#127 Global. Local. Standardization. Adaptation
When discussing the issue of standardization vs. adaptation of the marketing mix with students, I am often asked for convincing examples and illustrations of the differences between those strategies. One example that I personally like as a candy lover are wafers. As a category, they exist in most markets globally, and there is an abundance of local, regional, and global products.
Before I provide examples for different wafer products, I also should say that it is really important to distinguish between two types of standardization. The first type is that, which is employed by a mere sales approach, followed by the export-focused international company. These companies have a product that has been developed for and tested in a core market (usually the home market), and they are trying to sell the product in foreign markets as is. They are not interested in adapting their product to local needs, but just want to expand their sales territory with the lowest investment and risk possible. These companies products are standardized based on the needs in the core / home market. Their strategy is a clear hit or miss – the product may work in some markets, but not in others, and there is definitely always some market potential that is left untapped. I call this the outbound standardization. The other type of standardization is the one followed by global companies. They identify target groups that are globally homogenous with highly similar needs, and then they design or redesign their products to fit the needs of these target segments – regardless of geography. The product is therefore standardized, but not based on a singular home / core country market, but based on the needs of global segments. This is a costly and complex endeavor that involves a great deal of planning and investment. I call this the inbound standardization.
Now, back to candy and wafer examples. As they are widely appreciated across markets, there is an abundance of local brands such as, for instance, Manner in Austria, Loacker or Balocco in Italy, Minoo in Iran, Apollo in Malaysia, Kopobka in Russia, or Gossip in South Africa. These can be considered typical local products. Were the companies behind these products to internationalize their products as they are (which many of them have done), they would be following the first type of standardization approach, the outbound orientation. Under a mere sales / export approach they (would try to) sell the exact same product with highly similar price positioning and promotion through the same channels they are used to work with.
A good example for a global wafer product is Kitkat. While originally developed and sold in the UK by Rowntree, the Kitkat was launched into a global product by Swiss-based multinational Nestle after its acquisition in 1988. While there are some country-specific variations, the core, chocolate covered wafer is available in the vast majority of the world under the same brand, with the same ingredients, at the same price point, etc. catering to the exact same global target segment. Between the purely local and the truly global, there are some regional products that aren‘t global, but also not tied to a singular country market only. Take, for instance, Knoppers. Knoppers is a wafer product by the multinational Storck, that is positioned as a snack for children in the regions of Central and Eastern Europe. Storck has clearly identified a homogeneous target group in those regional markets, but hasn‘t taken the step to creating a globally standardized product (yet).
One good example for how a candy product (although not originally a wafer) can grow from American beginnings (at National Biscuits – Nabisco – today a division of Mondelez) into a highly standardized global product and then, later, into a multinational one by being adapted for specific markets are Oreos – the quintessential American cookies (so, not exactly a wafer – at least not in the US, as you‘ll see). Oreos originally had limited market potential in China, but through adaptations to the product (for instance, the chocolate covered Oreo wafer stick; new flavors such as strawberry, etc.) and the pricing (offering smaller, more affordable units) grew market share rapidly. The changes not only made Oreos hugely successful in China, but the innovations in that market were also leveraged in other markets.
What always needs to be pointed out in the international marketing debate is that the idea of an entirely standardized product is pure fiction. It is an idea, an extreme that helps to illustrate the dichotomy of the theoretical concepts of standardization vs. adaption. In reality, there is always one element of even the most global product – from the branded soft drink to a commercial aircraft – that is adapted to fit the local environment better.
March 12, 2018 @ 9:47 pm
From my point of view, this blog perfectly demonstrates the challenges businesses face when selling their products and services in international markets. Moreover, it witnesses how many businesses make costly errors when deciding between standardizing or adapting their products. These errors can be explained by the desire of businesses to standardize as much as possible and adapt very little if they can. The overriding advantages of a standardization are consistency throughout different, international markets and – of course – cost advantages. Moreover, the incremental globalization may be another argument for standardization. On the other hand, standardized products display no differentiation for local markets, local consumers and their unique needs. As the several wafer product examples clearly demonstrate, both approaches appear to be rational and businesses may gain benefits by using either approach. In my opinion it depends on the right “balance”. When businesses exert all their efforts on the extreme position of either standardization or adaption, they often become unfeasible and incoherent. In this context I want to mention the Austrian wafer manufacturer “AUER”. The company was looking to expand into other markets with its two products (Auer Baumstämme und Tortenecken). When choosing a product strategy, they decided to adapt and redesign their products. In order to accommodate specific consumer requirements and meet as much consumer needs as possible, they made specific adjustments for every single foreign market. Ultimately, the company found itself in over-adaption. This example clearly demonstrates that especially small businesses, when going global, need to find a balance between both sides of the coin.
