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International Journal of Management Reviews Volume 9 Issue 4 pp. 303– 324 303

International Journal of Management Reviews (2007) doi: 10.1111/j.1468-2370.2007.00213.x

Blackwell Publishing LtdOxford, UKIJMRInternational Journal of Management Reviews1460-8545© Blackwell Publishing Ltd 2007XXX ORIGINAL ARTICLESMarketing mix standardization in multinational corporationsxxxx 2007

Marketing mix standardization in multinational corporations: A review of the evidence Andreas Birnik and Cliff Bowman

This paper reports the findings of a systematic review of literature on marketing mix standardization in multinational corporations. The objective is to extract and synthesize ‘best evidence’ regarding marketing mix standardization practices in multinational corporations and to identify evidence regarding the performance impact of marketing mix standardization. Beyond relevance to an academic audience, this review could be useful for management practitioners in multinationals seeking to integrate operations across borders. In this context, the paper seeks to make a contribution to evidence based policy and practice.

Introduction

This paper critically reviews the evidence base regarding cross-border marketing mix standardization and seeks to extract ‘best evidence’ prescriptions for use by management practitioners. In contrast to a good deal of prior research within this field, this paper aspires to establish a stronger link with management practice. Cross-border integration is a distinctive feature for multinational corporations following international, global or transnational configu- rations (Bartlett 1986; Bartlett and Ghoshal 1987a,b, 1989) in contrast to stand-alone multidomestic operations. Marketing mix

standardization, to at least some degree, is often a component of such operating models. While a good deal of relevant and high quality research exists, the available evidence is often not presented in a synthesized format that would be easily accessible to practitioners.

During the past few years there has been extensive discussion of the so called ‘relevance gap’ in management research and in business school teaching (e.g. Bennis and O’Toole 2005; Ferraro et al. 2005; Ghoshal 2005; Kanter 2005; Mintzberg 2004). As a response to the relevance challenge, it has been proposed that management research needs to reorient away from the explanatory sciences towards the

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applied design sciences, such as medicine and engineering, and thus move from Mode 1 knowledge creation towards Mode 2 knowledge creation (Starkey and Madan 2001; Tranfield and Starkey 1998; van Aken 2001, 2005). In line with Romme (2003), this research takes a design orientation:

Design is based on pragmatism as the underlying epistemological notion. That is, design research develops knowledge in the service of action; the nature of design thinking is thus normative and synthetic in nature – directed towards desired situations and towards synthesis in the form of actual actions. (Romme 2003, 562, italics in original)

More specifically, this research seeks to extract technological rules and solutions concepts for potential use by management practitioners. This is defined by van Aken as follows:

A technological rule follows the logic of ‘if you want to achieve Y in situation Z, then perform action X’. The core of the rule is X, a general solution concept for a type of field problem. The remainder of the rule is a kind of user instruction connecting the solution concept with the field problem, including indications and contra-indications, i.e. knowledge of when to use the solution concept and when not to. The solution concept can be an act, a sequence of acts, but also some process or system. (van Aken 2005, 23, italics in original)

Technological rules are thus similar to what Argyris has labelled actionable knowledge: ‘A generalization is actionable if it informs the user how to create it in settings beyond those in which it was first created’ (1996, 392). This paper applies Pawson’s (2001) ‘realist synthesis’ approach based on developing rules that address the understanding of context (C), the underly- ing mechanisms (M) and the outcomes (O). In Pawsons’s language, this changes the research question from simply ‘what works’ to ‘what works for whom in what circumstances?’ (2001, 4). For this paper, we have built on an extension of Pawson’s reasoning developed by Denyer and Tranfield (2005). In their modified version, the research synthesis is conducted by mapping context/contingency factors (C),

design parameters/solution concepts (D), generative mechanisms (M) and outcomes (O). A generative mechanism (M) is a basic theory of how a design parameter/solutions concept (D), in a certain context (C), generates a specific outcome (Denyer and Tranfield 2005).

Denyer and Tranfield (2005, 1) argue that systematic literature reviews constitute a suitable method for developing technological rules as ‘rather than conducting new empirical studies, technological rules can be created through the synthesis of the collective wisdom from existing research’. Chalmers (2003) has also advocated the use of relevant and up to date systematic reviews to guide practitioner interventions with the objective of minimizing the risks that such interventions do more harm than good.

