Factors That Influence Standardization versus Adaptation
Product Standardization and Adaptation
Companies that carry out international marketing have to research the new market first, to decide which is more favorable between standardizing their products and adapting them to the new markets. Product standardization involves the use of similar product range, pricing mechanisms, place and promotional strategies (Loukakou 2012). Adaptation of the products, on the other hand, refers to changes made to the products and services to satisfy customers’ needs in global markets (Chung 2009). Adaptation could be based on various factors such as the country’s political, economic, cultural, geographic and competitive forces as well as the level of infrastructure, technology and the distribution structure (Cateora et al. 2009). The extent to which a product is adapted when entering the market of a new country relies heavily on cultural variations between the two markets to meet the customers’ needs and increase satisfaction levels.
Adaptation could be a requirement by the local authority, referred to as product homologation (Cateora et al. 2009). A study that was conducted showed that product homologations are a greater cause for adaptation of products when compared to social and cultural purposes.
Benefits of Standardizing and Adapting the Product
Before entering a new market, companies should weigh between standardizing and adapting the products (Kondo 2000). Marketers must possess global awareness where they have knowledge of the potentials of the international market, the different political, economic and social trends in various regions before entering a new international market (Cateora et al. 2009). Where the product has a complex technological system that is hard to implement in the new market, the company can simplify that product to be able to sell it. In Asia for instance, due to the high cost of electricity, Electrolux manufactured washing machines that use cold water instead of hot water.
In developing countries, products that come in from the developed countries may need to be adapted for them to gain acceptance (Farrell & Saloner 1985). For example, Gillette, in a bid to reach the low-income earners in less developed countries, package their razor blades in reduced quantities as compared to other developed countries (Cateora et al. 2009).
Standardization, on the other hand, may be used for different reasons. Loukakou (2012) argues that standardization brings about the creation of a strong brand due to consistency across the international markets. Standardization also occurs when consumer needs and wants are homogenized because of increased levels of globalization.
Approaches to Standardization and Adaptation
Standardization and adaptation strategies in global product management depend on the nature of the product. Standardization is used mainly in highly technical products (Vrontis et al. 2009). For instance, Apple’s processes are standardized because its products which include the Mac computers, iPhone and iPad are designed to target certain consumers without regard to geographic borders. Due to the globalization that has occurred across the world, the concept of ‘world consumer’ is dependent on standardization (Vrontis et al. 2009). Standardization has also been used to promote a global image of products. For instance, the shoe producing company Nike has a slogan ‘Just Do it’ (Mullman 2007). This slogan promotes a similar message and lifestyle globally, and the company has been able to generate significant profits from this strategy. Since businesses that carry out standardization method have a centralized form of management, this has enabled them to have high levels of efficiency in monitoring the activities of the subsidiaries (Chung 2009). Standardization will bring about large economies of scale in the reduction of costs in marketing and store designs due to iterations. Adaptation, on the other hand, will result in appreciation from the local societies because of the increased customer satisfaction. (Chung, 2009). To make sales, a company that sells air conditioners in Europe moved into the Asian market and had to adapt to the designs the people preferred.
Benefits and Drawbacks of Standardization and Adaptation
Use of the adaptation strategy will enable businesses to be in a position to quickly respond to changes in the local market. This strategy may even enable the companies to have the first mover advantage (Krishnamurthy 2016). Both the standardization and adaptation method of entering new foreign markets have their pros and cons. It is possible to strike a balance between the methods and get the best of both sides (Tan & Sousa 2013). A company that has been able to do this is McDonald’s which utilizes the same systems in its franchises across the world giving the same customer experience but with different local menus in various places.
