Rs. 100/ Journal of MARKETING JOLUME : XXXVIII NUMBER :7 JULY, 2008 In This Issue in Attractiveness of Sarawak as Ecotourism Destination Goi Chai Lee in Overview of Natural-Based Market Segment Chieng Fayrene Yew Leh Kunal Gaurav Dr. Shivashankar. K Dr. Basavaraj Banakar M. B. Nichit S.N. Patil levision Viewing Behaviour Among Indian Kids Manish Mittal ing Practices and Problems of Cotton Cultivators in Dr. M. Balasubramanian ihunagar District Dr. R. Eswaran lationship Marketing : A Conceptual Analysis Prof. Harbhajan Bansal Komal Smriti iture Pattern of College Girls in Dindigul Town, Tamil Nadu Dr. N. Rajasekar cclusive Study. Dr. S. Manimaran M.S. Kokila Shopping — An Empirical Study of Bangalore City. Dr. V. Murugaiah Radhika VishyasInternational Advertising Strategy: Standardization or Adaptation? “Kunal Gauray INTRODUCTION The issue of whether advertising should be standardized or adapted to local cultures has been a major focus in the advertising literature. The debate regarding whether to standardize or customize the advertisement of a multinational company is not new and till now this is going on. This debate has involved the research community since 1950s. Basically, there are three schools of thought regarding international advertising: Standardization, Adaptation or Adaptation and Contingeney perspective. Advocates of standardized international advertising argue that customers for the same products are looking for imilar benefits from the products so they seck similar information across the country and they can be persuaded by universal advertising appeal, therefore advertisers must instead focus on the similarities of consumers around the world. Buzzel (1968) & Levitt (1983) argue that as the world’s needs and desires are becoming increasingly homogeneous, standardized advertising campaigns offer potential cost savings and efficiency gains. Given the potential benefits, itis logical that advertisers seek indicators supporting the opportunity for a standardized approach. The seeming westernization of foreign markets and foreign advertising is often such an indicator. There are mainly four grounds that construct the appealing base for standardization of advertising, First, it allows the multinational companies to maintain an unfailing image and identity across the nations. Second, it minimizes confusion among expatriates. Third, it allows multinational companies to develop a single, co-ordinated advertising actos different foreign markets. Finally, this approach helps a multinational company to reduce different ce media cost, advertising production cost etc. In Contrast, Advocates of adaptation argue that separate message should be employed to communicate with customers ofa particular foreign market by making the message adoptable to each country they serve. The rationale behind this approach is that there are so many differences (viz. cultural, social, economical, political & legal etc) between countries and even different parts of the same country. Proponents of the adaptation school of thought argue that advertisers must consider differences among countries, including — but not limited to ~ culture, stage of economic and industrial development, stage of product life cycle, media availability, and legal restrictions (Britt, 1974). These differences compel the advertiser to go for adaptation approach where separate message is designed for the customers of a particular market segment. In between pure standardization and pure adaptation, there is contingency approach. The proponents of contingency approach hold a moderate view that opines that neither complete standardization nor complete adaptation is necessary and at the same time (In view of Kotler (1986)), effective advertising strategy can be developed by using a combination of the above two approaches. In other words, the most effective advertising strategy varies depending upon situation and considers positives of both the standardization and adaptation approach. The intent of this paper is to develop a comprehensive framework to capture the relevant factors influencing the international advertising decision regarding adaptation and standardization in order to equip the managers to take right decision while designing advertising program for a foreign market. This paper also talks about different facets of advertising decision taken by multinational companies regarding standardization and adaptation, NEED OF THE STUDY This is a well known fact that the whole world is shrinking towards a common marketplace where companies from various countries are offering produets and services for the cosmopolitan customers. Me carthy (1960), proposed the concept of marketing mix, as a tool to achieve the marketing objective effectively and efficiently, commonly known as 4Ps (Product, price, place & promotion). The promotion is a very important element of marketing mix that is responsible for communication with various purposes like informing the customers, persuading the customers and reminding the customers about the products and services offered by the firm. As we are witnessing the globalization of the market; the communication strategy of the firms for different host countries is becoming very important as customers from different parts of the worlds are different. Very often, firms are adopting different approaches for Associate Profesor (Marketing). David Memorial Insitute of Managem. 