Global Versus Localized Marketing Strategies

Introduction

In recent years, considerable attention has been focused on the debate over global versus localized marketing strategies for firms competing in international markets. In this assignment, we are going to analyze the debate over global versus localized marketing from a cross-cultural consumer behavior perspective. We also discuss the type of products or services for which a global marketing and advertising strategy whether is it appropriate or not. We will analyze the logic of the global marketing strategies from a consumer behavior perspective of two companies, Samsung and Coca-cola, which using global marketing strategies for one or more of their products or services. We will also discuss the consumer behavior factors that necessitate the use of a localized strategy by McDonald.

Global Versus Localized Marketing Strategies

A truly global marketing strategy would aim to standardize some elements of the marketing mix across the world, while customizing others. The correct approach would be to identify the various value chain activities within the marketing function and decide which of these can be performed on a global basis and which can be localized.

Typically, marketing includes the following activities:-

Some of these activities are amenable to a uniform global approach. Others involve a great degree of customization. Within a given activity, parts can be globalized and others performed locally.

Product design & development is an activity where the potential to globalize needs to be examined carefully. A globally standardized product can be made efficiently at a low cost but may end up pleasing few customers. On the other hand, customized products targeted at different markets across the world may be too expensive. The trick, as in the case of other value chain activities is to identify those elements of the product which can be standardized across markets and those which need to be customized.

Types of International Strategy: Localized vs. Global

Localized Strategy

* Product customized for each market

* Decentralized control - local decision making

* Effective when large differences exist between countries

* Advantages: product differentiation, local responsiveness, minimized political risk, minimized exchange rate risk

Global Strategy

* Product is the same in all countries.

* Centralized control - little decision-making authority on the local level

* Effective when differences between countries are small

* Advantages: cost, coordinated activities, faster product development

A fully multi-local value chain will have every function from R&D to distribution and service performed entirely at the local level in each country. At the other extreme, a fully global value chain will source each activity in a different country. Philips is a good example of a company that followed a multi-domestic strategy. This strategy resulted in:

* Innovation from local R&D

* Entrepreneurial spirit

* Products tailored to individual countries

* High quality due to backward integration

The multi-domestic or localized strategy also presented Philips with many challenges:

* High costs due to tailored products and duplication across countries

* The innovation from the local R&D groups resulted in products that were R&D driven instead of market driven.

* Decentralized control meant that national buy-in was required before introducing a product - time to market was slow.

Matsushita is a good example of a company that followed a global strategy. This strategy resulted in:

* Strong global distribution network

* Company-wide mission statement that was followed closely

* Financial control

* More applied R&D

* Ability to get to market quickly and force standards since individual country buy-in was not necessary.

The global strategy presented Matsushita with the following challenges:

* Problem of strong yen

* Too much dependency on one product - the VCR

* Loss of non-Asian employees because of glass ceilings

Japanese companies such as Matsushita and also Sony have been quite successful in marketing standardized versions of their consumer electronics products. These companies had limited resources during their early days of globalization and identified features which were universally popular among customers across the world. Global economies of scale helped them to price their products competitively. At the same time, these companies laid great emphasis on quality. As a result, as their products, even without frills, began to appeal to customers. Many of Sony's consumer electronics products are highly standardized except for the parts that meet national electrical standards.

In the case of industrial products, standardization may become unavoidable if global customers coordinate globally their purchases. This seems to be true in the PC industry and companies such as Dell are taking full advantage of this trend. This is likely to accentuate further, as companies increasingly feel the compelling need to coordinate their corporate information systems on a global scale. Some often choose to replicate the computer system in their headquarters to minimize the costs involved in writing new programs and training staff.

In industries characterized by high product development costs and great risk of technological obsolescence, there is a great motivation for developing globally standardized products and services. By serving large markets, costs can be quickly recovered. Even in the food industry, where tastes are largely local, companies are looking for opportunities to standardize. Even if identical offerings cannot be made in different markets, companies