In summary, this research is primarily con- cerned with the quest for ‘best evidence’ that can guide management practice. As argued by Tranfield et al. (2003), this is typically not the core objective of reviews of management research:

Reviews of the available evidence in management to assimilate ‘best evidence’ to provide insights and guidance for intervention into the operational needs of practitioners and policymakers have largely become a secondary consideration. (Tranfield et al. 2003, 208)

We begin with an explanation of the method- ology used in this literature review, followed by the findings from this part of the study. We continue with a discussion and suggestions for future research before concluding with some managerial implications. A descriptive classi- fication of the reviewed articles has been included in the Appendix.

Methods

Approach

We have followed the systematic review approach prescribed by Tranfield et al. (2003). This approach seeks to minimize bias in the review by being both systematic and explicit about

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how the review has been conducted. This means following a stepwise approach to determine relevant keywords and search strings as well as deploying a specified methodology to exclude articles based on a priori deter- mined relevance and quality criteria. The review started by identifying the need for the review, preparing a review proposal for discussion with an academic panel and developing a detailed review protocol with a list of relevant keywords composed into search strings. Six databases considered relevant were tested to decide which databases to include: EBSCO, ABI Inform, ISI Web of Knowledge, Elsevier Science Journals, Blackwell Synergy and Emerald. Based on the outcome of this test, EBSCO and ABI Inform were selected for inclusion in the review.

The composed search strings generated 112 hits in EBSCO and 127 hits in ABI inform. After reviewing titles and abstracts in relation to the objectives of the study, and removing overlaps between the sources, 107 unique articles were identified as suitable for full-text review. To compensate for the mechanistic approach of a systematic review, 43 additional articles were manually included in the review, based on articles previously identified by the authors or by the IJMR reviewers. This resulted in a total number of 150 articles included in the full-text review.

The full-text review resulted in 47 articles being excluded on the grounds of lacking relevance to the topic. This yielded 103 articles for the quality appraisal. As this research adopts a ‘realist synthesis’ approach, it was not possible to review the articles based on quality criteria before the synthesis started. In line with Pawson et al. (2005), quality was instead established in relation to synthesized elements of the reviewed articles. Thus, a paper with a highly original conceptual con- tribution may be included in the review even if the empirical work suffered from quality problems. During the synthesis process, 19 articles that had passed the relevance test were subsequently removed, as they did not meet the quality criteria. The result was a total number of 84 articles for full text review.

We have included an Appendix with further details about the classification of the reviewed articles at the end of the paper.

Synthesis Methodology

The data extraction has followed an extended version of Denyer and Tranfield’s (2005) CDMO categories described above, with the addition of new categories for factors supporting strategic choices and effective implementation. Data have been extracted and synthesized into the following categories:

(1) managerial design parameters/solutions concepts in relation to marketing mix standardization (D)

(2) evidence of the degree of marketing mix standardization

(3) contextual factors influencing marketing mix standardization (C)

(4) discussion of generative mechanisms linking design parameters to organizational performance (G)

(5) factors supporting strategic choices regarding marketing mix standardization (SC)

(6) factors supporting effective implementation of marketing mix standardization (I)

(7) performance impact or outcomes of marketing mix standardization (O).

Extraction tables were created within each category. A new sub-category was added whenever a new relevant finding or concept was reported in a paper. In the beginning, the number of sub-categories thus expanded rapidly while later papers primarily added evidence to already identified sub-categories.

Findings

Theoretical Perspectives Adopted in Reviewed Studies

We begin with a brief discussion of the theo- retical foundations of the reviewed studies. In this regard, we note that most of the market- ing standardization literature is not connected

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with central theoretical perspectives outside the marketing field, such as industrial organization (e.g. Porter 1980, 1985), resource-based view (e.g. Barney 1991; Penrose 1959; Wernerfelt 1984), dynamic capabilities (e.g. Eisenhardt and Martin 2000; Teece et al. 1997), institutional theory (e.g. DiMaggio and Powell 1983; Meyer and Rowan 1977), resource dependence (e.g. Pfeffer and Salancik 1978), or the debate regarding strategic choices (e.g. Astley and Van de Ven 1983; Child 1972; Hannan and Freeman 1977; Hrebiniak and Joyce 1985). This can be viewed as a distinct weakness of the marketing standardization literature and leads to a lack of integration with central debates in related fields such as strategic management and organization theory.