12-13-1275. Jehovah Sieh. Tarnaka, Secunderabad - 500017, Andhra Pradesh Email: nal aura» tryahoo.co.in 8 Indian Journal of Marketing @ July, 2008advertising the products and services in overseas market even for the same product with same features. So, itis very important for marketers to understand what makes the advertising effective in overseas market. Although, the debate regarding standardization versus adaptation of advertising strategy has traveled a long way, still international marketers face difficulty while designing advertising campaign for the international market. Both approach of advertising i.e. standardization and adaptation has their own strengths and weaknesses. One approach of advertising may be successful for a specific category of products and services across the nation but same approach may not flourish for other group of product and services. Although the intent of 10 develop a comprehensive framework to capture the relevant factors influencing the international advertising decision regarding adaptation and to understand what makes a particular approach of advertising to remain unbeaten across the nation, this paper will certainly contribute to the ongoing debate of standardization versus adaptation approach of advertising. METHODOLOGY This paper is a conceptual paper and completely based on literature review. EBSCO and Emerald were used as research paper databases. The methodology comprise of collecting all available papers relating to the study topic for a given period and selecting relevant papers for the review purpose. Selection of papers is done on the basis of merit regarding, their relevance and contribution to the body of knowledge. At first, all selected papers were given primary reading in ‘order to select the papers which will constitute the core for this review study. Finally, relevant papers were selected and reviewed in order to capture various dimension of standardization and adaptation approach of international advertising. LITERATURE REVIEW ‘As world is witnessing globalization and liberalization, the importance of multinational companies are growing day by day. This growing importance has stimulated the research community to suggest the appropriate model for international advertising of multinational brands. A Multinational corporation manages production and distribution of goods and services at least in two countries. Multinational corporations can have a powerful influence in international relations and local economies. Very often itis argued that the new form of Multinational Corporation has been evolved in the response to globalization e.g. ~ globally integrated enterprises. We are well aware that marketing mix of an organization is very important for any organization and it should be managed very carefully. ‘Advertising of any multinational company isa very important part of overall marketing mix and it plays a very important role in communicating with foreign customers and building a unique brand image. STANDARDIZATION OF ADVERTISING STRATEGY: WHAT IT IS & WHY? Harris & Attour (2003) opined that “standardization” isa flexible policy that can be adapted to a range of circumstances and differing market conditions. In very strict sense, it can be said that standardized advertising believes in having identical advertisements across the countries. In practice, no two international advertisements are identical in all aspects, so the strict approach of defining the standardization of advertising strategy may not be valid. No two countries are identical so some kind of adaptation is inevitable to ensure the success of advertising strategy. Onkvisit & Shaw (1987) believe that advertisements can be said to be global only if it is almost unchanged in al the countries except translation. As language of different countries are different and it plays.a very important role at the time of receiving and interpreting the advertising message, that is why the researcher considered the translation of common advertisements in local language a part of standardization approach of advertising. Very often it is observed that standardized advertisements use same visual and basic message across the international market. Standardized advertisements maintain uniformity across the nation. Same time it can also be argued that standardized approach of advertising works well for standardized product and services offered by a multinational throughout the globe. Although much work has been done to define the standardization of advertising, there is no one robust definition that can define what it is. However, the visual component (picture) seems to be one of the most vital elements from a standardization perspective as most strict definition of standardized advertisement also believes in adaptation to the local language. Buzzel (1968) argued that standardization allows realization of economies of scale in production of advertising materials, reducing advertising, cost and enhances profitability. Levitt (1983) said that gone are the days when a ‘company could sell last year’s models or inferior version of advanced products in the less developed world. And also gone are the days when prices, margins and profits from foreign market were generally more than at country of origin. He also argued that the world is converging towards commonality and itis driven by technology. This com- Indian Journal of Marketing © July, 2008 9commonality is on the back why everyone everywhere is looking for same thing they have heard about, seen or experienced via new technology. When market is more or less homogenous, marketers need to take advantage of this trend by following a standardized marketing strategy. The basic logic behind standardization rests on the assumption of homogenization of global demand. If organization adopts standardized strategy, it can lead to effective and efficient operation in international business. Viswanathan (2007) argued that standardization is more critically dependent on the ability ofa firm to transfer its competitive advantage from market “A” to market “B” rather than the existence of competitive advantage in either market “A” or market “B” by itself. When the degree of transferability of competitive advantage from market “A” to market “B” is high, standardization strategies are facilitated. ‘Nikolaos & Viasis (1997) argued that standardization of advertising works well when the following conditions are revailing; Prey if there is great similarity in ctrl logal and economic environs aeroes differnt countries. + Ifthe Consumer profile and media scene across the countries are almost similar. + Lf the firm’s strategic orientation is not oriented with the culture of a particular country. + If firm believe: regional managers to take decisions. If firm is dealing with industrial products rather than consumer products Ifthe product offered by the firm is at the same stage of product life cycle across the countries If firm is dealing with non-culture bond products If the level of competition between local and multinational firms is not If firm is operating under severe