6 - Global or Local?
Globalization of companies is touted for giving companies access to massive markets in a cost-effective manner, but the problems of globalization have also become evident: consumers preferences for products is often culturally derived, such that a product or brand is appealing to some but not to others (and can even be offensive or unappealing).
Particularly for marketing, there is a choice to be made by attempting to create a single global brand, or to create different brands for different geographic markets. There are advantages and disadvantages to both approaches.
Standardization vs. Adaptation
The argument in favor of a standardized product and brand is largely one of efficiency: the cost of adapting the brand to the preferences of a local market can be significant, and it is in the interests of producers to avoid undertaking this expense. There are also examples of products (such as Apple or Gilette) which have been very successful with a global product and brand.
On the other hand, those who prefer adapting to local markets can cite the cultural differences that make a message that is appealing in one location less effective in others. It is not merely a matter of language, but involves the cultural values, religious beliefs, social arrangements, and other factors that cause people to prefer one brand over another. For example, the world leader in the beer market is AB Inbev, which manages one global brand (Heineken) but for whom 85% of their business comes from brands that are localized.
Still others use mixed strategies. For example, many of Procter & Gamble's products are uniform the world over (washing powder doesn't need to be adapted much to tastes), but their marketing efforts involve location-specific campaigns for their brands, and the brands themselves may be local or global.
Determining an Approach
The author means to discuss a number of factors that a company should consider in deciding whether to use a global or local approach to branding and marketing.
Convergence of demand
While there is no such thing as a global consumer, customers all have the same basic needs (we are all human beings, after all) and may also have similar preferences in the way they seek to meet them, or at least be indifferent to the inessential qualities of a given product.
It is argued that the globalization of media has led to a trend in the globalization of taste, such that local differences are diminishing. For certain products such as computers and other high-tech devices, there is very little difference in what is popular in one location to the next (there is not a localized iPhone); but for other products, such as clothing and food, there remain great differences in preferences (while McDonalds has become a global brand, the menu is quite different in various nations).
Advertising regulations
In terms of marketing messages, regulations in different locations may prevent the same advertising campaigns to be used in multiple locations.
The availability of media
While there has been rapid development in many undeveloped parts of the world, there are still areas in which television and mobile phones are not widely accessible or dependable, and others in which older media are still consumed in spite of the availability of newer technology.
A comparable competitive position
Entering into overseas markets does not necessarily mean entering into a green field. In addition to competing with local brands, a global company may find itself in competition with other global firms that have already entered the same market - or which soon will if a competitor pioneers them and proves them to be lucrative.
International Competence and Experience
Research has shown that companies that have more experience in international business are better able to perform in world markets, as opposed to firms that are entering the global market without previous experience.
The same is true of their partners. Specifically, many firms rely heavily on an advertising agency to manage their campaigns, and most agencies will be glad to extend their services into the international realm - but not all agencies are qualified to do so competently.
Global Control vs. Local Autonomy
A firm may regard and manage its operations in other companies in a manner similar to subsidiary businesses, or it may take a world-scale perspective on its operations, managing overseas locations in the same manner that most firms manage domestic regions. Marketing efforts will likely be managed accordingly.
A hybrid approach, with global management of marketing but local management of operations, logistics, and the like can be difficult to maintain given that the activities of the different business units must be carefully coordinated so as to be harmonious rather than discordant.
Acceptance and Resistance of Globalization
Globalization has become a political issue, and various cultures and individuals vary in their sentiments about the matter. For some customers, they are hostile to foreign brands simply because they are foreign, and will refuse even to consider them and may take their resistance further, whether by acts of government restrictions or even direct hostility toward "invading" brands. Others might be enamored of foreign brands because they believe them to be superior to local product.
The author refers to a categorization system for these attitudes:
- Global - Customers who show a preference for homogeneous products that are the same the world over and are not tailored for local preferences.
- Local - Customers who wish products to be tailored to local tastes and preferences and do not care for standardized global products
- Indifferent - Customers who have no preference for global or local, but will choose whichever brand best suits their needs
- Hostile - Customers who are disenchanted with consumer culture and are hostile to any commercial product regardless of its origin or orientation
(EN: This seems entirely oversimplified, and is likely to vary by product and consumption situation, and the remainder of the chapter becomes even more sketchy .)