Kayla SandersProfessor DeifInternational Marketing 3264 December 2017Standardizationvs. CustomizationWhat’s better? Customization orStandardization? This has been a huge question the business world for quitesome time. Although both methods have pros to their use, they are also followedwith cons. In this paper, I am going to be talking about the difference betweencustomization and standardization. I will explain how each process works andreal-world examples of each technique.
In the end, you will have an idea of thebenefits and weaknesses of each and can decide which method you would prefer. The article The Globalization of Markets gave me a great first initial look at whatis globalization. The beginning of the article starts off by talking about theadvantages and disadvantages of globalization. It talks about how globalizationhelps a lot for mass production. By allowing for more mass production, biggercompanies are able to start overshadowing smaller ones (Levitt, 2). The articlethen goes on to talk about how globalization can be bad because it does notrecognize for different cultures in different countries. This can cause abusiness a lot of trouble if they are not carefully placing the products.
Globalization can happen with both products and services and can be seen in awide variety of companies, especially with the help of the increase intechnology (Levitt, 2). The article then went on to mention theHoover case. The Hoover case is a company trying to sell washing machines.Hoover first started to sell their washing machines at a higher price becauseof the new features it offered (Levitt, 7). After a while of selling, it becameclear to Hoover that they should have sold a simpler washing machine at a lowerprice because consumers liked lower prices over fancy goods (Levitt, 7). TheHoover case is important because it shows you how strategic a company has to bewhen using a standardization method especially with the increase of technologypushing all companies in the same directions when it comes to selling (Levitt,7).
The article then went on to show examples of how companies standardized. Itshows what works and doesn’t work with standardization.After reading the article, Globalization of Markets, I concludedthat the method of standardization is used a lot in the business world. It ismostly used for products that will also have the same use.
Like a car will alsobe used to travel and sunglasses will always be used to block your eyes fromthe sun. Standardization makes it easy for a company to mass produce a productat a lower cost (Levitt,2). Companies are able to do this at a lower costbecause the same exact product is being sent to all different places around theworld. An example of standardization is the iPhone. From the beginning of whenApply first started making iPhones, they decided to make all their productshigh-end consumer technology.
In order to achieve this status, Apple invested alot of money and time into making the function and performance of their productthe top line (Wikipedia, 2013). In 2013, Apple had already explained into 417retail stores in 13 different countries (Wikipedia, 2013). Along with these 13countries, Apple was also able to sell their iPhones online in 38 othercountries (Wikipedia, 2013).
The reason standardization worked too well forApple is because consumers are drawn to the well-made product (Wikipedia,2013).Although Apple was able to take away allof the benefits of standardizing the iPhone, this method of selling productsdoes not always work. Standardization works for companies like Apple becausethey are a big company.
Other companies, on the other hand, will not be able tocompete with Apple because their company size is not as big. Standardizationalso might not work in all cultures. Products like the iPhone will but that isbecause phones are made for one purpose and they all pretty much look and do thesame thing. If a company was trying to standardize the food they were trying tosell, this most likely will not work in every country. The reason is thatbecause of the different cultures and religions in different countries. Someother products that do work with standardization are Raybans and medicine.
Medicine is a great product forstandardization because it pretty much has to be standardized. All medicine ismade up of certain compounds in order for it to work. There is really no needfor a consumer to be able to customize medicine because it would mess with themakeup of the medicine and the medicines function would no longer be valid.Another great example of standardization is Raybans. Raybans are sunglassesthat first became very popular in the United States. Raybans was able to easilyexpand and standardize their product because of the universal use consumers usesunglasses for. Sunglasses are used to block the sun’s UV rays from your eyes.
This is the function of use in most countries making it easy to standardize. Customization, on the other hand, works alot better if you want to make sure that your product will work for differentparts of the world. Customization allows to connect more with differentcultures and also allows consumers to make the product what they want. A greatexample of customization is NikeID. NikeID is a line of Nike that allows you tomake one the Nike shoes with any design or color you would like. This featureof customization opens Nike up to more consumers around the world (Team, 2015).
Consumers that live in a certain part of the world know what is and is notacceptable. Since they are able to design their shoes, Nike will be able toenter into more markets around the world (Team, 2015).Customization also applies to a lot ofservices.
Today, you see a lot of customization on internet websites. A reallygreat example of an internet service that uses customization is Amazon. Amazonuses a lot of data mining techniques in order for them to be able to customize yourexperience to others on their website (Happy Birthday to Amazon, 2014). Datamining allows Amazon to send you coupons on items that you have looked at,suggested items that you would like, etc. Amazon’s use of customizations allowsthem to build a relationship with the customers (Happy Birthday to Amazon,2014). It makes the customers feel like that Amazon knows them on a personallevel which allows Amazon to be used in all different countries around theworld.
