globalization

globalization Order Description Read as widely as you can on the concept of ‘globalization’ starting with the Levitt article, ‘The Globalization of Markets’. Ensure you are able to produce a balanced answer. Be able to critique his view on technology driving the world together. Journal of Consumer Marketing THE MYTH OF GLOBALIZATION Yoram Wind Article information: To cite this document: Yoram Wind, (1986),"THE MYTH OF GLOBALIZATION", Journal of Consumer Marketing, Vol. 3 Iss 2 pp. 23 - 26 Permanent link to this document: http://dx.doi.org/10.1108/eb008160 Downloaded on: 05 January 2016, At: 01:51 (PT) References: this document contains references to 0 other documents. To copy this document: [email protected] The fulltext of this document has been downloaded 1511 times since 2006* Users who downloaded this article also downloaded: Philip Kotler, (1986),"GLOBAL STANDARDIZATION—COURTING DANGER", Journal of Consumer Marketing, Vol. 3 Iss 2 pp. 13-15 http://dx.doi.org/10.1108/eb008158 Nikolaos Papavassiliou, Vlasis Stathakopoulos, (1997),"Standardization versus adaptation of international advertising strategies: Towards a framework", European Journal of Marketing, Vol. 31 Iss 7 pp. 504-527 http:// dx.doi.org/10.1108/03090569710176646 José F. Medina, Mike F. Duffy, (1998),"Standardization vs globalization: a new perspective of brand strategies", Journal of Product & Brand Management, Vol. 7 Iss 3 pp. 223-243 http://dx.doi.org/10.1108/10610429810222859 Access to this document was granted through an Emerald subscription provided by emerald-srm:187202 [] For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.com Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services. Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download. Downloaded by UNIVERSITY OF LIVERPOOL At 01:51 05 January 2016 (PT) THE MYTH OF GLOBALIZATION Yoram Wind Global marketing might be likened to prescriptions that apply to all situations. There is, however, a broad framework within which one can examine the issue of standardization, suggesting that it might be a perfect strategy for some products, some companies, and some situations, but totally inappropriate for others. First, let's identify seven specific conditions under which the standardization approach might be appropriate, and evaluate these conditions to see to what extent they really hold. 1. The one that is discussed most often is the trend toward a homogenization of the world's wants. However, there is no strong empirical evidence that the world is becoming more homogeneous. True, world segments are emerging, but these do not necessarily entail a homogenization of consumer wants. Furthermore, there is increasing evidence of an intracountry segmentation for the United States and many other countries. Finally, there is correlating evidence, especially from companies that are working in different countries, that different types of market response functions exist in different countries; as firms face these different market response functions, the viability of the global strategy becomes shaky. 2. The second argument suggested by Ted Levitt is that people are willing to sacrifice specific preferences in product features and functions for lower price and high quality. Again, there is no evidence that consumers are becoming universally more price conscious. In fact, some of the products often viewed as global are fairly expensive-Cartier watches, Louis Vuitton handbags, or Canon cameras. Furthermore, the desirability of focusing on lowprice positioning is very questionable. In fact, from a strategic point of view, proba- Yoram Wind is the Lauder Professor and Professor of Marketing and Management at the Wharton School, University of Pennsylvania. He is the Director of the Lauder Institute of Management and International Studies. He joined Wharton in 1967, after receiving his Ph.D. from Stanford University. Dr. Wind has consulted and conducted research projects for close to 100 companies, including Pfizer, MRCA, Edward D. Jones and a number of law firms. In addition, he is a frequent lecturer in faculty seminars and executive programs in the U.S., Canada, Australia, Japan, Europe, South America, and the Middle East. The author of a recent book, Product Policy, Dr. Wind has co-authored several books including Advertising Measurement and Decision Making, Marketing Segmentation, and Organizational Buying Behavior. The marketing literature has included over hundred and sixty of his articles, monographs and chapters on marketing research, buyer behavior and international marketing. Dr. Wind is a former Chairman of the Institute of Management Science, and he has received a number of awards, including two Alpha Kappa Psi Foundation Awards for the best articles published in the Journal of Marketing in 1973 and 1976. VOL. 3 NO. 2 SPRING 1986 23 Downloaded by UNIVERSITY OF LIVERPOOL At 01:51 05 January 2016 (PT) THE JOURNAL OF CONSUMER MARKETING bly the last thing a company would want to do is position itself as a low-price producer. Low price offers no long-term consumer franchise, and there is always the possibility that a cheaper technology or lower labor costs elsewhere will eliminate the company's temporary advantage. Furthermore, a customer who buys based on price will tend to switch to a lower-price product. Finally, given the tremendous diversity in the competitive environment across countries, very often a standard product will be overdesigned for some countries and underdesigned for others; the same product could then be overpriced in some countries and underpriced in others. 3. A third argument often presented economies of scale. Current developments in factory automation allow, however, product customization without major cost implications. More important, with many products the cost of production is a relatively insignificant part of the total product cost-for example, in pharmaceuticals and cosmetics. Another disturbing factor is that in much of the discussion on standardization, the focus is strictly on the product and technology. What has been ignored is the role of the other decisions involved. If one explores, for instance, a very simple sequence of decisions-positioning, product line, brand name, packaging, pricing, advertising and public relations, customer and trade promotion, and distribution, one has the option for each of these either to go global or not. By focusing only on the product, a company would ignore the complexity of the marketing decision. Table 1 illustrates a preliminary framework to evaluate global strategies; the standardized approach advocated is only the extreme left branch of the diagram, which, with its eight items, represents only one out of 256 combinations. The other extreme approach will obviously be the fully customized strategy, which again is not very desirable because it eliminates all the possible synergies among various country operations. 