Introduction
The difference between the two key concepts in the international marketing strategies called customisation and standardisation in relation to medium enterprises (SME) and large organisations will be presented in this paper. Therefore, this paper will discuss both customisation and standardisation.
Customisation and standardisation in international marketing
Standardisation marketing strategy is a means of marketing consistent solutions throughout the marketing mix. This is the opposite approach to adaptation strategies in which multinational corporations differentiate their products and adjust them to meet the unique needs of the country. The main point of standardisation marketing strategy is that companies can standardise not only all aspects of their product experience but also components of product or marketing. Standardisation of the entire product experience includes product uniformity, customer service, product support, marketing, pricing, and distribution. This is a standardised marketing mix (Bizfluent, 2011). The biggest advantages of this marketing strategy are cost reduction and a strong brand. Companies can reduce the cost of developing marketing strategies because they can use one marketing strategy in all markets without having to spend special marketing costs on each market. In addition, it enables to create a strong brand image by promoting the same brand image in the global market (Study.com, 2019). There is another advantage of cost reduction, which allows standardisation to halve manufacturing costs. This is because purchasing leverage can significantly reduce purchasing costs for companies. If product purchases and parts are standardised, inventory utilisation is lowered, and general parts are supplied only, when necessary, after storage, so there is no order cost incurred (Business Automation Specialists, 2013). In addition, standardisation makes it easy to introduce changes, increasing productivity and efficiency because improvements are uniformly applied throughout the production system (10 Things That Can Be Done to Up Drive Production Per Labor Hour, 2012)
On the other hand, customisation refers to the act of changing products or services delivered to customers to suit their preferences or needs. It does not mean exactly the same, but it is similar to what is called custom-made or custom-made. Today’s market is highly competitive, and consumers and businesses want to work their own way. Therefore, many people expect companies to provide customised options because they are getting used to and looking forward to customised products. In order for a business to be competitive, it is necessary to know exactly what consumers want and what competitors are doing. If a firm provides more specifically what customers want, it will increase customer loyalty and satisfaction, increasing the likelihood of business success (What is customization? Definition and examples, 2020).
International marketing gives companies more opportunities such as new opportunities and market expansion than local marketing. This is because the scale of attracting customers expands because they can market to more people. For small and medium-sized enterprises, international marketing may be a difficult problem to determine, but the development of social media and online advertising today allows them to reduce international marketing costs (Industry Today, 2018).
The main decision in the development of global marketing strategies is whether to market with a globally standardised approach or a differentiated approach with customisation tailored to each market. In fact, many firms use standardised marketing. Standardised company products can maintain the same central message by emphasising distinct advantages. Nevertheless, flexibility is needed if the company’s brand message is not delivered well (Your Business, 2012).
Standardisation has certain advantages over customisation. As well as saving time and resources from the company’s point of view, it has advantages for consumers as well. Standardised products have fixed product specifications, so consumers can find products that suit their purpose wherever they are. In addition, standardisation of products reduces the number of products that can be used for a specific goal, making it easy for consumers to choose the products they want to purchase. As a result, consumers are aware of the characteristics of the product because of its repeatability and unity, so they can make wise consumption decisions based on that information. (Bhasin, 2018).
For instance, Coca-Cola can reduce costs by producing the same products delivered to all markets, and this same format is more efficient. The same standard price is applied to all markets in consideration of the price of the product, such as exchange rates. In this way, Coca-Cola can produce products at low cost and efficiently, so it can introduce new products to the international market faster (dugfairbrother, 2013). Also, Apple also uses standardisation strategies for their products. Their strategies create efficiency by designing products, expanding the size of the manufacturing economy, simplifying supply chains, and reducing marketing costs (Lumen, 2019).
On the other hand, companies such as StitchFix and Nike use a customisation approach. StitchFix personalised its business model. Customised clothes are recommended to customers based on data such as each customer’s choice, feedback, preference, and previous purchase products. It also serves as a stylist who recommends products based on customers’ profiles and provides better services to customers. In the case of Nike, it started an online store to allow customers to customise their shoes. This increased sales and gave customers a friendly image. This service called “Nike by you” allows customers to easily design by selecting the colour and image they want, which also allows customers to express their individuality.
