The two alternative approaches of Pan-Global Marketing Strategy and Global Localization Marketing Strategy mean that businesses have to make a major strategic decision when marketing internationally. The product will need to be either standardized or adapted.
Globalization and the aggressive growth of some large multinational companies have promoted the increased use of international marketing strategies.
However, due to the growing presence of foreign competitors, businesses are finding it increasingly important to win over competition. In fact, many of the issues that a business may face when entering new overseas markets can be overcome by detailed market research. But, this can be costly.
This is where strategies for international marketing come in handy. Strategies for international marketing are methods to overcome problems of entering into foreign markets.
Definition of Global Localization Marketing Strategy
Global Localization Marketing Strategy means that the Marketing Mix is adapted to meet local (national and regional) cultures. This includes offering differentiated products, different prices and promotion that suit local expectations.
At a business level, we talk of globalization when companies decide to take part in the emerging global economy and establish themselves in foreign markets by adapting their products or services to the final user’s linguistic and cultural requirements. The business is adapting and selling products that are geared directly towards the particular cultural, religious and consumer requirements of each country.
Glocalization combines the words ‘globalization’ and ‘localization’ to emphasize the idea that a global product or service is more likely to succeed if it is adapted to the specific requirements of local practices and cultural expectations. The term started to appear in academic circles in the late 1980s, when Japanese economists used it in articles published by the Harvard Business Review.
Glocalization emerged when multinational companies experienced the political and cultural backlash in some countries trying to use a ‘one-strategy-suits- all policy’. As the same product did not suit diverse communities around the world, multinationals have started realizing the importance adapting Marketing Mix – developing slightly different products as well as promotion and pricing strategies – to reflect local and regional differences.
How does Global Localization Marketing Strategy work?
Global Localization Marketing Strategy: Different Marketing Mixes for different markets: Product A → Region A, Product B → Region B, Product C → Region C.
Global Localization Marketing Strategy uses differentiated marketing that is tailored to suit different countries. This approach to international marketing is summed up as ‘Thinking globally – acting locally’.
Examples of Global Localization Marketing Strategy
YUM: YUM, the world’s largest fast-food organization, owning top restaurant brands such as KFC, Taco Bell and Pizza Hut, has adopted this approach in China to its great success. KFC in China sells local products not available in other countries to suit local tastes such as youtiao, rice meals or soy milk at varied price levels to reflect differences in income of Chinese citizens using advertisements contain local ethnicity. Pizza Hut was the first brand to introduce the Chinese to pizzas in 1990. Its distribution and place decisions are being tested for local markets as it has tried out quick-service restaurants offering authentic Chinese food in surroundings designed in a local style.
Mitsubishi: Companies in the automobile industry has made several attempts to brand its products using local name that call to mind different images in the local context. In the 1980s, Mitsubishi renamed one of its cars in Spain and Spanish-speaking Latin America because the original name had connotations with an offensive slang term.
McDonald’s: McDonald’s tries to be ‘as much a part of local culture as possible’ by using its standard menu to glocalize by accommodating local foods such as spicy chicken wings or shrimp hamburgers in China. In Beijing, the restaurants are presented as local places to linger, often for hours, over a snack or study English. In the UK, McDonald’s menu reflects the country’s fondness for Indian food with offerings such as ‘McChicken Korma Naan’.
Advantages of Global Localization Marketing Strategy
Advantages of Global Localization Marketing Strategy include:
- Better suits local markets. Global Localization strategy considers differences in local needs, tastes and cultures including them in the Marketing Mix of the business that suits the local market. Despite growing similarity between consumers in different countries in recent years, the business develops different products to suit cultural variations of local customers. This better meets their expectations and could lead to higher sales and profits. Otherwise, they may simply not be willing to purchase the product, hence market opportunities would be lost.
- No cultural incompatibility. The business does not make any attempts to impose foreign products on regional markets by using the same brand name across all markets. With glocalization, there will be less local opposition to multinational business activity as the business will be more culturally appropriate.
- Less legal restrictions. As legal restrictions differ substantially between different countries, some standardized products and their promotions may be illegal to sell and use. The glocalized products are more likely to meet local and national legal requirements than, if they are standardized products.
Disadvantages of Global Localization Marketing Strategy
Disadvantages of Global Localization Marketing Strategy include:
- Fewer opportunities for cost reductions. The scope for economies of scale is reduced. This strategy does not help with cost reductions which can be substantial as different Marketing Mixes are used for selling different products in different markets. There will be additional costs of adapting products, promotional strategies, pricing strategies, store layouts, etc. to specific local needs. Also, developing different products that may have only short Product Life Cycles for each country requires the firm to spend huge sums of money. All these costs might lead to higher prices than Pan-Global Marketing Strategy would result in.
- Weaker brand recognition. By using Global Localization Marketing Strategy, the business cannot really establish a common brand identity for its products. The international brand could lose its brand power and brand identity, if locally adapted products become more popular than the standardized global product. This will cause lower recognition among customers.
- Not suitable for all businesses. Global and bureaucratic businesses may not have the agility necessary to communicate and compete in the local environments. Despite spending hundreds of thousands of dollars on market research associated with new product innovation, global firms that are not flexible enough may still get the global localization strategy badly wrong.
As the differences between consumers in different countries keep on reducing, people in different countries have more and more in common with each other than before. Hence, Global Localization Marketing Strategy does not fit the principle of growing the business to become a multinational company.
In summary, adapting to local conditions however has the advantage of meeting, fulfilling different consumer needs and behavior, obeying government regulations, respecting national culture, exploiting local market opportunities, winning over competition in the market, adapting to conditions under which the product is used, etc.