Most of the reviewed papers exhibit a strong descriptive character and present arguments or evidence regarding standardiza- tion of various elements of the marketing mix. The theoretical contribution is often limited to simple trade-off discussions regarding:

(a) the benefits and drawbacks of standardization (b) arguments for and against the convergence

of markets and customer needs on a global or regional scale

(d) performance outcomes.

Having concluded the above, there are a number of notable exceptions that connect with central debates and thus build a bridge with other literatures. Among that minority of studies, we note that the dominant theoretical perspective is industrial organization economics and, more specifically, reference to co-alignment or congruence between a firm and its environ- ment (Cavusgil and Zou 1994; Hewett et al. 2003; Özsomer and Prussia 2000; Özsomer and Simonin 2004; Zou and Cavusgil 2002). Two of these studies complemented the industrial organization perspective with alternative views including institutional theory (Hewett et al. 2003) and the resource-based view (Zou and Cavusgil 2002).

Managerial Design Parameters in Relation to Marketing Mix Standardization (D)

We continue by reviewing the managerial design parameters (D) in relation to marketing mix standardization. A design parameter specifies a possible type of intervention that can be used by managers in a given context. This review has identified three primary design parameters that decision-makers can use in relation to marketing mix standardization. These are (1) deciding on the overall stand- ardization approach and whether or not all markets should be treated in the same way, (2) deciding on standardizing marketing programmes vs marketing processes, and (3) deciding on which marketing mix elements and sub-elements to standardize.

Standardization approach. The standardization debate has produced several seminal contribu- tions. Levitt (1983) has argued strongly for the globalization of markets based on techno- logical drivers. Levitt’s prescribed strategy is based on standardized products that will both take advantage of, and further reinforce increasingly homogeneous customer prefer- ences on a global scale. Douglas and Wind (1987) agree that changes in the global business environment necessitate a global perspective on strategy but conclude that Levitt’s thesis of global standardization is both naïve and over-simplistic and may result in major strategic blunders for multinationals who follow Levitt’s prescriptions. In contrast to Levitt’s (1983) prescription of ‘standardization’ as the one best way, Douglas and Wind (1987) advocate a contingency approach based on mixed strategies. Ohmae (1989) advocates a similar contingency solution when he concludes that the quest for universal products is not a generalizable prescription but that Levitt’s prescribed global standardization makes perfect sense for certain segments and certain product categories.

A review of different stances regarding the standardization debate reveals four possible

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overall positions in relation to standardization. These have been described by Michell et al. (1998) as: (1) standardization, (2) clustering/ regionalization, (3) middle of the road and (4) adaptation. Standardization and adaptation occupy opposite ends of the spectrum. Clustering/regionalization strategies seek to standardize the marketing mix, to a substantial extent, across clusters of similar markets. This strategy would thus yield a range of heterogeneous market clusters but with a higher degree of marketing mix standardization within each cluster. Middle of the road strategies, in contrast, advocate flexibility which leads to case-by-case decisions regarding standardiza- tion and adaptation for each market and each marketing mix element.

Marketing mix elements. The terminology used to describe marketing mix elements and sub- elements varies significantly between studies. Some of the most commonly referred to elements include: (1) brand name, (2) advertising and promotion, (3) product, (4) packaging, (5) pricing, (6) sales & distribution channels, (7) customer service and (8) the use of the world-wide web. Standardization may also vary by element or sub-element of the marketing mix. This makes it less meaningful to talk of the entire marketing mix as either standardized or adapted (Vrontis 2003). A core element of any international marketing strategy is to decide which marketing mix elements or sub-elements to standardize and to what degree.

Programme vs process standardization. A number of studies have investigated standard- ization of the marketing process, standardization of marketing programme content and possible relationships between the two (Chandra et al. 2002; Griffith et al. 2003; Rosenbloom et al. 1997; Sorenson and Wiechmann 1975; Zinn and Grosse 1990). In line with Sorenson and Wiechmann’s (1975) contribution, these studies indicate that the potential for standardization of the marketing process is higher than the standardization potential of marketing pro- gramme content. As an example, Zinn and

Grosse (1990) found that, while only 8% of Fortune 500 firms in Latin America had centralized distribution channels, 58% had a globalized approach to major distribution channel decisions. There is also some evidence pointing in the direction of a positive relationship between process and programme standardization (Chandra et al. 2002; Griffith et al. 2003).

Evidence of Degree of Marketing Mix Standardization

A wide range of studies have reported on the relative degree of standardization for different elements of the overall marketing mix. While terminology and level of detail vary between studies, some patterns are clearly distinguishable.

