Globalisation - Following the Standardisation or Adaptation approach?
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- Through his seminal text in the Harvard Business Review, Levitt (1983) popularised the extremist theory of standardisation expressing that the world is converging into the emergence of a single homogenous consumer with increased similarities leading to a standardised institution of trade, manufacturing and product offering. The substantiality of this oft quoted theory has been countered by various theories of relative degrees of adaptability, largely initiated by Wind and Douglas in 1987.
- As early as 1983, Levitt highlighted the effects of globalisation which marks the movement from local to global facilitated by technology and diffusion of their aspiration through communication. Today, close to three decades later, the rapid increase in globalisation and expansion of brands into new and developing markets makes it even more crucial to understand similarities and differences in consumer perception of brands as shared perceived symbols or distinct cultural interpretations.
India in a Global World
- In today’s economic scenario, it is evident that developing countries are extremely promising prospects with high disposable incomes as well as willingness to spend among consumers. Since 1991, when the Indian market opened up to foreign investment, the economic upturn in India has been inevitable with multinationals keen to invest. With further relaxation of FDI allowing upto 100% investment in Single brand and 51% in Multi brand retail, Indian consumers will be facing choice and options from International brands competing with one another. However, what determines the brand approach to a foreign country? Does one standardise or adapt? Is standardisation a naive optimistic approach at its best and rigid at its worst? Are Indian consumers seeking a truly standardised product or service, at par with what they experience globally through travel, a click, a touch on latest technology? If a brand does decide to, what strategies do they need to customize?
The standardised approach
- India has seen the entry of International brands through various models of standardisation and degrees of adaptation. Theories of complete standardisation are strongly backed by the expansion of Spanish brand Zara into India in 2010. A leading high street apparel brand, Zara has maintained the same brand identity through imagery, product range, and its “no advertising and promotion” practice. The opening of their second store in India, in Palladium, Phoenix Mills, Mumbai saw a large number of eager people gathered, most of who knew and loved the brand. Standardisation worked best for Zara as their target market is mostly fashion conscious people who are aware of its personality or people looking at buying into an International brand. Experiencing Zara in both the UK and India, I found the product range to be identical (except for the lesser winter wear product mix in India, which also took me by surprise as I didn’t expect any at all in Mumbai!), chiffons, georgettes and a host of synthetic material apparel which for me were a first in the Indian apparel market, similar in colour and styling rampant across the two countries and fast flying off shelves. Before Zara (and at best, Mango also owned by the Inditex group, Spain), most International brands in India were focused on denimwear and sold most of their range in cottons and jerseys, adapting securely to the Indian weather and what, in concept, Indians were familiar with.
- Complimenting Zara and Mango is the fashion brand Forever 21, an American brand that stays true to its identity of being just that – American. Catering to the young (and fabulous) – teenagers and mostly college crowd it has youthful and colourful fashion and accessories reasonably priced to meet their needs. Similarly, Accessorise, an English brand has the exact same product lines in their stores in the UK (London, Manchester, Birmingham) and India (Mumbai), displayed in a similar manner and yes, at almost the same prices at the current exchange rate! Luxury brands too, that have globalised beyond Europe recognising a sizable market in the BRIC (Brazil, Russia, India and China) countries have standardised their brands maintaining their brand identity and vision.
- Going by the current scenario, it would seem safe to assume that standardisation is the most effective way to enter a new market, staying true to ones identity, and recognising a global, like minded consumer segment. Supporting Levitt’s strong statement recognising a homogenous demand across borders (physical and trade) the above case studies validate the fact that globalisation is here, that the world is actually converging through technology and communication.
or degrees of Adaptation
- However, these brands reflect just one side of a tossed coin. We could argue about the success of denim brands like Levi’s, Pepe Jeans, Lee and Wrangler in India who have followed the strategically standardised yet tactically adapted approach. These denim brands in India merely follow guidelines from their parent companies globally, manufacturing almost entirely in India in prints and fabrics acceptable to the Indian consumer and sizes suitable to the unique body type of Indians. A possible explanation could be their early entry into India. Following Pepe Jeans which entered in 1989, the rest of the denim brands expanded to India in the 90’s. Technology and communication were still not advanced enough for most of the Indians who travel abroad today to experience these brands. Intelligently though, these brands sold in India retaining there brand identity and heritage as “English” or “American” brands. Much coveted. However, their continued success today, in modern times and as they say, globalised environment reflect a strategy gone right.
- Globalisation does not always mean recognising similarities in markets, or conforming cultures to those of Europe or America. Based on this understanding, the Denim brands in India follow a “Glocalisation” approach, a combination of strategic standardisation and tactical adaptation.
- Another case in point is Marks and Spencer and their performance in India. Having entered India with price points similar to that in the UK (British brand, and highly priced for the Indian market), they failed to attract consumers in store and sales targets. One of the prime reasons being their target consumer in the UK is middle age and affluent. Standardising their approach and expecting a similar consumer to pick up stuff from the shelf was foolishly optimistic considering that age group in India is still fairly conservative in tastes and sticks to traditional attire. M&S, largely promoted as a British brand highly conscious of their corporate social responsibility (CSR), did not connect on this level either with the Indian consumer, a market still developing a pattern of consumerism in western apparel. India, as an emerging fashion market, with several sub cultures within one culture is distinctly different from the major buying powers of the west. Along with a diverse culture, several geographic, demographic, psychographic and behavioural differences limit standardisation of brands in India. Recognising the market the brand wants to target, the connect with the consumer justifies the need to standardise, adapt or appropriately glocalise.
- Forming a market entry strategy is thus not a whim, fancy or art. It is a subtle science of understanding one’s own brand and the consumer segment one wants to target. It is a study and a necessary one at that to determine the fine balance based on research and strategy.
- Thus, it can be said that no standard rule applies to all brands. Globalisation involves much more than merely selling or manufacturing abroad. While the argument between extreme theories of complete standardisation based on the assumption of a homogenous market and adaptation to the needs of each market segment is a non conclusive one, the key to effective global branding lies not in polarisation of either but in the simultaneous working of the two within an organisation. Some heterogeneous markets cannot be standardised and would need a customised strategy to cater to specific needs differentiated by culture, demographics, social and economic factors. At the same time all market segments do not need adaptation (nor is it feasible) when they can be grouped together as similar consumer clusters.
- As theorised by Aaker & Joachimsthaler (2002), the strategies of a brand should not be directed towards creating a global brand but global brand leadership in each country of operation.