Standardization versus Adaptation in International Marketing

The most challenging decision that a company may face in internationalization is the degree of standardization or adaptation in its operations.  The question of standardization or adaptation affects all avenues of a business’ operations, such as R&D, finance, production, organizational structure, procurement, and the marketing mix.  Whether a company chooses to standardize or adapt its operations depends on its attitudes toward different cultures.  These attitudes are defined by three orientations toward foreign culture:  ethnocentric, polycentric, and geocentric. 

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Ethnocentric Model

 Ethnocentrism has a socio-psychological dynamic that is broadly used to describe human behavior in and between contradistinctive cultures.  The roots of ethnocentrism stem from a sociological construct explaining “majority” versus “minority” conflicts.  In 1906, sociologist William Graham Sumner coined “ethnocentrism”.  He defined the concept as, the view of things in which one's own group is the center of everything, and all others are scaled and rated with reference to it…each group nourishes its own pride and vanity, boasts itself superior, exalts its own divinities and looks with contempt on outsiders.  

The heart of ethnocentrism can be summarized as, a belief system of, one’s own company, culture, or country knows best at how to operate things.  The concept has a unique set of principles, which govern its very being.  These principles are distinguishing different groups; viewing their own group as stronger, superior, and forthright above all others; and to be apprehensive of and indifferent toward other groups, especially those they see as weak or inferior, or not trustworthy.

Ethnocentrism is ingrained in various areas of interaction between multifarious groups of people.  Ethnocentrism can predestine how companies behave in conducting business cross-culturally, as well as act toward particular cultures.  Marketing traditionalists view ethnocentrism, in cross-cultural marketing, as deleterious to product design, as well as global advertising.  Especially the belief a ethnocentric marketer has, such as, what is propitious for consumers in their own country is just as good for consumers globally, therefore, the need for unique approaches for marketing cross-culturally is negated.  This ethnocentric thinking can be detrimental in marketing strategies.

Furthermore, ethnocentric consumers tend to reject things that are not similar to their culture, such as values, symbols, and people; on the other hand, they will accept intra-cultural articles, which become receivers of loyalty and pride.  Therefore, a marketer should market products/services synchronously with a culture’s ethos, and not with their own cultural predilections.

Polycentric Model

            The polycentric orientation uses adaptation in every market, and its marketing mix differs, depending on the culture in which it is operates.  By differentiating, this orientation approach captivates, as well as satisfies the needs of each unique market.  The polycentric approach will set up global subsidiaries, and each will have its own marketing objectives, as well as policies and procedures, apart from the parent company, such as hiring, marketing, production, human resource, finance, and discounts.  The logic behind polycentrism is, when in Rome, do as the Romans do…let the Romans do it their way.  Therefore, the parent company steps aside, and lets its global offices make decisions that reflect the local practices.

Geocentric Model

 The geocentric orientation is a fusion of ethnocentric and polycentric orientations, it is understood that there are similarities and differences in cultures worldwide; thus, this is more of a balanced approach to take in marketing strategies, for it is a compromise and balance between the two orientations extremes of polycentric and ethnocentric.  Geocentric orientation is defined as a business attitude of global similarities between two markets and cultures.  In the geocentric mind set adaptation and standardization cohabitate. 

Attitudes of geocentricism are biased toward marketing, human resource, production policies, and finance that try to synthesize local and global practices.  Preeminence is given to accruing the right people and policies.  For instance, a decision maker, who is geocentric, would endorse a global pricing policy that would be adapted to regional and local environments.  These decision makers strive to ratify policies that fit both local differences and global commonalities.  Furthermore, when one adopts a geocentric mindset, this in turn, leads to the evolution of a geocentric company.

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  Comparison of Ethnographic, Geocentric, and Polycentric Models

Each orientation utilizes standardization or adaptation, or both, in its DNA.  Ethnocentrism uses standardization, polycentrism uses adaptation, and geocentricism exercises both standardization and adaptation.  How does standardization and adaptation affect the marketing mix?  A comparison of the dichotomies is illustrated. 

Marketing Mix	Standardization	Adaptation
Product	No changes are made to product/service	Specific changes are made to the product/service to fit cultural characteristics
Price	Fixed pricing in all international markets	Prices are determined by local competitive conditions
Place	Uniform channel structures	Adjusting distribution
Promotion	Same promotion is used in all international markets, and no changes are made	Specific changes are made to promotions to fit cultural contexts

     Whether a company should adopt standardization or adaptation in its international marketing strategy is an age-old debate.  However, one can compare the models and weigh the benefits, against the disadvantages of each. 

  Ethnocentrism is the polar opposite of geocentricism.  The ethnocentric approach (standardized) to marketing, views domestic techniques as superior and most effective in global markets, and domestic operations is primary, whereas foreign markets are secondary.  The ethnocentric philosophy for marketing strategies focuses on home country guidelines, and plans for the foreign markets are designed in the home country, using procedures and policies similar to those in domestic markets.  The export department conducts marketing, and employees are typically nationals.  R&D is not developed in foreign countries, but domestically; products are not modified extensively, and calculation for prices is the same as in the home market, with distribution costs added in.  Distribution and promotional strategies are similar as the home country, as much as possible, and operations are conducted from the home office, with a strong dependence on export intermediaries. 

         In comparison, the geocentric approach views the entire world as a possible market, knowing no boundaries.  Employees are from other countries, standardized product lines are developed for global markets, and pricing is determined based on local markets.  Promotional campaigns and products are developed globally, and are in harmony with the company image.  Channels of distribution are developed as well.

         The polycentric approach establishes subsidiaries in foreign markets that operate independent from the parent company.  This approach creates its own marketing plans and objectives, as well as R&D, which are governed on a country-to-country terms.  Product lines are separate, and are developed in each country, and domestic products are modified to adhere to local needs.  The promotion and pricing strategies are determined by each subsidiary.  The sales staff is composed of nationals, and the modes of distribution are those that are ordinarily used in each country.

