The present world business infrastructure provides numerous opportunities for business entities around the world to transcend national and regional borders and to run their operations on a global scale. The choice of an effective marketing strategy and goals regarding a company's desires are of great importance to its success. Additionally, companies that operate globally must choose whether to standardize across all its markets or to adapt or localize to each specific market. A case study constituting Google Inc. and McDonald's was used in the current paper to achieve the purpose. Since the research is of qualitative nature, a detailed literature review was conducted, covering scholarly articles and company reports. From the research, it is evident that various factors influence the decision of a local adaption or global standardization strategies.
The current business infrastructure simplifies access to places and customers globally, as well as products, technologies, and services beyond national boundaries. Business entities exploit the increased opportunity for new markets entry. As of consequence, more companies are operating in the global business landscape (Conklin, 2011). Brand management or marketing at the global level is increasingly gaining attention of strategic management due to the significance of effective marking strategies in creating and sustaining competitive advantages (Ansoff, 2007; Kotler et al., 2009). Considering brands as the heart of multinational companies, businesses need to develop appropriate and effective strategies for the brand to be successful in the present competitive business landscape. Google and McDonald's are examples of companies that have adapted their strategies to meet the demand and needs of various markets in which they operate. Logically, the competitive nature of the present business landscape pushes companies to either standardize or adapt their strategies to global and local requirements respectively. Brand management is vital component of marketing, which makes it of significance for multinational companies to develop clear goals and strategies to achieve them successfully. Consequently, the current research paper explores the concept of glocalization and its connection to the concept of standardization and adaptation in marketing literature. Moreover, it is segmented into two parts: literature review and a case study of two multinational companies employing the standardization and adaptation strategies.
To achieve the purpose of the current research paper, this section reviews various concepts surrounding glocalization and its connection to the standardization and adaptation concepts of global marketing. Marketing on the global arena is increasingly gaining attention of researchers and large companies due to its pivotal role in the survival and success of companies (Buckley & Horn, 2009; Etgar & Rachman-Moore, 2010; Volberda, et al., 2011). A multinational brand cannot function effectively without an appropriate marketing strategy, and marketing management entails implementing the strategy of the multinational's brand (Kotler et al., 2009). Additionally, a clear marketing strategy can help the entity make strategic decision for its foreign market operations. However, developing a marketing strategy can be challenging, especially in business environment, which is characterized by many variables, including varying laws and regulation, religious differences, and cultural differences among others (Brei, et al., 2011).
For international businesses, it is highly recommended that they simultaneously consider both global and local competition (Svensson, 2001; Wang & Lee, 2007). According to it, companies can consider the target market infrastructure, political environment, and sociocultural variables when formulating a marketing strategy and decide upon the approach to be used in increasing market share and gaining competitive advantage (Baroto, et al., 2012; Conklin, 2011; David, 2009; Joshua & Chi, 2007). It implies that a business entity needs to decide whether to be adapted to a specific economy or to be standardized across economies. For example, Vodafone and Batelco have restructured their marketing strategies and have moved from locally adapted strategies to globalized standardized brands (Steenkamp, et al., 2013; The Batelco Group, 2014). Such telecommunication giants formulated clear strategies and managed to sustain value and strength their local brand during the transition to global standards. The challenges faced by these companies during the transition were not only technology-oriented, but also socio-culturally aligned as there was a need to integrate the employees within such companies to assimilate the new marking strategy. The common issue facing most companies in the process of developing appropriate marketing strategy in the global business landscape to create and sustain competitive advantage in the international market, is whether to globalize and standardize their marketing management or to adapt the marketing strategies to fit the needs of a specific market. It is the basis, which explains why the given literature review will center on global marketing strategies, with a focus on local adaptation and global standardization.
Globalization is increasingly becoming the most debated topic in the academic realm. One of the popular definitions outlining the meaning behind globalization points to a process propelled by, and resulting in, growing cross-border flow of products, technologies, services, human capital, and cultural features (Hudea & Papuc, 2009). According to Hudea and Papuc (2009), internationalization and globalization presents both challenges and opportunities simultaneously. Market expansion translates to increased sales and profits (Jackson, et al., 2008; Jobber, 2007). Conklin (2011) noted that one of the main reasons for business entities to globalize or internationalize in that they can gain competitive advantages in the new markets. Other motivations behind globalization are that the process can yield economies of scale and improve scope in marketing, manufacturing, as well as research and development (Levitt, 1983; Paik, et al., 2011; Ryu & Simpson, 2011). Once an entity migrates to the global village, it faces challenge of formulating business strategy needed to achieve competitive advantage. Choosing a global strategy is always challenging hence it needs detailed research and allocation of appropriate resources. Hudea and Papuc (2009) pointed that any business transitioning from a domestic (local) position to an international (global) position must undergo various steps and adopt several instruments that allow the entity to transit towards internationalization and eventually to globalization. The authors continue stressing that for a company to achieve sustainable competitive advantage and growth in the current markets, which are increasingly becoming global and volatile, the companies must understand the diversity and complexity of global marketing. Effectively addressing this challenge and achieving competitive advantage is not an easy process (Arregle, et al., 2013; Capon, 2008; Dunning, 2006).
