Unilever saw an opportunity among low-income consumers in India who wanted to buy the company’s high-end detergents and personal care products, but couldn’t afford them. The company responded by developing low-cost packaging and other options that allowed it to offer dramatically less expensive options. This flexibility not only opened a new market for the company, but also allowed it to develop brand loyalty that consumers could take with them when their income increased and they could afford higher-end products from the same manufacturer.
Regional norms have an impact on products like detergent, too. For example, while in the U.S. people are accustomed to using both hot and cold water for laundry, some regions use only cold water and require detergents that will get clothing clean in those conditions.
Once a company has decided to go global, the first question concerns whether product modifications are needed and if so, which ones. Certain products are good candidates for standardization while others are not. Consumer nondurables, including food products, are the most sensitive to differences in national tastes and habits, making them more likely to need changes for various markets. Consumer durables such as cameras and home electronics are less subject to regional issues. Industrial products tend to be shielded from cultural influences, but government regulations or restraints often force substantial modifications.
There are four product options when approaching international markets:
1. Selling the product as is
2. Modifying products for different countries or regions
3. Designing new products for global markets
4. Incorporating all market differences into one flexible product design and introducing a global product
Many companies use several of these options simultaneously. A large consumer products company might have in its product line global, regional, and purely local products. They can later introduce some of the products developed for one market into others. For example, the Levi Strauss line of Dockers casual wear originated at the company’s Argentine unit and was applied by its Japanese subsidiary before being adopted in the U.S. and becoming that country’s top-selling brand in the category.
There are pluses and minuses for both standardizing and adapting. The advantages of standardization include cost-savings in production and marketing. Economic integration is often a driving force behind standardization, especially in Europe, as marketers are standardizing many of their marketing approaches. At the same time facing the same competitors in the world’s major markets will add to the pressure to have a worldwide approach to marketing. Coca Cola and Colgate toothpaste have universal products and marketing strategies. Still, the argument that the world is becoming more homogenized might actually be true for only a limited number of products that already have universal brand recognition.
Is adapting becoming less crucial as the world becomes more homogenized? What is another good example of companies adapting (or not!) to regional markets? What can companies do to make global business more successful?
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Although global markets are beginning to become homogenized, companies need to continue to think “glocal.” The “think global act locally” approach calls for the adaptation of products in order to fit local tastes. This includes regards to regional culture, customs, language, and religion. If a company does not take these factors into consideration, they may turn customers away from their products. McDonalds represents a company that takes international customers’ tastes into account. In India, McDonalds has created the Veg “McCurry Pan,” which is a completely vegetarian dish that utilizes the popularity of curry in India. McDonalds has also created the Indian version of the Big Mac called the Maharaja Mac. These adaptations to Indian culture has allowed McDonalds to remain successful internationally. Despite the additional costs of adapting specific products, companies benefit in the long run because of these adaptations. If a company simply cannot afford to adapt their products, they should target markets with similar cultures and customs.
Although the world is becoming more homogenized, adapting to different foreign markets is still crucial in the marketing process because people from different cultural backgrounds have different tastes and preferences—if the companies do not adapt, there is simply no market for them in the international market. An excellent example would be Kraft’s Oreo cookies in China. When Oreo first entered Chinese market, the Chinese customers were not buying Oreo cookies because they thought these cookies were too sweet. In response, Kraft lowered the percentage of sweetener in their ingredient in order to cope with the Chinese’ taste. As a result of their adaptation, their sale surged dramatically and Oreo cookies eventually became the biggest cookie brand in China. Another example would be IKEA’s famous business strategy which focused on standardizing a product that fits customers all around the globe. However, the company still had to change their ways of doing business when they entered the North American market. In other world, no matter how homogenized a product becomes, the firm still needs to constantly make different degree of changes that will satisfy different customers’ tastes in order to make global business more successful.