McDonald’s is another great example of customization using. McDonald’shas done a lot of work research their different target markets. Because ofthese extensive research, McDonald’s is able to customize their menus in orderto cater to different cultural markets. An example of this is in China McDonald’soffers a taro pie on their dessert menu. The taro pie is mad a lot like theapple lie sold in the United States.
In China, McDonald’s customized the menuto taro pie in order to appeal to the consumers likes in the area (Oswald,2016).After weighing the pros and cons ofstandardization and customization, I came to the conclusion that customizationis the better option to choose. When going into a new market, companies need torealize that a homogenous product will not always be as viable as it was in theprevious market. Although you save money with standardization, withcustomization you will be able to reach more consumers. Customization allowsyou to reach a new audience without potentially offending any cultural aspectsof a region. With the extensive research companies do in order to make acustomized product, they will also be able to better market it towards the newtarget consumers. Although customization fixes some of the problems ofdifferent cultural aspects, distance is still another hurdle for companies tojump over. In the article, Distance StillMatters I learned a lot about how distance still matter even with all ofthe technological advances (Ghemawat, 2001).
The DistanceStill Matters article started off with a case study about Star TV. The goalof Star TV was to bring television to the Asian audience. Star TV’s plan was touse already made English shows for the channel because that was most of theiraudience second language (Ghemawat, 2001). Unfortunately, in Star TV’s first yearthey lost $111 million. This loss was generated because they did not do enoughresearch in order to see if the Asian market was a viable one (Ghemawat, 2001).
Star TV did not take into the account of different geographic, demographic, andpsychographic in the Asian market. After the case study, the article went on totalk about how companies can measure the impact of distance. The article wenton to talk about the four different types of distance, cultural,administrative, geographic, and economic (Ghemawat, 2001).
Cultural distance is how all of theconsumers interact with each other. In DistanceStill Matters, it included the difference in religion, race, social norms,and language (Ghemawat, 2001). Administrative distance is the history of howthe country trades with other countries. This is important to know when you aretrying to go into business with a specific country. Geographic distance is howfar you are away from the country you want to do business with (Ghemawat,2001). This is important to know so the company can figure how to get theproduct to the location of the country.
Economic distance is very importantbecause it shows the wealth of the country the company wants to go into tradewith (Ghemawat, 2001). The wealth of a company can affect the level and type oftrade a country is willing and able to do (Ghemawat, 2001). The DistanceStill Matters article then ended with another case study in distance.During this case, Tricon Restaurants wanted to have a global expansion(Ghemawat, 2001). To determine which markets they wanted to enter into, theylooked at country portfolio analysis apply the effects of distance.
Once theystarted to narrow down the countries, they started to look at how distancewould affect eh industry and company-specific features (Ghemawat, 2001). Thearticle ended off by talking about how the increase in technology may be makingthe world smaller but isn’t eliminating the problem of distance (Ghemawat,2001). Since the Distance Still Matters article was written a while ago, I decidedto do further research into how technology affects global markets today.
Onenew technology attribution I found is the micro to macro methodology (McKisney,2016). This methodology helps companies understand the target market of largerareas in a more efficient manner. The methodology covers 20 different countriesand 30 industries (McKisney, 2016). The research shows the productivity andgrowth, natural resources, labor markets, the evolution of global financialmarkets, the economic impact of technology and innovation, and urbanization(McKisney, 2016). Technology made the data trade market tosoar. It allows smaller business to get into the market without big companiescoming in to overshadow them.
Technology also makes going the distance a loteasier (McKisney, 2016). Methodologies like the micro to macro system, helpscompanies learn the cultures of countries a lot easier with the instant globalaccess to information (McKisney, 2016) Technology also allows more emergingeconomies to participate in trade because it doesn’t require as much intensivemore or money to participate (McKisney, 2016). After reading the second article and doingfurther research, I came to the same conclusion that customization is still thebest option for most businesses. Since technology allows companies to learn somuch more about a foreign market, companies will be able to make more by usingcustomization.
Customization is also a great way to do global business forstart-up or smaller companies. The bigger companies are the ones that usestandardization because they already have the brand established and can offermore lines. For most smaller businesses and countries, they do not have themoney to offer a lot of different product line. Once again making customizationthe best option.
You may have to pay more up front, but consumers will pay morefor a product they love and you will most likely sell more of your productbecause it matches the consumer market better of whatever country you decidedto do business with. Works Cited Levitt, Theodore. “The Globalization ofMarkets.” Harvard Business Review, May 1983, pp. 4–11., doi: productivityand growth, natural resources, labor markets, the evolution of global financialmarkets, the economic impact of technology and innovation, and urbanization. McKisney.
“Digital Globalization: The NewEra of Global Flows.” McKinsey & Company, Mar. 2016. Ghemawat, Pankaj. “Distance StillMatters.” Harvard Business Review, Sept. 2001, pp.
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