Pricing. A majority of studies indicate that pricing is the least, or one of the least, standardized elements of the marketing mix (Boddewyn and Grosse 1995; Chhabra 1996; Grosse and Zinn 1990; Michell et al. 1998; Özsomer et al. 1991; Rosenthal 1994; Sorenson and Wiechmann 1975; Vrontis 2003; Vrontis and Papasolomou 2005; Zou et al. 1997). Conflicting evidence has been presented by Shoham (1996) who found that pricing was ‘medium’ in terms of the level of standardiza- tion, and Samli and Jacobs (1994) who found that 69% of large US MNCs used uniform or standardized prices. However, a drawback of Samli and Jacobs’ study is that it exclusively focused on pricing standardization rather than on the relative degree of pricing standardization in relation to other marketing mix elements. Yip (1997) also found that, while absolute pricing was among the least standardized marketing mix elements, relative pricing was fairly standardized.

Brand and product. At the other end of the spectrum, brand and product characteristics appear to be the most standardized marketing mix elements (Boddewyn and Grosse 1995; Chhabra 1996; Grosse and Zinn 1990; Michell et al. 1998; Özsomer et al. 1991; Rosenthal 1994; Shoham 1996; Sorenson and Wiechmann

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1975; Vrontis 2003; Vrontis and Papasolomou 2005; Yip 1997). Zou et al. (1997) found partially conflicting evidence indicating that, while product peripherals were often standardized, core pro- ducts had a low level of standardization.

Packaging. Packaging tends to show medium to high levels of standardization (Boddewyn and Grosse 1995; Rosenthal 1994; Sorenson and Wiechmann 1975; Yip 1997).

Advertising. Studies report mixed results regarding advertising, but the tendency is for advertising to exhibit a medium level of standardization (Grosse and Zinn 1990; Harris 1994; Özsomer et al. 1991; Shao and Waller 1993; Shoham 1996; Sorenson and Wiechmann 1975; Yip 1997). However, some studies have found that advertising is closer to the stand- ardized end of the spectrum (Boddewyn and Grosse 1995; Harris and Attour 2003; Rosenthal 1994). Peebles et al. (1977) distinguished between deploying the same advertising material across all or most markets (prototype standardiza- tion) vs more pragmatic pre-planned efforts to design the campaign for use in multiple markets and vary execution details as re- quired (pattern standardization). Sorenson and Wiechmann (1975) have further distinguished between standardization of the basic advertising message and standardization of the creative message. Similarly, Özsomer et al. (1991) distinguished between standardization of advertising theme vs advertising copy.

The above illustrates that multinationals are faced with very complex decisions regarding advertising standardization. Rather than a simple choice between advertising standardi- zation vs adaptation, there are many shades of grey in terms of possible types and degrees of standardization. Given this, Harris (1994) has argued that it is important to clarify such standardization forms labelled ‘partial’ or ‘modified’, given that the practices of firms falling into those categories can vary substantially.

There is some evidence that headquarters is more involved in making strategic advertising decisions compared with tactical decisions

(Michell and Bright 1995; Tai 1997). In an overview of academic vs practitioner oriented papers on advertising standardization between the 1950s and the end of the 1980s, Agrawal (1995) found that academics have tended to favour either adaptation or contingency approaches to advertising, while practitioners have alternated between adaptation and stand- ardization prescriptions to a greater degree.

Sales, distribution and promotions. The cumul- ative evidence indicates that sales and dis- tribution as well as promotions tend to show fairly low levels of standardization but typically not as low as pricing (Boddewyn and Grosse 1995; Chhabra 1996; Michell et al. 1998; Özsomer et al. 1991; Rosenthal 1994; Shoham 1996; Sorenson and Wiechmann 1975; Vrontis 2003; Vrontis and Papasolomou 2005; Yip 1997; Zinn and Grosse 1990; Zou et al. 1997).

Customer service. The findings for customer service report mixed results, with some studies reporting medium levels of standardization (Boddewyn and Grosse 1995; Özsomer et al. 1991), while other studies report higher (Shoham 1996; Vrontis and Papasolomou 2005) as well as lower (Zou et al. 1997) levels of standardization.

Web. Web site standardization has not been included in the reviewed studies that focused on multiple elements of the marketing mix. Limited evidence exists in the form of a single study by Okazaki (2005) who found that US firms tended to localize their web sites to a high degree in UK, Germany and France.

