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Contemporary Directions in Marketing

01 Aug 2016Business Essays

Globalization of world economy is making a great impact on the way marketing strategies are carried out worldwide. For at least twenty years now there has been vast growth in global advertising, which is targeted primarily at an average global consumer, irrespective of the culture he belongs too. By means of global advertising, multinational companies attempt to generate standard brand images in all countries.

In the meantime, they hope to save financial and marketing resources through relying on the uniformity of strategies and addressing to only a few international advertising agencies, responsible for the creative part. However, the faster the pace of globalization is getting, the more doubt appear that such a unified target consumer does exist and the more emphasis is laid on a more local perspective. The current paper seeks to summarize the recent research in the area, published after the year 2000, so as to consider the changing share in the use of standardization and localization vehicles as approaches in global marketing.

The title of the article “Advertising Localization Overshadows Standardization” (2002) by Ali Kanso and Richard Nelson is suggestive in itself revealing the main tendency to the localization of action in global marketing. The researchers conducted a survey among the American and non-American advertising executives in the Swedish and Finnish subsidiaries of multinational corporations to find out what is the ratio of standard and local approaches and whether cultural sensitivity depends on the nationality of the manager. Overall, the authors distinguish between three schools of thought as far as the issue of global marketing is concerned: standardization, localization, and compromise. While the proponents of standardization claim that the world is becoming a common marketplace, which leads to the uniformity of an average consumer worldwide, their opponents who cling to localization state that advertisers have to consider insurmountable barriers among countries. They are differences in culture, taste, media infrastructure, and economic development, and consumers' resentment of international corporations' attempts to homogenize their differing tastes and cultures. Given these considerations, it becomes necessary to design specific advertising programs to achieve impact in local markets 

Finally, there has been a growing group of scholars who believe that none of the previously mentioned approaches is either possible or effective. Thus, they try to redefine the basic concepts by differentiating between prototype and pattern standardization. “Under prototype standardization, as it has been historically understood, the international firm in various countries would use the same advertisements or campaigns with the only differences being appropriate translations and a few idiomatic changes. On the other hand, under pattern standardization--a trend that seems now to be a more flexible form of standardization--the campaign, including the overall theme and individual components, is originally designed for use in multiple markets” (Kanso&Nelson ,2002) The authors of the study seem to support the compromise approach in its pattern version and confirm their opinion by the relevant findings. Thus, for example, of the 73 firms that use standardized messages in varying degree, 40 said they either modify copy and illustrations to fit their markets, or they change all materials except the central theme. Twenty-five respondents claimed they translate messages and make idiomatic changes, four reported literal translation of messages, and four others indicated they use standardized messages in the original language of the country where corporate headquarters are located. Based on the distinction that was reported in the literature between two types of standardization, the findings suggest that subsidiaries tend to lean more toward the use of pattern standardization than the use of prototype standardization.

Other findings show the importance of cultural factor. Thus, the advertising executives evaluated the main obstacles they face in the following way (5 being of the highest importance):

  • cultural differences,
  • differences in consumers' lifestyles,
  • language diversity,
  • variations in worldwide market infrastructure, and government regulations of advertising media

These results show that following prototype standardization  would be a risky and inflexible approach. The managers are becoming more culturally aware (Americans who were accused of being insensitive follow the tendency to the same degree).

The study by Nan Zhou and Russell W. Belk “Chinese Consumer Readings of Global and Local Advertising Appeals” (2004) consider the same controversy between localization and globalization but using a different method, which they call reader-response approach. The authors justify the choice of method by the discrepancy, which often occurs between the intended message of advertising and the way consumers actually understand it. As a result of their research, the scholars found out that it is largely due to a group of goods, which approach to stick to because the implications are different. The outcome shows that global appeals are read as signaling beauty, status, and cosmopolitanism, whereas local appeals are read as evoking Chinese cultural values or nationalistic feelings ( Zhou&Russel, 2004) That’s why the first approach is acceptable in the promotion of the so-called status or luxury goods. Average Chinese consumers cannot afford many foreign products, but they can still envy and yearn for the higher standards of living of Western countries. This has been termed "imagined cosmopolitanism”. Consumption of Western things is in fact perceived as separation of those who are successful from those who are not. Beauty and technology industries are those win the Chinese consumers by applying global appeals.

On the other hand, Chinese tend to stick to their authentic national values while buying such goods as food, medicines, non-alcoholic beverages and so on. These products seem to be perceived as belonging to the realm of national conventions, which have strong historical roots, whereas everything foreign is seen as stylish and beautiful but at the same time superficial. There is another peculiar finding which was received as a result of the experiment. The point is, in many cases, people do not recognize which brand is home and which is local. This confusion proves that the terms “global” and “local” no longer pertain to the spatial or even national sphere but only reflect the choice of marketing strategy.