budget constraints If the objective of advertising is to inform the customer rather than persuading and reminding the customers. Ifthe firm has expertise in handling the barriers that hinder the standardization of advertising strategy in overseas market * Ifthe firm has high degree of orientation with respect to the development of standardized communication mix across the different countries + If support activities (e.g. clear strategic vision, access to the reliable information, economy of scale etc.) are present and different barriers (e.g, Communication differences) are absent in the way of standardization of advertising. Standardization of advertising offer mainly two benefits to the firm; first is cost reduction (Onkvisit & Shaw, 1990) and second is consistent brand image (Onkvisit & Shaw, 1990; Tai, 1997). Firm can think for cost reduction because of economies of scale and scope as common advertisements are being used across the nation. Along with cost reduction and consistent brand image, standardized advertising also offer some associated benefits like consistency of communication, opportunity to exploit good idea, improved planning & control, require less effort in designing and demand less pre sellingefforts. At the same time, the concept of standardized advertising rely upon the assumption of homogenous market .Unless this assumption holds true in reality, this may not work well. Onkvisit & Shaw (1990), claimed that cost reduction does not automatically imply profit maximization as standardization may make the advertising unappealing to target segments and thereby decreasing sales. ADAPTATION (LOCALIZATION) OF ADVERTISING STRATEGY: WHAT IT IS & WHY? Fatt (1967) argued that no single country is a single unified market; itis composed of various market segments with different characteristics. The difference lies in mentalities, religious belief, customs and standard of living. As one country cannot be considered as a unified market, the assumption of homogenous market may not hold true across. the nation and standardization of advertising may not prove effective, Hite and Fraser (1990) claimed that advertising is more dependent on cultural influences than other marketing elements. Because of these characteristics, the visual and verbal parts of advertising are in particular sensitive and use of local language, models and scenery increases the probability for the advertisement to be effective. They supported the adaptation strategy of advertising for international market and the logic they gave for this is that a ‘company can create and exploit differential competitive advantage through local sensitiveness and improved communication effectiveness. Adaptation strategy aims at developing a separate advertising for a particular foreign market. This approach also believes that different countries are different regarding their culture, stages of economic development, political and legal system, customer values and life style, social pattern ete. Hence, culture of a particular nation is one of the major barriers in the way of developing a standardized advertising program i.e. developing same advertising message for all the countries they serve. in the host country 10 Indian Journal of Marketing @ July, 2008ee Nikolaos & Vlasis (1997) argued that complete adaptation of advertising strategy is desired when the following specified conditions are prevailing; * If firm is dealing with consumer durable and non durable products rather that + Advertising objectives focus more on persuading the customer rather than informing and reminding the customers. + All the other determinants, which are mentioned in standardization of international advertising exists in high degree but in the opposite direction. As adaptation of advertising relies on the assumption that different countries are different regarding their culture, stage of economic development, social pattern, political condition, it favors for designing a separate advertisement for a particular market that suits the host country. This strategy is generally linked with the decentralization of advertising function. In the view of Onkvisit & Shaw (1999), the basic idea of adaptation is to ensure differential advantage by adapting the communication message to ensure maximum advertising effectiveness in term of better response rate and sales. As a basic advantage, adaptation of advertising offers compatibility of advertising message with the local culture and local language. The visual elements (picture) and advertising message are adjusted with the host market so that international customers can never have a conflict with the advertisements. Adaptation also adds to the accurate positioning argument and price discrimination across the countries. Although adaptation of advertising strategy offer certain benefits to the marketer, but at the same time it is very costly and may lead to destruction of consistent brand image of the firm. Agrawal (1995) identifies the approaches by practitioners and academics over time. He argued that both the communities hold different views regarding advertising strategy of multinational companies for foreign market. He also captured the changing views of academics and practitioners. Practiioners: 19505 ————-——-+ 19608 + 19708, ————-—-—-» 19808 ‘Adaptation ‘Trend towards ‘Adaptation ‘Standardization standardization ‘Academicians: 1950s 419605 nnn 19703 — ny 19808 ‘Adapiation Contingency ‘Adaptation! ‘Adaptation contingency Source: Agrawal (1995) As cross cultural studies doesn’t show similarity, academics are in the favor of certain adaptation of advertising ‘message to succeed in foreign market. At the same time, Practitioners swing between adaptation and standardization He also argued that in 1950, practitioners were in favor of adaptation due to low level of familiarity with foreign customers as they did not have easy assess to actual preferences of international customers. As knowledge of international market increased, practitioners shifted towards standardization in 1960. In the 1970, they again shifted towards adaptation. Again in 1980, practitioners shifted towards standardization, the reason behind this shift may lie in the global of marketing practices across the country. CONTINGENCY