International Product Management Models
The product component model helps businesses find out the impact of the mandatory, physical, and cultural factors affecting how a product is accepted in a particular market. The model focuses on the main components of the product, support services and the packaging (Fine 2007) (Tassey 2000). These components include both the intangible and tangible properties of the product as shown;
These elements have different characteristics; the core component contains product platform, functional features, and design features. The packaging component has the brand name, package, quality, styling, price, and trademark (Zipkin 2008). Finally, the support services component has the repair and maintenance, deliveries, warranty, installation, spare parts, and instructions (Cateora et al. 2009). Regarding the core component, Apple Inc. would apply, since it uses its design features to create a brand that it distributes across the world without further adaptation. Additionally, certain packaging requirements must be complied with based on the location of the business (Cateora et al. 2009). In Japan, for instance, there is a requirement that labels must be written in more than one language on the packaging material. Regarding the packaging component, a good illustration would be Nike (ElMaraghy et al. 2013). It has created a brand, with very high-quality products, which are stylish to promote a particular lifestyle (Nike 2011). Additionally, it uses celebrities a majority of times in its adverts to attract a particular type of clientele mainly the youth and the rich. Its price is also above average to bring about a certain feeling to customers who purchase these products. Lastly, the support services are mainly used by companies that sell electric products (Quelch et al. 1992). Electric companies have the role of installing the products, and they also have to provide a warranty for their products. In some countries, routine maintenance is expected of these electronic products (Lehmann & Winer 2004).
Another model is the Black blot Model (Caballero & Simsek 2013). It contains four components namely; sales engineer, product marketer, Marcom manager, and product planner. This model brings into focus the importance of team work in an organization (Simpson & Thorpe 1995). The four components of the model should collaborate to ensure that the product is properly marketed and can thus be able to bring in maximum sales.
Models for Global Product Management
It shows the importance of the relationships of all aspects of the product. Scope shows the international market into which the product will be introduced. The quality refers to how good the product is as depicted in its functions and design. Effort refers to how much work is being put in to ensure the product can be acceptable in the new market as well as the sales force to be put in place. The company should be able to mitigate the risk faced by producing high-quality products and conducting research and development before entering the new market (Simpson & Thorpe 1995). The timing for market entry should also be favorable for the business regarding political, economic, and social conditions.
Client Organization in an International Market
The chosen client organization is Tesla Inc. into the African market. Tesla is a company that produces electric powered vehicles and solar panels (Tesla 2016). The company’s primary strategy in marketing is the presence of numerous charging stations across the American, European and Asian regions. To make a profit, the company would need to establish the free charging stations across Africa to encourage clients to buy the vehicles. The company can use standardization of the more expensive products such as the Roadster and the Model S. In the meantime; it should carry out research to know how to reach the average African by producing more cost sensitive vehicles (Vance 2013). The solar panels, on the other hand, would be standardized because they are global products that do not necessarily need adapting. Tesla Inc. would only make sure to adapt its marketing approach to reach more people in the new market. They will apply the SQERT product management model to ensure coordination between the various activities (McCarthy 2013). Additionally, they should provide after sale services whereby they install the solar panels for clients.
Benefits of a sales force in international markets
Having a good sales force in place is very important for companies venturing into foreign markets. The sales force can consist of people from the local region (nationals), expatriates and cosmopolitans. There are various advantages of using a sales force made up of locals. First, they have a better comprehension of the market given that they live in that country and are familiar with the sorts of products the people may prefer (Cateora et al. 2009). They are also aware of the social and cultural norms of the people, and they are therefore able to work properly with them. In certain multinational corporations, it is a requirement to hire locals in a bid to create employment locally. Moreover, there are highly-qualified personnel for these posts in these countries.
Case Study: Tesla Inc. in the African Market
Cosmopolitans also have benefits they bring into the organizations. They can be productive and deliver results in different environments regardless of the geographic location. Finally, the expatriates can produce good returns in markets that are recording high levels of growth (Nemo 2015). They are however expensive and are mainly used for short time periods (Sleuwaegen 1992). In conclusion, all these types of sales forces should be able to; reduce conflicts concerning various opportunities and be more focused on the achievement of set goals, have excellent decision-making skills, better communication with all other sales people, and the presence of clarity across all sales representatives about markets and product lines.
Benefits of the Communications Mix
A marketing communications mix is used by companies to achieve objectives to market its products. There are a variety of factors that affect marketing communications mix. The message is fundamental because the audience must be captivated first before they can listen to promotional information (Nemo 2015). It must then be conveyed through the proper medium to have the desired outcome. The target audience is also significant and must be determined first when building a good marketing mix. The objectives of the communication must also be identified as either to inform, persuade, and correct certain existing information among others.