4. An extremely important condition which probably by itself can justify opting for a standardized approach, is the preference of a number of global market segments for a uniform physical product and brand image. This is often the case for industrial companies, which have a preference for the same product specifications and the same service in various parts of the world. If this is the case, then one can make a strong argument for at least some of the components of the marketing strategy to be globalized. But again, the advisability of doing this has to be weighed against other strategic factors: the size and growth of the segment, the strength of the preference of this segment, the expected profitability from the segment, and the ability to reach the segment effectively. 24 Downloaded by UNIVERSITY OF LIVERPOOL At 01:51 05 January 2016 (PT) 5. The fifth set of conditions requires that there be no external constraints on the firm's ability to implement the standardized strategy. First we have to recognize the fact that operating around the world there are numerous government regulations with which a company must deal. Second, there are tremendous differences among countries; Ted Levitt correctly stresses that one should not focus only on differences, one should look for commonality and similarity; however, one cannot ignore the differences and the need to adapt to them. Most international blunders stem from instances of cultural insensitivity— lack of awareness of values, and attitudes-that cause a strategy which is extremely successful in one country to prove wrong in another. Very often a standard product will be overdesigned for some countries and underdesigned for others; the same product could then be overpriced in some countries and underpriced in others. The third factor, which is an important one, is the fact that there are tremendous interdependencies between the marketing decision and other decisions the firm has to make with respect to resource markets-such as procurement of raw materials, technology, manufacturing, human resources, and financial. Marketing decisions cannot ignore these factors but rather have to deal specifically with them. 6. Another set of conditions relates to the absence of internal constraints on the firm's ability to implement a standardized strategy. Two major factors operate in this case: one is the fact that most firms do have international operations. They do not start from scratch and say: "We are a U.S. firm; let's look at a world of 170 or so countries, and decide which countries we want to reach with a standardized strategy." Most companies instead have established operations, established commitments such as joint ventures, wholly owned subsidiaries, long-term contracts with distributors, and so forth. This network of relationships in many markets must be taken into account when a company designs a strategy. The second factor at stake here presents an interesting problem. There is much discussion about the age of entrepreneurship and about ways to enhance it in corporate settings. There is concern about large bureaucratic organizations that kill entrepreneurship and lose employees who decide to go on their own. This situation has led to a move toward decentralized structures in which the authority and responsibility belong to the local manager. A standardized approach, on the other hand, takes the initiative and entrepreneurial spirit away from the country managers; in this respect, standardization which tends to be associated with centralization, could create major problems to the long-term survival of the firm. 7. The final condition that affects the decision to follow global strategy is the presence of positive synergy from multicountry operations. Yet synergy, despite its importance, is not limited to a standardized approach. It can be achieved among non-standardized but integrated strategies. Given the problems that we have outlined, and the increased risk of standardization, what is the solution? An obvious conclusion is that standardization is one, and only one, of many possible strategies. If we look at these factors more systematically, we can develop a framework for the classification and determination of the most appropriate global strategy. Given the various marketing strategy components-positioning, segmentation, product line, brand name, packaging, pricing, and so on— there are three major types of strategies one can follow: The first one is standardization, with the entire marketing mix strategy being the same worldwide. This is a very special case. Network of relationships in many markets must be taken into account when a company designs a strategy. The other extreme is a total differentiation with a distinct strategy being designed for each country. This is not very desirable, because it eliminates all possible operating synergies. We are then left with mixed strategies, which 25 Downloaded by UNIVERSITY OF LIVERPOOL At 01:51 05 January 2016 (PT) THE JOURNAL OF CONSUMER MARKETING encompass the range of 254 strategies between those two extremes. There are even more options if one adds another level in the continuum from standardization to differentiation-that is, a cluster of segments or countries. This would increase the number of options from 256 (28) to 576 (38). Given the large range of possible strategies, it is desirable for companies to start profiling their operations and find out where they are among all these possible options. Each profiled strategy should be examined to see whether changes in it, either toward globalization or toward a more idiosyncratic strategy per country, would be desirable. In addition, a useful conceptual guideline for the selection of the best strategy can be altered from what I would like to call think globally, act locally. What this approach suggests is that overall design follows worldwide perspective but that every detail of the marketing strategy takes into account the idiosyncratic country characteristics and cultural differences. There is no difference in the approach that we should use to design these strategies in each country and the one we use domestically. However, the perspective should be a global one encompassing the entire range of operations, looking at the global competitive and market environment. A standardized approach takes the initiative and entrepreneurial spirit away from the country managers. By following the strategy of think globally, act locally, we (a) take advantage of what Ted Levitt suggested to us, that is, that changes in the world force us to move away from thinking domestically, (b) avoid the pitfalls of inappropriate global standardization and (c) employ marketingoriented approach and take advantage of our understanding of the local conditions in each one of the world markets. 26 Downloaded by UNIVERSITY OF LIVERPOOL At 01:51 05 January 2016 (PT) This article has been cited by: 1. Ali Kanso, Richard Alan Nelson, Philip James Kitchen. 2015. Meaningful obstacles remain to standardization of international services advertising. International Journal of Commerce and Management 25:4, 490-511. 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