March 17, 2018 @ 7:02 pm
Once a company pro-actively decides to go global or is being pushed out to do so, in the later case to compensate a troubled home market, many decisions have to be made and a correct strategy has to be set in place. According to Perlmutter (1969), McDougall & Oviatt (1994), Johanson & Vahlne (2009) and Kerr (2016), a company has first of all to understand in which phase their corporate readiness is currently in. Depending on the phase type, focus, number of countries and marketing mix vary.
For a systematic market entry the company has to evaluate the product readiness as a next step. They need to decide between standardization and adaptation and the necessary degree of the chosen option. In the case of standardization the same product, usually coming from the home market, is being exported to other countries and might succeed or not. Advantages are cost reduction, improved quality of products and processes, enhanced customer experience and -preference as well as an increased competitive leverage, but this strategy ignores local conditions and can even be perceived as being ignorant, which can result in unrealized market share potential. Furthermore the cost of coordination is increased.
Adaptation on the other hand adjusts to differences in order to increase the attractiveness of the product in the given market. This local responsiveness leads to a higher customer satisfaction, enhances local competition and can lead to innovation by learning from local markets. Also this strategy has disadvantages like increased costs or inefficiencies for example.
In the case of wafer products/ food items the purchase is usually strongly driven by cultural factors, consumer tastes, habits, and incomes.
Adaptation strategies may be as simple as tweaking the logo and the colors of the packaging, or may involve developing new flavors better suited to the local palate or new financing models more fitting for the local economy” (Valez, 2011).
When choosing to adapt and redesign to meet customer needs in foreign target markets, a company needs to find the right degree of adaptation to avoid over-adaptation, as it could be troublesome for the firm and lead to chaos and un-recognizable products. This is an especially delicate issue when quality varies in the different markets. A brand is always associated with a certain standard of quality. Just recently Knorr for example has been accused to produce at a lower quality for Eastern European countries, while the design of the packaging stays the same apart from language adaptations. This can be rather misleading for customers and create a loss in reputation.
To come back to the topic of this blog entry, Manner decided to use their home product for international product placements without distribution. For example the Manner wafer product was placed in the series F.R.I.E.N.D.S. Also in the movie Terminator the products had a cameo appearance. Arnold Schwarzenegger integrated them into the movie, since Manner wafers are one of his favorite sweets.
After a company has decided between standardization and adaptation, the target market(s) need(s) to be selected, the entry mode has to be chosen to finally be ready and dare the entry.
June 24, 2018 @ 6:42 pm
When going global the theory says that you should standardize as much as possible and adapt as much as necessary. But I think it depends on the product and on how you define your strategy. It isn’t possible to not change anything of the product – there is always something to change like the language of product description. From my point of view, the Manner wafer product has a very good design of packaging. Because of this reason its packaging stays the same apart from language adaptations. Manner sells the same local product, with nearly similar prices, through the same channels all over the world and this strategy works well.
In my opinion, this blog perfectly describes that selling an entirely standardized product is impossible today.
March 13, 2019 @ 7:15 pm
Inbound and outbound globalization can also be seen in other industrial sectors like the automotive market. A car is a very standardized product that can, in general, be sold to a very homogenous market. However, “little” differences in national or regional legislation make it necessary for manufacturers to adapt their standardized products. An recent example is the newly-found Vietnamese company Vinfast. While their product can be sold in a standardized fashion in the ASEAN market, the potential Russian market requires little adaption in terms of used fluids, loudness of the horn and so forth. Another example would be if a manufacturer of left-hand drive cars chooses to get into the right-hand drive market. While those markets lure with millions of customers, the initial product has to be reworked.
March 24, 2019 @ 9:30 am
When thinking about going global as a company it’s crucial to strategically decide on how to make this step. First of all the readiness of the company has to be evaluated and then the product readiness needs to be investigated. It’s important to then think about the correct market mix fitting all the needs, but also resources of an organization. As emphasized in the article there are options available, which are (outbound and inbound) standardization and adaption. All of them have their advantages and disadvantages, as standardization does not involve that much risk as it does not require a change of the product; it either works or not. On the other hand, if no adjustments to fit the market of interest are done, the likelihood of failure is bigger. Adapting requires as the name implies a change of the product. It can “only” be changing the product packaging, but it can also involve offering another flavor of e.g. a wafer or totally modifying it. The decision to only standardize or totally adapt to certain needs is not only black or white, the options merge. As mentioned, one can “only” change the packing size of the product, which counts as adaption, but still leaves the core product (as e.g. the wafer) the same. A golden rule in this regards is to standardize as much as possible, and adapt only as much as needed.