Factors Influencing Marketing Mix Standardization (C)

This section presents a synthesis of the impact of contextual factors (C) on marketing mix standardization.

Type of product or industry. A majority of studies report that industrial products are more stand- ardized than consumer non-durables or consumer

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durables (Baalbaki and Malhotra 1993; Cavusgil and Zou 1993; Chhabra 1996; Jain 1989; Kim and Mauborgne 1987; Özsomer et al. 1991; Quelch and Hoff 1986; Whitelock 1987). However, there is also some evidence to the contrary. Grosse and Zinn (1990) found that consumer non-durables were more standardized than industrial products, which were in turn more standardized than consumer durables. Leonidou (1996) also found that consumer products were more adapted than industrial products, but the study was limited to Japanese MNCs in the Middle East. Samiee and Roth (1992) found a higher degree of standardiza- tion for consumer products than for industrial products, but the difference was statistically insignificant, and the sample consisted of 85% industrial firms. Finally, in a study of UK firms in the Middle East, Michell et al. (1998) found no evidence that industrial products were more standardized than consumer products. Taken as a whole, and specifically looking at evidence outside the Middle East, the evidence base suggests that the potential for standardization of industrial products is higher compared with consumer products.

There is also some evidence indicating a low level of standardization for consumer products used in the home (Quelch and Hoff 1986; Whitelock 1987), and for consumer products that are perceived as culture-bound (Baalbaki and Malhotra 1993; Cavusgil and Zou 1993; Whitelock 1987). However, based on a single case study of IKEA, Martenson (1987) argues that standardization is feasible in culture-bound industries, especially if the price differential becomes significant. Martenson also argued that it is possible to find cross- border segments that are less culture bound, these being characterized by low status concern, low conservatism, high education, high income and white-collar professions.

A number of studies have reported higher standardization for high technology products (Cavusgil and Zou 1993), for products that are perceived as being essential (Baalbaki and Malhotra 1993, 1995), and for branded premium luxury goods (Ohmae 1989).

Degree of centralization in decision-making. There is some evidence that centralized decision- making leads to greater or more effective marketing standardization. A number of papers have reported a positive link between centralized decision-making and higher stand- ardization (Jain 1989; Özsomer et al. 1991), while other studies have not found any relationship (Picard et al. 1998; Quester and Conduit 1996; Tai 1997).

HQ ownership level. There is a fair amount of evidence indicating that fully owned, or at least substantially controlled subsidiaries have a higher degree of marketing standardization (Laroche et al. 2001; Özsomer et al. 1991; Rau and Preble 1987).

Subsidiary sales volume. A single study reported no significant relationship between degree of standardization and subsidiary sales volume (Özsomer et al. 1991).

Entry mode. Two studies have indicated higher degrees of standardization for indirect entry modes (exporting, franchising, JVs and licensing) compared with direct modes of entry (Griffith et al. 2003; Vrontis and Papasolomou 2005).

Extent of local production in country. One study has found that a higher degree of local in- country production leads to more adaptation of marketing (Grosse and Zinn 1990).

Degree of local competitive intensity. There are a number of studies which report that higher local competitive intensity pushes companies to adapt their marketing to a higher degree (Baalbaki and Malhotra 1993, 1995; Cavusgil and Zou 1993; Vrontis and Papasolomou 2005). However, one study found no link between local competitive intensity and more marketing adaptation (Grosse and Zinn 1990).

Size of local market. The results are incon- clusive regarding the relationship between standardization and size of the local market. Chhabra (1996) found partial support for

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more adaptation in larger markets while Rau and Preble (1987), in a conceptual paper, argue that standardization is expected to be higher in larger markets and when there is a high degree of interpenetration of markets.

Market similarities. There is strong evidence that market differences require companies to adapt their marketing. Differences in terms of consumer preferences, stage of economic development, ‘psychic’ or cultural distance between markets, legal and regulatory regimes and marketing infrastructure, have all been shown to lead to adaptations in the marketing mix, while similarities in these parameters lead to greater standardization (Baalbaki and Malhotra 1993, 1995; Jain 1989; Kotler 1986; Mueller 1991; Özsomer and Simonin 2004; Özsomer et al. 1991; Rau and Preble 1987; Sorenson and Wiechmann 1975; Theodosiou and Katsikeas 2001; Vrontis 2003; Vrontis and Papasolomou 2005). Limited evidence to the contrary was presented by Chandra et al. (2002), who found that, while similar consumer response patterns were associated with greater advertising standardization, a dissimilar environment, contrary to their hypothesis, was associated with advertising standardization. Their study was, however, limited to advertising standardization of US MNCs in India.