Finally, the study conducted by Susan H.C. Tai and Y.H. Wong “Advertising decision making in Asia: "Glocal" versus "Recall" approach”  focuses on the whole Asian region, constituted by such countries as China, Taiwan, Hong Kong and Singapore. The focus of the article is on decision-making and to what extent it is made by the international office or is shifted to the local one. The key concept which runs through the whole paper is a newly-coined blending “glocalization”, which to my mind continues the trend, which was traced in the above studies. As the authors claim,  the concept of "Glocalization" started with the realization that Asia was not 'westernizing' but in fact was 'modernizing'. The key to the modernization of consumer markets is their ability to adapt incoming influences and blend them into the fabric of their identity, not adopt the foreign influence wholesale.

Globalization is much more than the simplistic "think global, act local" but requires identifying the degree to which needs and the stimuli which trigger them are universal or local. The method, which was used to conduct the research, is the following one: structured questionnaires were mailed to marketing directors at the headquarters of the multinationals or their subsidiaries in the markets of the above-mentioned countries. On the basis of the results, the researchers developed a scale method of assessment, which takes into account the degree of localization and standardization. Thus, four decision-making approaches are distinguished:

  1. Global Approach (Centralized Decision Process, Standardized Advertising Approach). A firm with a higher degree of centralized decision making is more likely to adopt a standardized advertising approach. The example of the company who follows this strategy is the Swiss company L'Oreal S.A., whose main reasons for the centralized process are to have consistent offers available to consumers worldwide and to keep both advertising agencies and clients working more closely together.
  2. Local Approach (Decentralized Process, Differentiated Approach). The companies are localized as far as advertising is concerned, but the  subsidiary needs to gain final approval from their headquarters (Tai&Wong, 2002) This approach is used, for instance, by Fuji Photo Film, whose  total demand and market share vary from market to market. That’s; why local subsidiaries have the right to decide what marketing strategies to follow. Between the two extreme approaches, there are two, which can be considered as compromised ones.
  3. Regal Approach (Centralized Process, Regional Approach). The "Regal" approach is made up of "red" (regional) and "cal" (local); that is, it uses a local adaptation on a regional basis (Tai&Wong, 2002) There can be given an example of Carlsberg beer, which runs a corporate image campaign in Asia and carries out worldwide sponsorship activities. It means that the strategy is up to the headquarters, whereas the tactics are left to the local subsidiaries.
  4. Glocal Approach (Decentralized Process, Standardized Approach). This approach is a combination of the "Glo" (global) and "cal" (local) approaches. “The headquarters develops global campaigns for its major brands and the local offices may or may not follow these proposals because they are responsible for their own profit and loss accounts. The headquarters has declared that advertising standardization is not a compulsory company policy, but a consequence of their joint headquarters-distributor decision making”.

This approach is successfully applied by such known companies as Coca-Cola and Henkel, which rely on the local budget most of all.

The reviewed studies, which focus on the issue of standardization and globalization of advertising on the world market may vary in approach but have much in common in the findings. First, it is evident that standardization proper is scarcely possible. Even if such term is applied, the shift is from the prototype to pattern standardization is traced. Second, the prevailing majority of companies prefer a mixed variant to any extreme bias to either standardization or localization as modern conditions demand extra flexibility as far as marketing strategies are concerned. The creation of such indicative blendings as “globalization” and “regal” reflects an important trend in global marketing, which seeks to take into account a wider number of criteria.

Third, barriers to standardized advertising programs continue to be very high. Managers of subsidiaries perceive cultural considerations, differences in consumers' lifestyles, variations in market infrastructure, and government regulations to be major impediments. Fourth, a general paradox about globalization is repeated on the marketing level: in an increasingly globalizing world, the national and cultural identity is getting increasingly important. That’s why the cultural aspect should no way be ignored even by global monsters like Coca-Cola. Fifth, geographical closeness doesn’t guarantee the possibility of the unified approach for the whole region (like Sweden and Finland), Implementing regionally standardized campaigns in neighboring countries seems to be more a bother than a benefit when stumbling upon such varying media infrastructures and clashing message considerations. Sixth, in the rapidly developing economies, notions of status, cosmopolitanism, fashion, modernity, and beauty are more apt to be changed by advertising that are more culturally ingrained notions of national identity, national pride, food, face, family, filial loyalty, and respect for the elderly. Overall, the tendency towards flexibility, cultural sensitivity and compromise is being demonstrated, which shows that global economy is entering the stage of maturity.

Reference:

  • Buckley, Peter J., and Pervez N. Ghauri. .2004, "Globalisation, Economic Geography and the Strategy of Multinational Enterprises." Journal of International Business Studies , vol.35, no.2, p. 81+.
  • Kanso, Ali, and Richard Alan Nelson. 2002,"Advertising Localization Overshadows Standardization." Journal of Advertising Research , vol.42, no.1, pp.
  • Onkvisit, Sak, and John J. Shaw. 1999,"Standardized International Advertising: Some Research Issues and Implications." Journal of Advertising Research , vol.39, no.6, pp.
  • Tai, Susan H.C., and Y.H. Wong. 2002, "Advertising Decision-Making in Asia: "Glocal" versus "Recall" Approach." Journal of Managerial Issues , vol.10, no.3,pp. 318+.
  • Zhou, Nan, and Russell W. Belk.2004, "Chinese Consumer Readings of Global and Local Advertising Appeals." Journal of Advertising, vol. 33, no.3, pp.63+

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