Similarly, Skinit provides customised mobile phone cases. They make customised phone cases as well as other accessories. Customers can obtain the phone case they want by simply uploading the image they want on social media. Customisation can also be found in the pet business. Susan Lanci is an online dog boutique that helps to make pets’ custom-made clothes, necklaces, and other dog accessories. The products are high-quality, comfortable, and safe. Therefore, Susan Lanci can be a good choice for pet owners who want to provide good quality products to their companion animals (Brush Your Ideas, 2021).
Influence of Customisation and Standardisation on Business
Customisation and standardisation are based on two different marketing strategies. Standardisation is a marketing strategy for everyone and uses one identical strategy for all customers in the global market. Many companies are using this method because of the advantages of reducing costs and expanding the number of customers. Standardisation also helps achieve economies of scale and helps to gain brand recognition in the global market. This strategy can be used by SMEs without any burden. However, despite many advantages, there are also disadvantages. Since this strategy is to provide consistent services and products, product defects or service mistakes can break promises with customers, thereby damaging the brand image. In addition, since standardisation focuses on repetition and identity, employees with a tendency to be motivated to learn new things can be bored with work, which can result in reduced productivity or higher turnover. Finally, innovative thinking may be insufficient due to repetition and identity (Your Business, 2013).
On the other hand, customisation is to adopt a marketing strategy to meet customer needs. In other words, it is a process of providing goods and services according to customer demand. Therefore, this strategy can satisfy customers more easily because it accepts their tastes and needs and is also effective in markets where various cultural environments and competition are fierce. Marketing is also a flexible strategy that changes according to customer preferences. However, this strategy may be a burden on SMEs because it costs a lot to check customer preferences. However, many large companies are trying to gain a competitive advantage by using this strategy (Paperssolution.com, 2015). For example, Nissan provided buyers with the option to select engine models and interior and exterior colours of the vehicle in 2016. Vice President Kent O’Hara predicted that this personalisation will provide 25 percent of the company’s profits by 2022. Similarly, Nutella allowed customers to write their names on the bottles they purchase, and this marketing was successful. Customers shared bottles with their names on social media, making headlines (prabhukri, 2017).
Understanding new businesses, human resources, culture, and communities is essential for multinational corporations. This requires information, technology, and knowledge about overseas markets. Since knowledge through learning increases over time, old multinational corporations are more productive than new multinational corporations. Multinational firm’ cutting-edge technologies help them get new ideas and information, and corporate R&D investments help companies develop and learn well in various markets. R&D is a key strategy, and multinational corporations tend to work harder than non-multinational corporations, so multinational corporations are expected to have higher productivity. In addition, business operations in overseas markets can gain the right local business opportunities for companies while gaining new ideas and information through experience. Firms in the international market compete globally with each other to increase market competitiveness and efficiency of products. In this way, multinational companies can achieve economies of scale beyond the domestic market. (Government of Canada, 2020).
International Marketing Opportunities and Complications
One of the most common problems international entrepreneurs faces in other countries is the language barrier between them and their potential customers. There are several ways to overcome these communication disorders. Learning the basics of the language through books or apps or showing yourself what you have tried can be good ways to communicate. Hiring a business interpreter is another wise measure for smooth communication (Montes, 2018).
Furthermore, companies must understand their own country and local laws and regulations no matter which market they operate in. This includes local laws, taxes, and other administrative requirements related to the product. Therefore, companies must investigate the regulations of the selected country. Doing business in another country is working within the country’s regulations. Because all laws are different, they must be studied and understood, and some regulations affect the sale of goods. Things such as labelling and packaging methods may differ, and information on local language, ingredients, and materials should be identified. In addition, inspection or approval may be required before sales. If this is not prepared, sufficient investigation is needed because it can affect the cost and profitability of the product. In many countries, various products tend to be subject to strict regulations. Regulated products include food, beverages and alcohol, tableware, medicines and cosmetics, and electrical devices. These products can be subject to regulations such as sales restrictions.
Additionally, restricted products are not limited to consumer goods, and other industrial and capital products, such as construction products, may be subject to technical standards for standardisation reasons. Therefore, it may affect the sales potential or other matters of the product. For example, it may be difficult to sell products produced by EU standards to other markets. In addition, apart from product-specific regulations, some countries conduct pre-shipment inspections on goods imported to their countries. There is also a purpose of checking whether the product meets the specifications or standards, but there is a procedure to check whether the goods conform to the documents or their destination, thereby preventing fraud, import tariffs, or underpayment. In some cases, the exporter may incur costs and the buyer may have to bear the costs. Even if there is no cost, it is necessary to understand the requirements and consider the period when planning the delivery schedule (The Institute of Export and International Trade, 2022).
