International Marketing Mix: Standardization vs. Adaptation

Market Coverage Strategies

There are 3 main types of market coverage:

• Intensive – Distributing the product through the largest number of different intermediaries.
• Selective – Choosing a number of intermediaries for each area.
• Exclusive – This involves choosing only one intermediary.

Promotion Mix Elements

The promotional mix includes:

• Advertising
• Public Relations (PR)
• Personal Selling
• Direct Marketing (DM)
• Sales Promotion

Promotion: Standardization vs. Adaptation

• Standardization = The same promotional message or element of the promotional mix is used across all communications and markets (e.g., the same TV advert used, perhaps with language updates).
• Adaptation = All (or some) of the promotional mix is changed to appeal to local needs and demand (e.g., producing different TV adverts and marketing materials for each language/culture a product is sold in).

Considerations for Promotional Strategy

• Minimum standardization of promotion tends to be around language.
• Some companies try to get around this with minimal words and the addition of music, actions, etc.
• A strapline or Unique Selling Proposition (USP) may stay the same across countries (e.g., Audi's 'Vorsprung durch Technik' or HSBC’s 'The world’s local bank').

Product Strategy: Standardization vs. Adaptation

Product Standardization

This allows a product with a standardized specification and features to be marketed across a number of countries, including the home market.

• Achieves economies of scale and reduces costs.
• There may still need to be some adaptation of packaging and branding to accommodate language differences.

Product Adaptation

This requires modification to the product specification (design, quality, features) to meet national requirements.

• Increases production costs.
• Requires adaptation to branding, packaging, warranties, and after-sales service to meet local requirements.
• Increased costs may be offset by a larger volume of sales due to the product being better designed to meet the needs of the local market.

International Pricing Considerations

• What stage is the product in its life cycle?
• What is the state of the competition – are substitute goods available?
• What are the extra international costs of exporting – shipping, in-country transport, storage, staff in-country, insurance, etc.? This can lead to price escalation.
• It is vital that price escalation does not price the product out of the international market.

Price Strategy: Standardization vs. Adaptation

Price Standardization

A single pricing policy is applied across several markets or countries.

• Difficult to maintain due to changes in exchange rates.
• Companies may have to increase prices as exchange rates fluctuate.
• Could make them uncompetitive compared to local manufacturers.

Price Adaptation

Pricing policy takes account of local factors (e.g., demand, competitors, etc.) and adapts in line with these.

• Allows pricing policy to be more in line with local conditions.