A number of studies have also found that standardization is greater when products are at the same stage in the product life-cycle (PLC) (Baalbaki and Malhotra 1993, 1995; Rau and Preble 1987; Theodosiou and Katsikeas 2001), although Sorenson and Wiechman (1975) did not find supporting evidence for this connection.

Country of origin of parent company. There are no consistent conclusions across the papers that review the impact of the origin of the parent company on marketing standardization (Kirpalani et al. 1988; Özsomer et al. 1991; Sirisagul 2000; Tai 1997; Yip 1997).

International experience of parent company. Some evidence suggests that firms with significant international experience and long

market presence adapt their marketing more (Cavusgil and Zou 1993; Leonidou 1996). However, in a study of Norwegian exporters, Solberg (2002) found that a higher level of local market knowledge at headquarters led to more standardization, as the headquarters were better at perceiving important similarities across markets.

Competitive position. Limited evidence indicates that standardization and headquarters control is higher when there are greater similarities in competitive position between the parent and the subsidiary (Jain 1989; Laroche et al. 2001).

Level of communication between parent and subsidiary. Rau and Preble (1987) argue that standardization is likely to be higher when there is a greater degree of communication between parent and subsidiary.

Organization structure of parent. Rau and Preble (1987) also argue that standardization is likely to be higher in companies with an international division compared with product divisions, as the latter organization structure results in more duplication of activities.

Core competence/generic strategy. In a highly original conceptual paper, Shanklin and Griffith (1996) argue for a link between core competence or generic strategy and marketing standardization. The authors propose that standardization is required for cost-based competition, given the requirements to reduce operating costs and gain economies of scale. Standardization is also required for product innovation-based strategies, which supports other findings that high technology products are standardized to a greater extent. In contrast, localization is considered the best avenue to pursue for firms seeking customer-based strategies. Regionalization (clustering) is considered a possible compromise strategy for all three generic strategies.

Table 1 summarizes the evidence regarding contextual factors influencing marketing standardization.

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Generative Mechanisms (G)

We continue by discussing generative mecha- nisms (G) and note that such mechanisms are not discussed widely in the reviewed literature. As a result, we have a weaker theory of exactly why management interventions (design param- eters), in a certain context, result in a specific outcome. For this paper, we hypothesize that marketing standardization occurs either with the aim of increasing customers’ perceived use value (PUV) and/or to reduce costs. The PUV refers to customers’ subjective perceptions of the usefulness of a particular product or service (Bowman and Ambrosini 2000). Increasing customer PUV could result in a positive outcome in terms of higher brand preference, larger market share, larger customer base, more loyal customers, increased usage per customer and thus, ultimately, higher revenues. Reducing costs should result in improved margins. Thus, if marketing mix standardization could lead to increased PUV and/or lower costs, the strat- egy could improve financial returns and value creation for the corporation.

Figure 1 illustrates the possible implications of a standardization strategy. Increasing PUV

while reducing costs would be the ideal case, representing clear standardization wins. In the diametrically opposite quadrant, we find the standardization failures, where PUV decreases while production costs actually increase. The remaining quadrants are more difficult to analyse. In the bottom right quadrant, we find the results of rationalization efforts. Standard- ization leads to significantly lower costs, but there is a corresponding reduction in PUV, e.g. because the product is perceived not be sufficiently tailored to meet local requirements. But the outcome is difficult to predict but could be neutral or positive if the lower costs translate into a price reduction for customers. In the top left quadrant, we find new capability development where PUV has been considerably increased but this corresponds to higher production costs. Once again, results may be neutral or positive if the higher costs are offset by higher revenues. The lower part of the top left quadrant represents standardization question marks as production costs are significantly higher but PUV is only marginally improved. The PUV can also remain the same while production costs are either increased or decreased as a result of centralization. It would be important

Table 1. Contextual factors and influence on standardization

Stronger evidence Weaker evidence

More standardization • Industrial products • Essential products • High-tech products • Luxury products • Market similarities • Indirect entry modes • Products in same stage in PLC • Fully owned subsidiaries

• Parent and subsidiary have similar competitive positions • High degree of communication between parent

and subsidiary • Foreign operations centralized in an

international division • Strategy based on either (a) cost-based

competition or (b) product/innovation oriented • Centralization in decision-making

Less standardization • Consumer products • Products used at home • High local competitive intensity • Culture bound products

• Direct entry modes • Local in-country production • Customer-based strategy

Inconclusive • Size of local market • Country of origin of parent company • International experience of parent

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to analyse the total cost of ‘production’ across the value chain, including sourcing, manufacturing, marketing and sales and distri- bution as, for example, lower production costs from centralized production facilities might be offset by higher distribution costs or customs duties to reach more remote locations.

