In international marketing, the marketers are required to come up with a decision as to whether they are going to standardize the product or to modify the existing products which is one of the challenging decisions that they have to make. And this decision can make impacts on the organization in terms of the Research and development expenses, finance, production, organization structure, procurement, marketing mix etc. And the decision as to which to choose depending on the attitudes towards the different cultures. So in this article, we are going to cover these two concepts so that you can have an idea about the two concepts in depth.
Product standardization refers to the process of maintaining uniformity of products and services sold in different markets or in other words setting identical characteristics for a particular good or a service.
For an example, if a particular company comes up with the decision of standardizing the product then the product is being manufactured using the same materials, same processes and even sold under the same name.
In the process of standardizing a product, there are certain guidelines to be used and such guidelines should be followed by the company who is willing to standardize the product and the guidelines will be applicable to one organization or to one industry and will be conformed in the national level or international level.
There are several examples for industries that use standardized products.
- Piston industry
- Nut and bolt industry
Now let’s talk about the consequences of the standardization.
Standardization promotes the uniformity among the products and services and hence yields the advantages. This does not give advantages only to the organization but also to the customers as well.
Advantages of Product standardization
To the organization
- Reduction in cost – In the standardization, an identical product is produced using the same materials and processes etc. So that the materials can be purchased in bulk quantities and this will lead to have discounts in purchasing. At the same time, this will cause less wastages in material usage as well and reduces the cost.
- Production efficiency – When the product that we are currently producing is being uniformed, the production process becomes efficient due to enabling factors such as mass production, specialization of labour, automation of the processes of production.
- Well established and well-strengthened brand – When an identical product is being available in different markets it helps the organization to establish and strengthen the brand.
- Increase in production – When the differences among products are reduced the production of the company can be easily increased.
To the consumers
- Customers are enabled to choose the exact product that they want – When the differences among the products are reduced then the customers are not required to confuse as to which product or service to buy. So that they can choose the exact product without any confusion.
- Can obtain a high-quality product – When the products are standardized consumers can obtain relatively a high-quality product.
- Better living standards – When the consumers are capable of consuming high-quality products at lower costs their living standards gradually increases.
But there are situations where this product standardization gives negative results as well.
Disadvantages of Product standardization
- Stagnation – When the organization keeps producing a uniform product for a long time then it will cause the organization to remain in the same place in the industry. This is not good for an organization since the rivals can take advantages of this. So while trying to standardize the products they need to make changes to the products as the environment changes.
- Communication failures – As the time goes the demand of the consumers can be changed and in such situations, organizations will still try to maintain the consistency without looking at the changes of demand of the consumers. This will make bad consequences on the organizations’ survival.
- Less choices to consumers – Since the product is a standardized one, the consumers do not have a wide range of choices.
This is a strategy mostly used by Multi-National Companies(MNCs). This product adaption refers to the process of modifying the existing products in order to reach to each market. There are several product adaption strategies that an entity can use such as product, target market, package and design, ingredients, language, culture, religion etc. That means in terms of target markets, packaging and designs, ingredients, languages, culture and etc the organizations need to come up with different ways so that they can cater different markets in a way where the customer needs and requirements are addressed.
Eg: The way the Red bull product is being sold in China and North America are different from one another. Because the label of the Red bull which is being sold in North America consist of red and silver for which the red bull stands for action and the silver background stands for the youth spirituality and spirit. Whereas in China the label is in red and gold for which the red colour stands for good luck and the gold colour stands for wealth and happiness.
North American red bull: Red is a symbol of action and courage Silver-symbol of maturity Blue-symbol of youth spirituality and peace
Chinese Red Bull: Red-symbol of good luck Gold-symbol of wealth and happiness
At the same time when the shampoo of Dove is being sold the Dove company use different packaging to reach different markets. To Islamic countries they use a girl with a scarf and to the other countries which are not Islamic, a girl without a scarf is used.
There are mainly two types of product adaption methods.
- Mandatory Adaption – Adapting the products to a particular country’s local requirements so that the legal and physical operations can be done by the company in the respective country. Eg: left hand driving in the UK
- Local non mandatory adaption – Adapting a product with the intention of giving the consumers the chance to consume a better quality product which is not a legal requirement.
There are several reasons for such product adaption. They can be listed as follows.
- Cultural factors
- Usage factors
- Differing consumer purchasing power
- Level of local technical skills
- Local taxation policies
- Effects of different market entry methods
- Legal standards
- Technical specifications
Both standardization and the product adaption has its own advantages and disadvantages. As managers when choosing a strategy we always need to make sure to choose a strategy in a way where the negative effects are minimized and the positives are maximized.