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Product vs. Service Influence over Model Choice

   The Geocentric orientation should be integrated in all companies who are expanding operations globally.  This strategy is the most culturally adept in international marketplaces, and provides the greatest benefits in comparison to other orientations in marketing products/services overseas.

 The internationalization of services is influenced more by a geocentric (adaptation) approach in its marketing strategies.  For example, both the services and the service provider needs to undergo adaptation because in selling services world wide, a service provider needs to know cultural characteristics such as local habits, tastes, and preferences.  However, adapting services (intangible), as opposed to a product (tangible) is a lot more challenging.  For instance, in Japan, persuading consumers to utilize credit cards was nearly impossible, but after years of different marketing approaches (adapting), they finally accepted them into their culture.  Thus, geocentricism focuses, not only on the worldwide objectives, but the local objectives as well, and this is beneficial for internationalization of services.    

Conversely, a geocentric approach can be beneficial for marketing a product globally, for the same reasons this approach is beneficial to marketing services.  This approach sees the world as its oyster, and knows no boundaries, in addition, it adapts to local conditions, and cultural characteristics.  Furthermore, one could say, a geocentric approach is beneficial to companies who are expanding globally.  After all, since the geocentric mindset is that of adapting products/services to that of one’s culture, and knowing the cultural characteristics to meet the needs of that culture, is that not the core of international marketing, and the very persona of expansion into the global terrain?  Albeit, Dr. Howard Perlmutter postulated that companies who start their journey begin with an ethnocentric orientation, but imperceptibly procure a polycentric perspective, but over time endeavor to consummate a high level of geocentricism. 

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Cultural Differences and Model Choice

The differences in culture can shed light as to which orientation a company should choose in international markets.  For cultural differences abide, whether its values, languages, beliefs, behaviors, or external factors, each culture has its own unique characteristics.  When companies  make a choice to extend its marketing of products internationally, a strategic choice has to be made, whether to standardize its marketing mix, and use a single marketing strategy in all its global markets, as a “one size fits all”, or to adapt its strategies and marketing mix to tailor to unique cultural dimensions.  Cultural differences do affect which model orientation to use for marketing strategies.

On one hand, people are seeing global markets as becoming more homogenous, and progressively more global, hence, the key to success is a company’s appetency to standardize.  While on the other hand, you have those who advocate for market adaptation, saying that the global arena needs a tailor-made marketing strategy to fit each local market.  The dichotomies are logical in their arguments, however, cultural differences still determine consumer behaviorism in international markets.  

Therefore, a standardized approach may not be viable in the global arena because consumers define a brand’s image, and marketing strategies through a cultural lens, hence, if marketing strategists do not adapt to local culture then the marketing messages and brand perceptions may be lost in translation.  Furthermore, adapting brands to one’s culture may build lasting relationships with local consumers, and these relations will guide marketers more on how to assess and address the needs of consumers.

First, and foremost, a product has to be congruent with cultural norms.  Whether a company decides to use standardization or an adaptation marketing strategy will determine its overall success in the global market.  The decision is not solely based on business objectives, but also on cultural differences.  Looking through the kaleidoscope of the marketing mix, cultural differences, as it relates to the choice of standardization or adaptation in marketing strategies, can be observed more vividly.  

Standardization of products occurs when a company does not have to make any changes, when exporting internationally, because a culture may have similarities in product preferences and needs, in the international market.  However, standardization is mostly used for industrial type products, not consumer products/services, hence, consumer products/services have to be adapted to the local culture.  Although, not all of a product’s characteristics have to be adapted, only the one’s a company deems fit.  These elements include packaging, product design, name of a brand, etc.  Another factor that must be taken into consideration when marketing to different cultures is the price of a product.  This factor also begs the question of standardization or adaptation.  

This is where competition within the culture determines the price.  A marketer needs to assess the competition, and determine which strategy is best for the product within the cultural frame.  Competition or consumer preference steers differentiation in prices, whereas, lowering transportation expenditures, or better communication, steers price standardization.

Promotions can be standardized or adapted, depending on the situation.  Some companies standardize promotions to cut costs.  However, consumers from different cultures have unique cultural identities, thus adaptation is needed.  These cultural differences are language, laws, and availability of media outlets, economic, social, and political systems, and religion.  These differences should be addressed for the promotional strategy. 

To employ adaptation or standardization, for distribution channels, also has to be assessed when marketing cross culturally.  This branch of the marketing mix is considered more adaptive, and looks at several factors, including culture, consumer, and product.  Adaptation is more involved when there are differences in distribution framework, purchasing habits, and expendable income, as well as sales volume, or a quotidian product line.  There is an extent of adaptation and standardization of distribution channels contingent upon which country the company is located.

Conclusion

       The world has become increasingly integrated, and more businesses are expanding its operations globally.  When a company makes a decision to market its products or services cross- borders, they have to make a strategic decision whether to standardize, a “one size fits all” marketing strategy, or adapt, the marketing mix (product, price, place, and promotion), to harmonize with the local market’s unique cultural dimensions. 

       Cultural differences act as a determinate in standardization and adaptation strategies.  These two strategies are correlated with three management orientations toward foreign culture: ethnocentric, polycentric, and geocentric.  Ethnocentrism uses standardization, polycentrism uses adaptation, and geocentricism exercises both standardization and adaptation.  The geocentric orientation is understood as the most balanced in global marketing, and its principles should be adopted by all businesses expanding its markets internationally because companies are integrated both regionally and globally, where as ethnocentric companies are centralized in its marketing management, an polycentric companies are decentralized.