The Standardisation vs. Adaptation Debate Essay examples
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Rapid globalization, companies keen to spread out internationally companies is faced by a very critical question of whether to standardize or to adapt its product or services. Global marketers have been trying to conclude with a particular answer to this great dilemma. Over the years as modern industry has developed, to standardize or to adapt has become a very important defining decision for the marketers. Each has its own pros & cons but to choose the right is a tough choice to make, it needs a thorough analysis and understanding of the market and only then a decision could be arrived .This essay will critically try to understand and analyse the various arguments of standardization and adaption so as to arrive at which is…show more content…
As every-market has different needs, the consumers of the market are very different, they might not have the same cultural and sociological preferences as they exist in the producers market this brings in the debate either to standardize or to localize. Therefore from the point of view of a marketer it would not be a sensible to try and sell the same product in these vastly differentiated markets as the products would simply not generate numbers. But this does not signify that the products cannot be sold at all in these markets, it refers to the need of the product to be adapted as per the target market for it to generate better selling opportunities. A classic example of it would be the automobile market, in Germany the cars are typically left hand drive (LHD) whereas these same model cars in Indian market go widely as an adapted right hand drive (RHD) variant. It is not out of any specific law but out of the driving preference and culture of the country.
In a market scenario where every company wants to go global there looms one of the greatest questions in the minds of these companies i.e., to standardize or to adapt based upon the
Within the course International Marketing, the third project deals with academic research in international marketing and internationalisation. We have chosen to focus on the international dimension of standardisation versus adaptation in service marketing.
We will mainly discuss four typologies of services by McLoughlin & Fitzsimmons (1996), Lovelock (1983), Välikangas & Lehtinen (1990), and Clark & Rajaratnam (1999) and their implications for the standardisation versus adaptation trade-off. However, we will first give an overview about earlier research done within this field.
Some services were international in scope long before the term “scientific management” was ever invented or the first marketing course was taught. Shipping was an essential ingredient in opening up early trade routes, with banking and insurance following and then facilitating them. In time, large companies emerged to operate international marine freight and passenger services, developing a network of agents in different ports to represent them. As more and more organisations offer services in foreign markets - often around the world - and as international trade in services increases, important questions are being raised concerning the design and implementation of international service marketing strategies. Research on internationalisation of services has been more limited than for manufactured goods and has tended to focus on methods of entry into foreign markets (see Vandermerwe & Chadwick, 1989; Johansson, 1990; Ikechi & Sivakumar, 1998). But there are other issues, as well; international strategies, scale and diversity, etc. Not all services are the same. Globalisation has different implications for different types of services and is affected by the nature of the process involved in creating and delivering a given service. (Lovelock, 1999) Grönroos (1999) also noted that most of the literature on internationalisation, international marketing and export strategies is geared to the needs of the manufacturing sector. However, it is a fact that international marketing of services is becoming a considerable part of total service marketing. Hence, it is not only of interest for service companies, but also for manufacturing companies. (Grönroos, 1999) During the last 25 years, 34 major studies have addressed the adaptive versus global approach to the ingredients of the marketing mix (Melewar & Saunders, 1999 in Van Mesdag, 2000); in these studies both approaches are defended. But curiously, most of these studies have looked only at a single element in the marketing mix (14 of the studies focused on advertising). Because of the enormous differences in the ability to globalise product or service categories, studies that ignore the nature of the product/service, this author believes, are of little use. (Van Mesdag, 2000)
2 Academic Research
In order to understand why the internationalisation process of a service company differs from that of a manufacturing company, it is important to make clear what characterises services and what characterises products (Edvardsson, Edvinsson & Nyström, 1992). Services have the following characteristics: intangible; an activity or a process; heterogeneous; production, distribution and consumption are simultaneous processes; the customer participates in the production; no transfer of ownership; and cannot be kept in stock. Products, on the other hand, have the following characteristics: tangible; a product; homogenous; production and distribution are separate from consumption; (normally) the customer does not participate in the production; transfer of ownership; and can be kept in stock. (Grönroos, 2000)
2.1 Back Room vs. Front Room
The literature of operations management has paid relatively little attention to the globalisation of services while emphasising the international nature of manufacturing. The fact that so much recent reporting focuses on the export of back room operations indicates that one factor in globalisation is the degree of customer contact. By definition, customer contact is not a factor where routine back room operations are involved, however, local workers will need to be trained in their native language. The globalisation of front room operations with its verbal customer contact still depends heavily on cultural adaptation of the service. One reason for communicating with the customer is to learn what the customer needs and to customise the service accordingly. When taking a high customer contact service overseas, language and culture can create barriers to effective communication. In contract services such as computer software development, the ability to customise the work to meet customer needs is important. There is little doubt that new telecommunications modes have helped the globalisation of services. American service companies are faced with the problem whether or not to adapt their services to the user’s culture or to deliver the product that made their reputation in the USA. Labour intensity is currently a factor in the globalisation of services. Many of the back room operations moving offshore are doing so to acquire less expensive, but well-educated labour. Labour intensity and capital intensity are not offsetting entities in services. Labour intensive activities can be supported by major investments in communications and computer systems that facilitate the transfer of information into and out of the process. (McLoughlin & Fitzsimmons, 1996)
Standardising a service worldwide is best accomplished when routine services are involved, as we, for example, see in the example of McDonald’s. However, the customer contact or front room operations require sensitivity to the local culture. The best approach would appear to be to hire and train locals to handle that part of the process in consultation with those who know successful approaches, which have worked in other countries. (McLoughlin & Fitzsimmons, 1996)
With the exception of professional services, customisation and complexity are not important issues with the routine nature of many multi-site consumer services such as fast foods. Multi-service development represents an alternative growth vector for a successful service firm. For the multi-service single-site strategy to be successful internationally, customers must be willing to travel a long distance and stay for an extended time or telecommunications must be substituted for physical travel. Many services such as prestigious colleges, universities, medical centres, and tourist attractions meet these stipulations. A service that decides to retain its location and attract customers from around the world will be faced with developing the foreign language skill and cultural sensitivity of its customer contact employees. It may have to pay more to get those skills. The unique features of the location (for example tourist attraction or reputation of service personnel) will dictate the selection of this strategy. Differentiation will occur through customisation and complexity of the service. Transportation infrastructure and logistics management will be required to accommodate the visiting customers. (McLoughlin & Fitzsimmons, 1996)