Conclusion
As discussed above, companies choose standardisation or customisation after understanding their business regardless of the size of the business. However, some firms respond flexibly to the market by mixing these two methods. International marketing requires a lot of effort because it requires the acquisition of various knowledge such as local culture, regional law, and trade law. Therefore, they need thorough preparation to increase profitability, which is their main goal.
Firms such as Apple and Coca-Cola use standardised marketing to target the world into one market. This helps maintain the colour or image of the brand by reducing marketing production costs and promoting the same brand image in the global market. However, depending on the type of product, excessive standardisation can be a problem by overlooking diversity, an important keyword in the global era. Conversely, companies such as KFC and McDonald’s have successfully used customised marketing that reflects local factors. Therefore, the choice of appropriate marketing techniques will help firms successfully enter the international market.
References
10 Things That Can Be Done to Up Drive Production Per Labor Hour (2012) Your Business. Available at: https://yourbusiness.azcentral.com/10-things-can-done-up-drive-production-per-labor-hour-11117.html (Accessed: January 12, 2022).
Bhasin, H. (2018). Product Standardization – Disadvantages & Advantages of Product Standardization. [online] Marketing91. Available at: https://www.marketing91.com/what-is-product-standardization-uses-and-advantages/.
Bizfluent. (2011). Standardization Marketing Strategy. [online] Available at: https://bizfluent.com/info-8001807-standardization-marketing-strategy.html.
Brush Your Ideas. (2021). Top 9 Inspiring Examples of Brands Offering Product Customization. [online] Available at: https://www.brushyourideas.com/blog/inspiring-examples-brands-offering-product-customization/.
Business Automation Specialists. (2013). Using Standardization to Reduce Manufacturing Costs – Types of Standardization. [online] Available at: https://bautomation.com/using-standardization-to-reduce-manufacturing-costs-types-of-standardization/.
dougfairbrother (2013). Coca Cola; Standardisation and Localisation Strategies. [online] dougfairbrother. Available at: https://dougfairbrother.wordpress.com/2013/01/24/coca-cola-standisation-and-localisation-strategies/.
Government of Canada, S.C. (2020). Why Are Multinationals More Productive than Non-multinationals? Evidence from Canada. [online] www150.statcan.gc.ca. Available at: https://www150.statcan.gc.ca/n1/pub/11f0019m/11f0019m2020008-eng.htm.
Industry Today (2018). Advantages Of International Marketing – Industry Today. [online] Industry Today. Available at: https://industrytoday.com/advantages-international-marketing/.
Lumen (2019). Global Business Strategies for Responding to Cultural Differences | Principles of Management. [online] Lumenlearning.com. Available at: https://courses.lumenlearning.com/wm-principlesofmanagement/chapter/responding-to-cultural-differences/.
Montes, D. (2018) 6 complications of doing business internationally, Pulse Headlines. Available at: https://www.pulseheadlines.com/6-complications-business-internationally/71598/. (Accessed: January 12, 2022).
Paperssolution.com. (2015). Standardization and customization strategies – paperssolution.com. [online] Available at: https://paperssolution.com/file/standardization-and-customization-strategies-1840/.
prabhukri (2017). Top 7 Product Customization Examples. [online] Productimize. Available at: https://productimize.com/blog/best-product-customization-examples/.
Study.com. (2019). Global Standardization in Marketing: Definition & Strategy – Video & Lesson Transcript | Study.com. [online] Available at: https://study.com/academy/lesson/global-standardization-in-marketing-definition-strategy-quiz.html.
The Institute of Export and International Trade. (2022). The Institute of Export and International Trade. [online] Available at: https://www.export.org.uk/page/Local_Regulations [Accessed 12 Jan. 2022].
What is customization? Definition and examples (2020) Market Business News. Available at: https://marketbusinessnews.com/financial-glossary/customization-definition/ (Accessed: January 12, 2022).
Your Business. (2012). Global Marketing vs. Multidomestic Marketing. [online] Available at: https://yourbusiness.azcentral.com/global-marketing-vs-multidomestic-marketing-12934.html.
Your Business. (2013). Consequences of the Bullwhip Effect. [online] Available at: https://yourbusiness.azcentral.com/consequences-bullwhip-effect-14826.html.