The benefits discussed fit in the different marketing mix. Personal selling requires a sales person who is conversant with the culture of the region. The sales person will, therefore, be able to approach potential customers and inform them about their products and hopefully, make a sale (Cateora et al. 2009). Online marketing enables the seller to reach a large audience in a manner that is fast, cost-effective, and reliable. Direct marketing may target a specific audience or group of people and interact with them through emails, cold calls, or online. Public relations helps to excite people about a product and create a buzz so that people will want to buy it (Bhasin 2017). Finally, advertising comes in two ways. These are; by use of the media that is TV, radio, and print as well as using billboards. It is, therefore, able to reach to people in a broad geographical region at once.
Benefits of the Marketing Mix to Tesla Inc.
The client in this discussion is Tesla Inc., and the global region they want to enter is the African market. They can be able to use the communication mix in various ways to gain maximum returns. First, for the premium vehicles, they can use personal selling and direct marketing. This way, the sales force will identify their target market and approach them to inform them about the product. They can thus explain the advantages of buying a Tesla vehicle as opposed to other types of vehicles. The benefits could include; the environmental conservation, the free charging of the vehicle throughout ownership and the fact that it is very well made to promote a particular lifestyle. Since the sales people are aware of the cultural and social norms in the country, they can use them in their persuasion to make a deal. Online marketing and advertising can both be used to market the new versions that are more cost effective because they will be able to reach a wider audience. Finally, public relations will be used to create a buzz about the product using different media and hence increase awareness of the products and ultimately increase sales.
Management of the Sales Force
A company’s success is very much dependent on its sales force which explains why many companies spend much of their resources and time on it. As a result, the sales force is quite expensive and requires proper management. An efficient and effective sale force management is necessary, and it involves five stages that must be thoroughly carried out. First, there is the recruitment of the sales force. This is where the managerial and behavioral skills of the candidates are tested. Once the companies are content with the recruits, they take them through a training process. Here the recruits are taught essential ways of approaching customers, creating a rapport with them and eventually making a sale. Once the new sales force begins working, they undergo supervision to ensure they are dealing with clients in the right ways. They are also supervised to ensure that they properly manage time in closing the sales. The sales force is motivated in a variety of ways such as compensation using money where they receive a salary as well as a commission. They also sometimes get non-monetary rewards such as vacations. Finally, there is the evaluation stage where the sales reports are made to see who is best performing and who needs a push to do better (MSG Experts, 2017).
The model shows that the sales force structure is affected by four factors namely; the territory, product being sold, the customers being targeted and the nature of the products be they simple or complex.
Another model is the bottom up model. It starts with the quantity of product produced and the calling of potential customers. Then, there is the calculation of the conversion rates where the company can analyze how well their sales strategies are bringing in sales. Then there is the sales cycle to see how fast the conversions are taking place and finally, there is the average deal value. This is where the company can calculate how much each deal brings in and this could be useful in the future to analyze if things are changing in the enterprise to make changes.
Tesla Inc. and Sales Force Management
For Tesla Inc. to make sales, it would require to have a proper sales force planning model and to follow through with it. After recruiting and training the sales force, the company needs to decide how they will be organized regarding the territory to sell in as well as the products to sell (Fine 2007). The region segmentation of the sales force will depend on their cultural and social background where each sales person works where they are likely to be most productive. Their levels of skills will determine the commodities they sell. In this case, the more skilled personnel will have the responsibility of selling and installing the solar panels. The others can be tasked with car salesmanship (Halliday 2009). The sales people will have the liberty to choose their ways of reaching customers using the various promotion methods. The bottom up model helps the company to look at its numbers and decide where to improve, and it can also be used to encourage sales people to do better when their sales are dwindling.
Having a model as a framework, therefore, helps the company to make more sales because it informs the employees what is expected of them. Additionally, it assists in the division of products and territories as in the bottom up model. Having a model also helps the sales force to develop a spirit of competition where they strive to do better than fellow employees. An organization should hence manage its sales force properly and decide its strategies before it ventures into a foreign market.
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