Global brands tend to find themselves in a conundrum when it comes to the choice of whether to standardize or adapt to new markets. Choosing what to do is an interesting topic of discussion. It is such an interesting topic that the brightest MBA professors tend to pose this question on their Midterms. Each option comes with its fair share of pros and cons. This is why this topic requires a closer look. This post will argue the case for adapting over standardizing and will explore the pitfalls of failing to adapt in new markets.
Standardizing in marketing refers to the act of applying the same marketing strategy to each market. A one size fits all strategy with all elements of the marketing mix being roughly the same in each market. Standardizing comes with the benefit of being able to capture economies of scale, therefore, lowering the cost to a firm. It will also help the firm with the speed of implementation. By offering the same product/service with no adjustments it allows you the ability to enter new markets at a fast pace. Firms that are attempting to be the first to market would favor the standardization strategy. However, choosing to standardize will also lead to a firm being inflexible and lacking uniqueness. In terms of being inflexible, they are not able to adapt or adhere to local tastes and preferences. This can create an opportunity for a competitor who prefers to cater to the local market. An example can be seen with McDonald's and KFC in Japan. One would think that McDonald’s would be superior to KFC in Japan like it is here in the US but that is not the case. KFC has more success in Japan because they choose to cater to the local tastes and preferences, whereas, McDonald's chooses to standardize (Jacobs, 2019).
Adaptation in marketing refers to the act of adapting to the new market in which a firm chooses to operate. Most if not all elements of the marketing mix are typically adapted to fit local preferences. Choosing to adapt can be beneficial because it can help the brand with its local image, and it can ensure that the strategy succeeds. The downsides of choosing adaptation are the higher costs associated with it and the slower rate of speed required for implementation. An example of adaptation can be seen with Disneyland when they went to Europe. Initially, they chose to go with more of a standardized approach, rather than adaptation. As a result, Disney’s park attendance in Europe was extremely low. To combat low park attendance Disney had to do a better job at adhering to local customs. For example, Disney used to have a strict no-alcohol policy at their park in France, but, pushback from local customers led to them offering wine at their parks.
In conclusion, there are certainly tradeoffs with both options but choosing not to adapt to your markets can be far more detrimental to a brand's success. However, choosing to be all things to all people is very costly and is definitely not sustainable. Therefore, there must be a healthy balance between the two with a strong emphasis on adaptation.
Jacobs, Harrison. “KFC Is by Far the Most Popular Fast Food Chain in China and It's Nothing like the US Brand – Here's What It's Like.” Business Insider, Business Insider, 8 Mar. 2019, www.businessinsider.com/most-popular-fast-food-chain-in-china-kfc-photos-2018-4#:~:text=As%20of%202016%2C%20KFC%20still,their%20way%20to%20US%20restaurants.
Spencer, Earl P. “Educator Insights: Euro Disney—What Happened? What Next?.” Journal of International Marketing3.3 (1995): 103-114.