As businesses continue globalizing, marketing continues evolving to synchronize with the realities of regional, cultural, political, and economic differences in various markets around the world (Dunning & Lundan, 2008; Edwards & Rees, 2011). Multinational companies tend to make the decision of implementing either homogenous or heterogeneous strategies (Buckley & Horn, 2009; Scheide, 2003). The debate on globalization and standardization verses localization (customization) and adaptation of the global makers continues gaining importance as a marketing topic (Robertson, 1995; Svensson, 2001; Wibbeke & McArthur, 2013). The globalization of markets is essential for multination enterprises because the process leads to improved global returns, if the entities adopt global standardized marketing strategies (Hitt, et al., 2008). However, the prevailing market dynamics have induced complexities that require implementation of a standardized strategy. While this strategy is popular among multinationals, and since Levitt (1983) introduced the theory of global standardization, there is an increasing need for formulation of localized or adaptive strategies to deal with market variations. The concept of glocalization emerged in early 1990s, which entailed pursing global localization instead of global standardization. The concept was to some extent a hybrid of the global standardization and local adaptation (Hudea & Papuc, 2009). More recently, a school of global marketing debates has shifted to focus on regions (Andersson & Borgvall, 2011). As depicted in Figure 1, regionalization is a marketing concept that similar to glocalization pursues the middle ground between local adaptation and global standardization, but factors geographic regions in the formulation of strategies (Wilken & Sinclair, 2011). Globalized business entities are among the leading advertisers globally. For example, Uniliver (UK, Netherlands), Procter & Gamble (US), General Motors (US) and Nestle (Switzerland) were some of the top five global leaders in advertisement spending in 2011. Interestingly, such advertisements are tailored for various markets to improve product promotion, while sustaining the product uniqueness.
Criteria for Global Standardization and Local Adaptation
Under the global standardization approach, a company uses the same standardized strategies, while selling the same products globally (Wilken & Sinclair, 2011). Such approach is effective in cases where there are fewer choices of tangible and intangible components. Additionally, there are different standardized marketing communication strategies (Hotchkiss, 2013). As theorized by Hudea and Papuc (2009), the standardized approach focuses entirely on the global market. Furthermore, there should be uniformness in brand core values or visible organizational cultural aspects. On the other hand, as the name suggests, local adaptation strategy focuses on local markets. For that reason, the local markets' cultures are considered during the formulation of global marketing strategies (Harris & Moran, 2011). In fact, company products and strategies are designed to meet the needs of a target market. Therefore, a company modifies its existing global strategies to suit various local markets. Furthermore, environmental factors are taken into consideration under the local adaptation approach.
Advantages and Disadvantages of Standardization and Adaptation in Global Marketing
Standardization and global uniformity has several benefits. For instance, customers can expect the same level of customer care and quality of products of specific brand anywhere and anytime across the globe. Such approach to marketing also supports positive customer perceptions regarding a product (Levitt, 1983). For example, if a business enjoys strong reputation and brand identity, as in case of Apple and Microsoft, choosing the standardized approach to global marketing tend to work for their benefit. Positive referencing can imply a growth in sales across the world. The other advantage connected to the standardization approach entails cost reduction, which translates to economies of scale. The logic is that selling large volumes of the same and non-adapted products, as well as procuring non-customized product in bulk leads to a reduction in cost per unit (Wilken & Sinclair, 2011). The other benefits linked to economies of scale are improved R&D, as well as reduced cost of investment and marketing operational costs. Additionally, standardization is more reasonable than the adaptation approach, particularly in industries where trade barriers, such as laws and regulations are reducing (Iacobucci, 2014). Furthermore, implementing a standardization strategy helps entities center on a uniformed marketing mix, zeroing on a single product or service. Consequently, there are enough possibilities for the companies to improve product and service quality. By focusing on a uniformed product, employees can be trained to improve product quality, thereby attracting companies to invest in R&D, equipment, and technologies that can sustain the superiority of the standardized product or service. From the discussion above, it is evident that adaptation approach fails in regard to the economies of scale and expected quality. Logically, procuring customized product components or adapted raw material increases the unit cost, especially where the procurement is seasonal and small in scale.
