Globalization and Localization

An important issue in International marketing is Globalization Vs Localization or Standardization Vs Customization. The issue, in other words, is whether a company should follow strategy of geo-centrism or polycentrism. The question is whether all the markets should be regarded as a single homogeneous market that can be successfully tapped with a globally standardization marketing or whether there should be specifically designed strategy for each of the distinctive market.

Multinational standardization would mean the offering of identical product line at identical prices through identical distribution systems, supported by identical promotional programs, in several different countries. At the other extreme, completely localized marketing strategies would contain no common elements whatsoever. Obviously neither of these extremes is feasible or desirable and in practical marketing these terms are not used in the literal sense. In many cases, the issue boils down to what extent localization or standardization is appropriate. In a number of cases, what is appropriate is neither localization nor globalization but regionalization.

The world is becoming a common market place in which people no matter where they live desire the same products and lifestyle. Global companies must forget the idiosyncratic difference between countries and cultures and instead concentrate on satisfying universal drives.

Citing the examples of many high-tech ad high-touch standardized products being sold in the same way everywhere. World’s needs and desires have been irrevocably homogenized and that this makes the multinational corporation obsolete and the global corporation absolute.

While the multinational corporation operates in a number of countries and adjusts its products and practices in each at a high relative cost, the global corporation operates with resolute constancy allow relative cost as if the entire world or major regions of it were a single entity; it sells the same thing the same way everywhere.

The modern global corporation contrasts powerfully with the aging multinational corporation. Instead of adapting superficial ad even entrenched difference within and between nations, it will seek sensibly to force suitably standardized products and practice on the entire globe. They are exactly what the world will take if they come also with low prices, high quality, and blessed reliability.

The following developments tend to favor globalization:

Technological Advance: It is argued that the connectivity of the world through technological advancement in communication and travel by the technological revolution drives the world toward a converging commonality.

The very fast changes in technology also make products obsolete very soon, i.e. the product life cycle is very short in many cases. Customization involves time and the resultant delay in introducing the product in different markets may make the product life cycle even shorter in an environment of fast changes and come in the way of fast recouping the cost of products with short life cycles due to technological obsolescence or other reasons like changes in fashions.

Travel and Communication: Trans-national travel encourages globalization in two ways. First, it helps diffusion of product information. Second, transaction travelers become customers for a product in different countries. International migration also has similar effects.

Developments in the field of education and communication have tremendous impact on product promotion. The spread of English education has increased the international circulation of English publications. Media from one country newspapers, magazines, radio, TV etc may reach audience in many other countries. For example, consider the following cases.

German television broadcasts are received by 40% of Dutch homes with TV sets. Paris has a circulation of 85,000 in Belgium, 26,000 in Switzerland, and a substantial readership in Luxembourg, Germany and Holland.
On an average day, over 4 million French housewives tune in to Radio Luxembourg, the same broadcast reaches 620,000 Belgian housewives, 30,000 in Switzerland, and 100,000 in Holland.

On short worldwide communications carry everywhere the constant drumbeat of modern possibilities to lighten and enhance work, raise living standards, divert and entertain. The same countries that ask the world to recognize and respect the individuality of their cultures insist on the wholesale transfer to them of modern goods, services and technologies. As far as comforts of life are concerned, peoples’ attitudes are becoming more and more secular.

Product Image: Consumers are becoming more price and quality conscious Competitors in the 1990s will not be marketing magicians. They will rely on two rather universal needs of their customers’ reliable products and low prices. Standardization makes production more cost efficient, leading to low prices. Standardization reduces costs because of the economies of scale in production and marketing and because of the savings on R and D product development. By translating benefits of enormous economies of scale in production, distribution, marketing and management into reduced world prices, the corporations geared to standardization can decimate competitors that still live in the disabling grip of old assumptions about how the world works.

International Standards: The laying down of international standards for many products also encourages standardization. Many such industrial products which perform the same function everywhere lend themselves for standardization.