the marketer from adopting standardization policies (Mitic, 2013). The current studies help to recognize essential features upon which consumer homogeneity facilitates a standard reaction to the marketing mix. However, hardly any emphasis has been placed on the hidden greater order systems that cause uniformity between consumers upon these characteristics. Strategies of standardization are ever changing, and the normalization level alters with time. The most significant majority of commodities are not initiated concurrently on a world basis. Rather the standard of standardization develops with time, and it is denoted as a function of the environment, the competition, and the consumer.

The response to marketing mix by the user constitutes a demand establishment and similarity in this request creation and is best interpreted as the product of feedback effects. For instance, consumer funding within technology can produce homogenous feedback to the commodity considered as beneficial to the organization (Hollensen, 2017). Upon understanding these benefits, the group increases funds to encourage more customer investment in its technology. A rise in the number of clients investing in the technology causes the organization to apportion additional resources to attract more consumers. This real feedback effect produces the similarity in consumer reaction thereby enabling the standardization of marketing strategy.

Other forms of feedbacks effects which may promote customer similarities comprise routine dynamics, network learning dynamics, equity economies of scale and utility effects (Suzuki, 2011). Franchise techniques illustrate a type of system that has become successful as result of economies of scale within brand placement. When McDonald creates more markets, its success in brand equity placing will be leveraged because the consumers from new markets will move to new locations to promote its expansion. However, if no new markets are created, the users will remain in the same position. Additionally, global advertising promotes economies of scale by influencing consumers directly through a brand position as well as by word of mouth. The similarities in consumers’ feedback to McDonald is again encouraged by using conventional rules whereby consumers visit the premise because they are sure of what they will receive. The character of McDonald’s customers across the world adopt similar rules that consequently lead to the effectiveness of use and allocation of less cognitive resources. Dynamics of network learning can result in similarities in reactions to marketing mix as a consequence of the creation of consumer systems which have the same understanding of the commodity (Doole, 2012). This same understanding consequently acts as a way of promoting the first customers who react homogeneously to marketing mix provided by the seller. Various networks that sell directly like Amway and Tupperware managed by adopting a similar strategy (Mellahi,2010). Some direct selling networks such as that of Tupperware and Amway succeeded by following such a strategy.

The Importance of Feedback Effects in shift of Competitive Advantage

The easiness at which competitive advantage is transferred constitutes a supplying establishment which can be interpreted as an outcome. Effects of feedback which are particularly useful in explaining the ease of moving competitive advantage represent precisely “Asset position feedback dynamics”(Mitic,2013). These include economies of scale related to development and research, brand equity as well as economies of scale associated with the structure of manufacturing cost. The actual response of these economies of scale enables the transferability and sustainability of competitive advantages. For instance, the oil market invests heavily in fixed assets for exploration and production (Mitic, 2013). As a result, the economies of scale relating to manufacturing and distribution facilitate the entrance of Exxon-Mobil into current markets and ease the shifting of the current feedback advantages and competitive level within the new markets. The responses from the new markets motivate Exxon-Mobil to improve on economies of scale by improving on competitive advantage. Consequently, investments are expanded to increase economies of scale. The exact effects of feedbacks emanate from economies of scale which thus enable the movement of competitive advantage between existing current markets (Suzuki, 2011).

If the prospects of an organization to move competitive advantage between markets are great, the similarity of consumer reaction to marketing mix different markets also increases (Doole,2012). In such a case the homogeneity in economic freedom is also high between various markets thereby making it easier to standardize the marketing strategy. Also, the capacity of each decision factor to encourage standardization will be determined by the effects of the aspect upon the three aspects of movement of competitive advantage, the level of freedom of economies and, the similarity of consumer reaction to the marketing mix. For instance, the decision factor like the degree of homogeneity in an organization’s competitive setting between different markets would affect standardization due to its effects on the easiness of transfer of competitive advantage. If a similar group compete across several markets, and the degree of homogeneity in the organization’s competitive setting is at the top, the strength of the competition will reduce the possibility of transferring competitive advantage and further standardization (Doyle, 2013).

Correlation in decision elements like consumer culture in various markets can improve the similarity of consumer reaction to the marketing mix (Suzuki, 2011). The improvement of uniformity would lead to greater level of standardization. Homogeneity in legal processes within different markets can improve freedom of economies in various markets and therefore result in higher level of standardization. A better understanding of the impact of particular decision element on standardization requires an analysis of its effects on a single or multiple factors. This study will help in identifying the link between the said decision element and the subject of standardization in marketing strategy. Furthermore, the purpose of feedback effects is particularly useful in appreciating the reasons of how and why standardization is applied in marketing strategy.

Conclusion

The unification model comprising of three aspects has a threefold importance. First, it offers a conceptual model which is applicable in recognizing and appreciating the effects of different variables relating to adaptation and standardization. Secondly, the model describes any hidden dynamics of standardization by the application of feedback effects (Mellahi,2010). The third importance involves the level of freedoms of economies within various markets and, the movement of competitive advantage. By presenting the conceptual structure of standardization, the theory can help in making decisions and also offer an opportunity to further studies regarding the effects of decision factors on the strategy of normalization (Doole,2012). Hitherto making decisions on standardization, it is recommended that manager analyses the setting of the decision while considering the three aspects. It is acceptable for the manager to proceed with normalization if the three elements appear favorable. Doyle (2013) recommends that the manager analyses the prospective responsibility of the feedback effects towards the applicability of the actions of standardization to appreciate the long-term consequences of decisions made. It is required that the manager becomes informed on the dynamics of the level of freedoms of scale, movement of competitive advantage and, the consumer homogeneity feedback to the marketing mix to acknowledge the purpose of feedback effects (Doyle,2013). The framework can be used to pave the way for further studies by identifying and analyzing for further decision elements can affect standardization. For instance, the feedback effect has been identified from regular occurrences as aspects that impact demand as well as supply factors particularly significant in making decisions of standardization. There is need to conduct more empirical studies to justify these effects and to explain the ideas of procedures as an aspect impacting both supply and demand side issues particularly significant in making standardization decisions of franchising (Hollensen,2017). These general perceptions display initial stages in appreciating the ideas of sustaining competitive advantage, the level of freedom of economies in regards to strategies of marketing.

The idea of maintaining competitive advantage has undergone intensive research. Nonetheless, the idea of the change of competitive advantage, proper settings for the modification of competitive advantage and its importance are yet to be explored (Puška, 2013). On the same note, the level of freedom of economies has only been emphasized in the setting of competition theories, but its effect on the strategies of marketing have been disregarded considerably. Further research will help in appreciating the international environment as well last the growth of world marketing strategies about standardization.

References

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