June 29, 2020 @ 8:02 pm
When it comes to being international or selling products in a foreign country, I definitely agree with this Blogpost. You can´t sell a 100% standardized product in a new, foreign country, little adaptions are always needed (otherwise you will lose this market). For instance, small adaptations are the language of the product description, the color code, little price differences, etc.. Furthermore, when it comes to ingredients, it does not have to be a new flavor, sometimes the amount of sugar is the key in a new market. In Germany are soft drinks way more sugared than in the U.K., for example. I am now three days in Munich and I already noticed, that ordering soft drinks is normal, whereas in Austria, in my opinion, it is not so common. Needs are different.
In every country there are little (and sometimes also huge) cultural differentiations, some products aren´t successful without any adaptations, some are, but these are definitely exceptions or huge/global brands/companies.
July 25, 2020 @ 11:16 pm
Wafers are popular enough where companies can standardize their products. The flavors of the wafers do not need to be changed to appeal towards a foreign audience because global consumers are satisfied with the original flavors like chocolate, vanilla, and/or strawberry. Companies should prefer the inbound standardization over outbound standardization for their products because inbound standardization is more accommodating for their target market. I do not believe that products from companies can be entirely standardized because companies should adapt their products towards the international market. Companies must follow the legal requirements of their products before entering their host countries. The flavors of wafers can be specialized to accommodate to the host country’s tastes. For example, peanut butter flavored wafers for the American consumers. When companies advertise their wafers into an international market, companies will have to change the languages on the packaging, commercials, and advertisements from home country’s language into host country’s language. If the home country and host country speak the same language, the company will make less changes on the packaging of the products, commercials, and advertisements. I found it fascinating that some products like Oreo had to change into wafers in order to satisfy their global customers.
February 24, 2021 @ 1:09 pm
Entering a new market without any adaption of the product and its´ strategy is not a real life scenario. Having a closer look on wafers, especially the Austrian company “Manner”, which are producing traditional Austrian sweets especially wafers since 1890. They have already entered the European market and partly the Middle East, Asia and UK. This example shows that even if the product itself will not be adapted according to local requirements, the packaging and especially the Marketing strategy needs adaption. As the major slogan of Manner was a German rhyme (Manner mag man eben), it was clear that this slogan will not work in other countries. Therefore, the company decided to implement the slogan “The Viennese dream”. As a typical part of their marketing strategy, they are sponsoring ski jumping events as they are seen as a typical Austrian thing. Therefore, they had to adapt their Marketing campaigns accordingly to local requirements.
May one of their reasons, why they are successful with no adaptions on the product taste itself is because they have focused on a niche and are producing under fair and ethical conditions with focus on high standards and quality (e.g. UTZ certified and Fairtrade).
April 21, 2022 @ 11:32 am
That blog is interesting for me because I´ve written my master thesis at Manner and due to that, I got insights into the company. It is a family-owned business that is very proud of its main product, the Manner wafers. The Manner brand with its eye-catching pink (the color is trademarked) doesn´t pay anything for product placement in stores because the color is eye-catching enough. As mentioned, especially in the food and beverages industry, different nations/cultures have different tastes. Asians prefer much sweeter products than e.g. Austrians do. Food and beverages companies use sensory analysis for quality control before a new product would be launched. Before entering a new market that is different from the home market, food and beverages companies should analyze the market due to a representative number of test persons they test their products upfront. Supported due to a proper questionnaire, a company can find out if the product fits the market or if adaptions are needed, based on the customer´s needs. Investing time and resources in local market research can prevent a company from failing due to entering the market with products, that don´t meet the customer’s needs.
July 6, 2022 @ 10:21 am
I think it is never easy to sell your regionally well accepted product successfully in other countries. The article shows different variants of how to proceed in order to successfully put this into practice. As a showcase example, the way of Oreo is mentioned, which I personally like. Initially only available as a regional product, it was then adapted to the global market, but that did not work out in all markets. So there have been adjustments for different markets and finally the product was successfull. I think the best way is to make a profound market research of the markets I want to enter. Thus the risk is minimized that I fail.
April 9, 2024 @ 10:30 am
The text explains how companies decide whether to standardize their products worldwide or optimize them for local needs. Examples such as waffles and sweets are given to illustrate this.
In my opinion, it is important for companies to understand that not all markets are the same. Some products may work well in one country but not in another. Therefore, it is advisable to adapt products to local preferences. In this way, companies can reach more people and be successful. It is also important to take cultural differences into account. What is popular in one country may not go over so well in another. Therefore, companies need to be flexible and adapt their products to the needs of consumers.
Overall, the text provides a good explanation of why companies choose to standardize or customize and why it is important to understand the needs of local markets.