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?