Factors Supporting Strategic Choices Regarding Marketing Mix Standardization (SC)

Following from the discussion regarding generative mechanisms, we continue by examin- ing the factors that support strategic choices (SC) regarding marketing standardization.

Clarity of strategic objectives. Following from the previous section, it would appear essential to be clear about the objectives of standardi- zation, i.e. is the aim to increase customer PUV or to lower costs or to achieve both benefits?

Mapping feasibility vs desirability. It has been suggested that managers should separate the analysis of feasibility of marketing standardi- zation from the desirability of standardization (Onkvisit and Shaw 1987; Rau and Preble 1987). Onkvisit and Shaw (1987) argue that

desirability is driven by factors such as (1) cost saving potential, (2) communication effective- ness and (3) consumer homogeneity. Rau and Preble (1987) have argued that desirability is influenced by firm strategy and implementation requirements.

Use of cross-country research and segmentation. There are strong arguments in conceptual papers indicating that market research should be used to understand similarities and differ- ences between countries and to help identify common segments across borders (Baalbaki and Malhotra 1993; Farley 1986; Hassan and Katsanis 1991; Kale and Sudharshan 1987; Kreutzer 1988; Onkvisit and Shaw 1987; Plummer 1977; Thorelli and Becker 1980; Walters 1997; Wind and Douglas 1972). There is also empirical evidence supporting the use of segmentation (Craft 2004; Day et al. 1988; Huszagh et al. 1986; Sethi and Holton 1973; Sood 1993; Souiden 2002; Ueltzhöffer 1999). While some authors focus on the use of primarily country segmentation (Day et al. 1988; Huszagh et al. 1986; Sethi and Holton 1973), there is a clear trend towards advocating the segmentation of markets based on similar response patterns to marketing stimuli (Farley 1986; Hassan and Katsanis 1991; Kale and Sudharshan 1987; Souiden 2002) or psycho- graphic or behavioural segmentation (Hassan and Katsanis 1991; Plummer 1977; Thorelli and Becker 1980). Souiden (2002) has argued that segmenting markets based on marketing stimuli offers ‘the most efficient, realistic and feasible way that permits multinationals to apply the hybrid approach by standardizing their marketing programs to each homogeneous segment of countries or consumers while dif- ferentiating their strategies among different segments’ (Souiden 2002, 611).

Best evidence points in the direction of a hybrid approach which first clusters countries into macro-segments followed by micro segmentation within and across countries (Craft 2004; Raffee and Kreutzer 1989; Walters 1997; Wind and Douglas 1972). This approach combines the advantages of a macro grouping

Figure 1. PUV and production costs.

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of countries, which allows the micro segmen- tation to be more precise. The use of marketing stimuli together with behavioural/psychographic variables appears to offer the best avenue for the micro segmentation step.

In an insightful contribution, Sheth and Parvatiyar (2001) argue that marketing is shifting from focusing on international differences and functional adjustments on a country-by-country basis towards a new focus on transnational similarities and cross-functional integration across borders.

Use of matrix mapping tools. Both Kotler (1986) and Quelch and Hoff (1986) have suggested matrices to assist with global marketing planning. Kotler (1986) advocates a planning matrix based on mapping standardization vs adaptation of different marketing mix elements across countries. Quelch and Hoff (1986) have proposed a more sophisticated matrix based on mapping full or partial standardization or adaptation against: (1) business functions, (2) product characteristics, (3) marketing mix elements and (4) countries.

Customer rather than product orientation. Douglas and Wind (1987) have warned that a drawback of marketing mix standardization is that it tends to shift the focus away from customers towards the product dimension. Managers should thus take measures to safeguard a customer orientation during the standardization process, by, for example, using cross-border market research and segmentation.