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Despite the numerous advantages highlighted above, standardization presents a number of disadvantages to companies. As pointed above, different markets present different needs or preferences (Robertson, 1995). For that reason, selling a unified product across the globe lacks product distinctiveness. As a result, competitors are able to gain market share through customization of products and services to meet local preferences and needs of specific segment or market. Since different markets or countries have different tastes and needs, companies, using standardization, become vulnerable to unhealthy competition (Pearce & Robinson, 2014). For instance, Walmart's standardization approach contributed to its failure in regard to transition from the local position to the global position easily (Soni, 2015). The multinational companies faced numerous challenges while entering foreign markets, including China, Japan, South Korea, Brazil, and Germany (Soni, 2015). The underlying reason is that the company maintained its United States marketing mix, marked by inventory control, low pricing, and a large collection of products. Such standardized approach failed to synchronize in foreign markets, which had different supply chains and unique customer habits (Loeb, 2013; Wal-Mart, 2016). In fact, Wal-Mart's failure in Germany has become a template in the strategic management and marketing literature on how not to enter a foreign market. One of the challenges facing multinationals is that they depend on economies of scale, which is limited by the adaptation approach. Intrinsically, companies that have factories across the world need to adapt their operations to the local market regulations. For example, Apple must adapt its CSR and labor policies to match the varying requirement in the U.S. and Asia. In other words, the adaptation approach is beneficial where a company is obliged to tailor its operations and policies to be in harmony with trader barriers, such as the European Union and the United States. Table 1 summarizes the advantages and disadvantages of local adaptation and global standardization approaches in global marketing.
Advantages and disadvantages of local adaptation and global standardization approaches:
Global Standardization
Advantages
- Economies of scale
- Coherent global image
- Faster time of establishment
- Effective monitoring of integrated communication
Disadvantages
- Potential loss of effectiveness in advertisement
- Little flexibility and little reactivity
- Can result in negative reaction for neglecting local needs
Local Adaptation
Advantages
- Improved consumer engagement
- Respect towards local culture and consumer specifications
- Excellent local image
Disadvantages
- Time consuming
- High cost
- Poor speed of implementation
- Challenge to identify local needs
Analysis of Marketing Mix of Global Companies
The current section analyses the marketing mix of two multinational companies, namely Google and McDonalds. In addition, the section explores the implementation of glocalization strategy in the two companies, while focusing on the levels of local adaptation and global standardization approaches to global marketing. The two companies are famous for their market dominance and global popularity in their respective industries. A cross-industry analysis provides a detailed understanding of the two concepts, hence improving the comprehension of the two marketing concepts.
McDonald's Marketing Mix
McDonald's is an American-based fast food franchise operating globally. The company is a prime example and a template for franchising (McDonald's, 2016). Even though the company was not the first global franchise, McDonald's exemplifies a franchising success. In the same context, the company illustrates the significance of glocalization, particularly in the competitive fast food industry. Despite the volatile nature of the fast food industry, the company has managed to show itself as a successful global company, employing glocalization strategy. In the context of strategic management in general and marketing management in specific, the success of the company is viewed in terms of customer satisfaction, higher performance, higher market share, stronger corporate brand, job satisfaction, and higher profit margins in comparison to its rivals (McDonald's, 2016). Some of its competitors include Burger King and KFC. McDonald's is one of the globalized companies that has managed to illustrate the benefits of both local adaptation and global standardization approach to global marketing. With over 36,000 outlets in over 115 countries (McDonald's, 2016), the company has effectively managed its franchise model using both approaches. Consequentially, the company delivers consistent product branding and customer experience, while still ensuring possibilities for locally relevant menu items and service variations in various countries across the globe (Koller, 2007). Additionally, the company shoots its advertisements in over 10 different languages, featuring the customized products adapted for local markets. In its efforts to sustain its competitive advantage in the Gulf, the company introduce McArabia sandwich. Additionally, the company introduced McVeggie in India.