APPROACH OF ADVERTISING STRATEGY: WHAT IT IS & WHY? This approach of the advertising can be considered as middle of the road that not only recognizes the host country’s cultural factors but also believes in some degree of standardization of advertising across the nation. This strategy can be thought of as a hybrid strategy where advantages of both standardization and adaptation strategy can be enjoyed. Onkvisit & Shaw (1990) argued that effective advertising should have the right combination of adaptation of advertising to the local market along with some degree of standardization. They also argued that the difference between standardization and adaptation should be seen as a continuum where the degree of standardization and customization will be different at different point of continuum, Quelch & Hoff (1986) developed a continuum to be considered at the time of formulating advertising strategy for foreign market. An international approach can be anywhere on a continuum in between the two extremes. Flexibility is very important in international marketing and managers need to tailor their approach they use to each element of the marketing mix. This hybrid approach of advertising is also supported by Link (1988) who came with the idea of global continuum; on the left side a firm with highly decentralized, multi-domestic operation and products is placed whereas totally integrated and globally advertised firm is placed on the right side. In the middle of the continuum, firms that standardize their product and Indian Journal of Marketing ® July, 2008 11advertising strategy but still adapt to the local differences are placed. This contingency approach also believes that both internal and external factors determine the particular advertising strategy for international market. As compromise (contingency) approach of advertising tries to capture advantages of both the standardization and adaptation of advertising by standardizing some of the elements of advertisement and adapting some of the elements of advertisement, it seems to be more efficient and effective across the nation. FACTORS INFLUENCING INTERNATIONAL ADVERTISING APPROACH There are so many models identifying the variables that determine the degree of standardization of advertising. The models are all similar in the sense that they map external and organizational factors on the internal advertising, process. Furthermore, most of these models are contingency models, Thé contingency perspective suggests that there are factors within and outside the firm that determine the firm’s approach to advertising. Source: Harvey (1993) Harvey (1993) identified six variables that affect the degree of standardization or adaptation of advertising. These variables are: 1. Product variables ~the degree of universality of the product across the countries. 2. Competitive variables ~ the structure of the comps ment in the foreign market. 3. Organizational experience and control variables ~ the level of organizational experience in existing business. 4. Infrastructure variables — the degree of similarity of the media infrastructure, for instance, media, advertising, agencies and production facilities 5. Governmental variables — governmental policy of host country affecting the communication strategy of a multinational company. 6. Cultural and societal variables ~ the cultural differences between the foreign market and country of origin. International marketers should consider all the above variables at the time to deciding whether to standardize or customize the advertising message for the foreign market. Nikolaos & Vlasis (1997) identified three sets of variables viz. local environmental determinant, firm environmental determinant and intrinsic determinants that influence the standardization or the degree of adaptation of international advertising strategy on the international advertising strategy continuum. “Aga of sstagies and acts ‘Sancardaalon ot creative ‘Strtegy and tacts, ‘Cultural envronment Econom eandivons Legal candtions| ‘Gompettion ‘Aavetsng itastucure Consumer profie 1 “Supp seiviles and bariers Souree: Nikolaos & Viasis (1997) 12. Indian Journal of Marketing @ July, 2008"The first set of variables ic. ‘local envifonmental determinant’ deals with different aspects of the foreign market. It includes cultural environment, economic condition, legal and political condition, nature and level of competition in the market, advertising infrastructure, consumer profile and country of origin image. The second set of variables i.e “firm environmental determinant’ deals with internal environment and d mn taken in the organization. It also talks about financial attributes and managerial worth of the multinational firm. The third set of variables i.e. ‘intrinsic determinants’ deals with external factors which influence international creative development and media planning. This set of variables also talks about international advertising objectives, relationship between multinational company and advertising agency that deals with different activity of developing and implementing advertisements in foreign market, different elements of international communication mix, and support activities that helps the organization (directly or indirectly) to achieve advertising objective effectively and efficiently in the foreign market All the three set of variables discussed above are interdependent and together craft the area of influence and affect international advertising decisions individually as well as in the interaction with other set of variables. In simple words, it can be said that all the three set of variables determine the position of international advertisement in foreign market on a continuum with its two polar ends representing perfect standardization and perfect adaptation, between both the end we have contingency approach for international advertising of a multinational organization. CONCLUSION This paper is a conceptual paper based on review of existing body of knowledge regarding standardization and adaptation of advertising strategy of a multinational firm for the international market. Finally it can be said that no one advertising approach is perfect throughout the globe. 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