Classic debate about standardization vs. localization

The debate still rages: should a company standardize its marketing strategy and communications across the globe or should localized communications be created for specific markets? Researchers in the marketing field have been pondering this question for over 50 years.

Solberg (2002) approaches the question by examining how an understanding of the local markets affects which approach a company takes. Specifically, he examines how deep market understanding at the headquarters level often leads to standardization across all markets; his research indicates that when the central organization has this superior market knowledge, it is then able to discern the similarities between the markets – then focusing on those similarities rather than catering to the differences.  His metaphors of local baronies, civil war, federations, and confederations illustrate the matrix between local market understanding at the HQ level, reliance upon local sources to develop strategies, and the resulting standardization/localization levels.

More critically, however, Solberg’s research indicates that deep market knowledge (essentially, robust country and competitive analysis) at the headquarters level is the main factor in overseas success, regardless of the standardization vs. localization debate. Essentially, it is well worth the investment in time, money, and energy to develop that understanding in-house rather than rely on the knowledge of distributors, agents, or local management. It is not a statement of trust (or lack thereof) related to those distributors or agents; rather, it is the need to develop a more nuanced market picture across multiple markets that can only be done at the HQ level.

It should be noted, however, that when HQ develops this deep understanding, it often leads to greater tension between HQ and its local partners; the local team will often challenge that understanding, i.e. “you can’t possibly know my market as well as I do.” It should also be noted that an additional tension lies in whether HQ determines the standardization/localization of both the strategy and the tactics or if HQ determines the standardization/localization of just the strategy and transfers the remaining tactical decisions to local partners.

References:

Solberg, Carl Arthur (2002), “The Perennial Issue of Adaptation or Standardization of International Marketing Communication: Organizational Contingencies and Performance.” Journal of International Marketing, 10 (3), 1-21.

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