The global expansion and the localization of the products are at the core of the McDonald's success is. The glocalization strategy enables the company to maintain its global brand, while customizing certain aspects of its menu items to suit a specific local market. In line with Kotler et al (2009), the company adapts some of its products and services to a particular culture and region to satisfy local needs. In other words, the company embraces both local adaptation and global standardization strategies. Consequently, the company provides products globally without compromising their domestic market tastes. McDonald's also maintains its quality standards across all its outlets and ensures that cultural needs and preferences of local customers are unified. The local adaptation approach emphasizes on sensitivity to cultural difference and local tastes, including taboos and eating lifestyles. For this reason, the company introduced a vegetable inclined menu in India.
Google's Marketing Mix
Google Inc. is a multinational technology company offering Internet-based services, including software, cloud computing, and search (Google Inc., 2016). The company enjoys a long-standing reputation across the globe, which makes the company one of the most expensive and popular brands globally. Google is an apt example of a company that largely employs the standardization approach due to its global outreach and product uniqueness. However, the company adapts its compensation strategies to meet the local labor policies (Ernst & Young, 2013). Moreover, Google is an example of globalised entity employing the standardisation approach in global marketing. Its offices distribution has a distinctive layout meant to promote innovation, as well as improve its employees' working environment. Despite the office uniqueness, its branch offices have some standard features, including murals and decorations mirroring local personality.
Similarities and Differences
The key difference between the two companies is that they work in different industries, namely fast-food industry (McDonalds) and telecommunication/software industry (Google). Despite the difference in the underlying industries, the two companies exemplify the effective application of the glocalization strategy. In regard to operating and launching new products or services, Google and McDonald's are at the forefront of developing effective marketing strategies. Both companies implement the glocalization strategy, though to different extents, such as advertisement, use of local languages on regionalized websites, and provision of products that match local preferences as in case of McDonald's in India and Arabic countries. In regards to local adaptation and global standardization, Google emerges at the top in global standardization. An individual in Asia migrating to the United States expects to find the same service provided by the Google search engine. In an effort to improve quality and product uniqueness, Google used the language translator to improve accessibility, while maintaining product standardization. Unlike McDonald's, Google's marketing mix entails minimal product promotion. Its market dominance and global popularity reduces its investment in extensive product promotion. However, the company occasionally advertises its new products. Google's effective implementation of standardization is reflected by the company's minimal promotion in the company's marketing mix. For that reason, the company spends less than McDonald's in regard to product promotion.
Critical Reflection on Google and McDonald's
Globalized companies, such as McDonald's and Google constantly experience challenges in their global marketing efforts. In line with Koller (2007), is it evident that the challenges facing these companies largely concern the management of their marketing strategies. The two companies face the change of developing superior services and products in their respective industries, as well as brands that have positive image and distinct brand identity. In order to sustain their competitive advantages and to contribute to the success of the multinationals in a significant manner, the companies target their resource allocation and investment decisions. Considering the literature review provided above, it is evident that standardization reduces the cost of product promotion in a company's marketing mix. It is evident in Google's case, which has a single coherent global brand. For that reason, companies that use global standardization approach are much likely to save their product promotional costs, and invest the savings in different areas, including R&D and procurement of new technologies and equipment.
Conclusion
Glocalization is a business expansion or marketing strategy that finds a balance between the globalization and the localization strategies. In essence, the glocalization strategies entail acting globally, while maintaining sensitivity to local demands or cultural differences. There is an increasing debate over brands approaching the global market with either adapted or standardized approach. Proponents of the adaptive approached argue that it improves flexibility, reactivity consumer engagement, and respect the local culture and expectations. On the other hand, the supporters of the standardized approach argue that it increases economies of scale and reduces operational and marketing costs. The popularity of the adapted global marketing approach is based on the asserting that different countries or markets differ significantly regarding their consumers' needs, culture, product preference, spending preference, and shopping habits. For that reason, global marketing strategies should be tailored to meet the needs of the targeted market without compromising cultural differences. Google Inc. and McDonald's are examples of globalized companies that embrace the glocalization strategy, but with different levels of local adaptation and global standardization approaches. Unlike Google, which largely employs the global standardization approach, McDonald's uses the standardized global marketing approach by leveraging its global brand image, while simultaneously adapting its operations and marketing strategies to local markets. In summary, either standardized or adapted global marketing strategies should not be implemented separately. Therefore, hybrid of the two global marketing approaches should be used accordingly. In conclusion, multinational companies should think globally, but act locally, implying that they should simultaneously implement a standardized global marketing strategy and a local adaptation strategy.
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