Global Marketing Strategies

Two opposite viewpoints for developing global marketing strategy are commonly expounded. According to one school of thought, marketing is an inherently local problem. Due to cultural and other differences among countries, marketing programs should be tailor-made for each country. The opposing view treats marketing as know-how that can be transferred from country to country. It has been argued that the worldwide marketplace has become so homogenized that multinational corporations can market standardized products and services all over the world with identical strategies, thus lowering their costs and earning higher margins.

Localized Strategy The proponents of localized marketing strategies support their viewpoint based on four differences across countries:19 (a) buyer behavior characteristics, (b) socioeconomic condition, (c) marketing infrastructure, and (d) competitive environment. A review of the marketing literature shows how companies often experience difficulties in foreign markets because they did not fully understand differences in buyer behavior. For example, Campbell's canned soups mostly vegetable and beef combinations packed in extra-large cans did not catch on in soup-loving Brazil. A postmortem study showed that most Brazilian housewives felt they were not fulfilling their roles if they served soup that they could not call their own. Brazilian housewives had no problems using dehydrated competitive products, such as Knorr and Maggi, which they could use as soup starters and still add their own ingredients and flair. Also, Johnson & Johnson's baby powder did not sell well in Japan until its original package was changed to a flat box with a powder puff. Japanese mothers feared that powder would fly around their small homes and enter their spotlessly clean kitchens when sprinkled from a plastic bottle. Powder puffs allowed them to apply powder sparingly. Similarly, advertisers have encountered difficulty when using colors in certain foreign countries. For example, purple is a death color in Brazil, white is for funerals in Hong Kong, and yellow signifies jealousy in Thailand. In Egypt the use of green, which is the national color, is frowned upon for packaging. Socioeconomic differences (i.e., per capita income, level of education, level of unemployment) among countries also call for a localized approach toward international marketing. For example, limited economic means may prevent masses in developing countries from buying the variety of products that U.S. consumers consider essential. To bring such products as automobiles and appliances within the reach of the middle class in developing countries, for example, the products must be appropriately modified to cut costs without reducing functional quality. Differences in the character of local marketing infrastructure across countries may suggest pursuing country-specific marketing strategies. The marketing infrastructure consists of the institutions and functions necessary to create, develop, and service demand, including retailers, wholesalers, sales agents, warehousing, transportation, credit, media, and more. Consider the case of media. Commercial television is not available in many countries. Sweden, for example, lacks this element of the marketing infrastructure. In many countries, for example, Switzerland, commercials on television are allowed on a limited scale.

Suntory (a Japanese liquor company) considers the ban on advertising liquor on U.S. television as a main deterrent for not entering the U.S. market in a big way. Similarly, the physical conditions of a country (i.e., climate, topography, and resources) may require localized strategies. In hot climates, as in the Middle East, such products as cars and air conditioners must have additional features. Differences in telephone systems, road networks, postal practices, and the like may require modifications in marketing practices. For example, mail-order retailing is popular in the United States but is virtually nonexistent in Italy because of differences in its mail system. Finally, differences in the competitive environment among countries may require following localized marketing strategies. Nestlй, for example, achieved more than a 60 percent market share in the instant coffee market in Japan but less than 30 percent in the United States. Nestlй had to contend with two strong domestic competitors in the United States, namely General Foods, which markets Maxwell House and other brands, and more recently Procter & Gamble, which markets Folgers and High Point. Nestlй faced relatively weak domestic competitors in Japan. IBM, which is the leading computer company in the world, slipped to third place in the Japanese market behind Fujitsu Ltd. and NEC Corporation in terms of total revenue. Nestlй and IBM must reflect differences in their competitive environments in such marketing choices as pricing, sales force behavior, and advertising.

Standardized Strategy In contrast to the view that marketing strategies must be localized, many scholars and practitioners argue that significant benefits can be achieved through standardization of marketing strategies on a global basis. As a matter of fact, some people recommend an extreme strategy: offering identical products at identical prices through identical distribution channels and supporting these identical products by identical sales and promotional programs throughout the world. Levitt asserts that "commercially, nothing confirms this as much as the success of McDonald's from the Champs Elysees to the Ginza, of Coca-Cola in Bahrain and Pepsi-Cola in Moscow, and of rock music, Greek salad, Hollywood movies, Revlon cosmetics, Sony televisions, and Levi's jeans everywhere."25 Although across-the-board standardization, as proposed by Levitt, may be difficult, it is commonly accepted that the marketplace is becoming increasingly global, and indeed standardized strategies have been successfully pursued in many cases. Among consumer durable goods, Mercedes-Benz sells its cars by following a universal marketing program. Among nondurable goods, Coca-Cola is ubiquitous. Among industrial goods, Boeing jets are sold worldwide based on common marketing perspectives. Past research shows that, other things being equal, companies usually opt for standardization. A recent study on the subject lends support to the high propensity to standardize all or parts of marketing strategy in foreign markets. For example, an extremely high degree of standardization appears to exist in brand names, physical characteristics of products, and packaging.

More than half of the products that multinational corporations sell in less-developed countries originate in the parent companies' home markets. Of the 2,200 products sold by the 61 subsidiaries in the sample, 1,200 had originated in the United States or the United