Factors Supporting Effective Implementation of Marketing Mix Standardization (I)

In this section, we present the evidence in relation to factors supporting the implementation of marketing mix standardization (I). We conclude that there is only a relatively limited amount of research with an implementation orientation. Furthermore, we note that most papers on the execution of marketing stand- ardization have been conceptual in nature.

However, recently some empirical papers concerning implementation of marketing standardization have been published (e.g. Özsomer and Prussia 2000; Özsomer and Simonin 2004).

Cross-border co-ordination. According to Raffée and Kreutzer (1989), effective implementation of a global marketing approach requires a variety of structural mechanisms for co-ordination, e.g. establishing specific groups to address global co-ordination, strategic planning, creative communications, R&D and personnel issues. The authors state that companies typically start with smaller organizational changes such as regular discussion groups and various global co-ordination groups before implementing more significant organizational changes, such as lead country concepts for specific products or allocating global product responsibility. Kashani (1989) has in a similar vein advocated the creation of a cross-country board including participants from different subsidiaries to make decisions, and Aaker and Joachimsthaler (1999) have advocated the creation of organizational support structures to realize cross-country synergies.

The importance of establishing a common overall global brand planning process has been stressed by Aaker and Joachimsthaler (1999). The authors also argue that companies implementing global branding have a choice between four different organizational configu- rations they label: business management team, brand champion, global brand manager and global brand team. The first two are led by senior managers, while the last two are led by middle managers. Harris and Attour (2003) have also argued that a greater emphasis needs to be given to managerial issues in advertising standardization, and they explore whether certain structural arrangements lead to superior results, e.g. nominating lead markets, centralising development, and the encouragement of cross-fertilization. While co-ordination structures appear vital to the implementation of marketing mix standardization, there is a lack of empirical evidence indicating

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which type of structures are best suited for certain contexts.

Alignment and knowledge sharing. Two con- ceptual papers have argued that implementation of a standardized marketing strategy is more effective when key managers share a common worldview, and there is greater strategic consensus between parent and subsidiary managers (Jain 1989) as well as mechanisms for knowledge sharing of insights and best practice between countries (Aaker and Joachimsthaler 1999). And Kashani (1989) has proposed that an effective follow-up process is a vital ingredient in the implementation of global marketing.

Clear responsibilities. Aaker and Joachim- sthaler (1999) have stated that it is vital to assign clear roles and responsibilities regarding different brands so that it is clear who does what. Jain (1989) has further argued that a greater centralization of authority is required to ensure effective implementation of a standardized strategy. This relationship between marketing standardization and centralization of decision-making was confirmed empirically by Özsomer and Prussia (2000) and partially confirmed by Özsomer and Simonin (2004).

Modular product approach. To reach a com- promise between standardization and adaptation, Walters and Toyne (1989) have proposed two hybrid product standardization approaches. In the modular approach, the company would develop a range of modules that can be assembled in different ways. In the core product approach, a range of attachments would be fitted onto standardized core products to provide customization.

Performance Impact of Marketing Mix Standardization (O)

In the final section on findings, we turn our attention towards the reported outcomes (O) of marketing mix standardization. Until the 1990s, there was a lack of empirical studies

seeking to establish the relationship between marketing standardization and performance. As argued by Özsomer and Simonin

[w]hile much has been written on the promises and pitfalls of marketing program standardization, the majority of published work is conceptual, or based on anecdotal evidence. Surprisingly, few empirical research works that document the relationship between a standardized marketing program and performance exist. (Özsomer and Simonin 2004, 398; italics in original)

There have been some studies addressing this topic, but the findings have been inconclusive and conflicting. It would appear that difficulties in collecting relevant and reliable data have limited the number of high quality studies linking marketing mix standardization and performance. This literature review has thus also reached the conclusion that the jury is still out regarding the relationship between marketing standardization and performance.

No impact. In a mail survey to 332 multi- nationals in global industries, Samiee and Roth (1992) found no significant difference in perform- ance between multinationals that emphasized standardization and those that did not.

Negative impact. Özsomer and Prussia (2000) found a negative impact on subsidiary perform- ance for multinationals with centralized marketing structures and the authors suggested decentralized marketing structures and decision-making as key success factors for subsidiary marketing.

Mixed results. Shoham (1996) reported mixed results where adaptation of product quality, services and design did not lead to higher performance while adaptation of price, sales force management and advertising content had a positive performance effect. No significant effect was found for distribution adaptation.

Positive results. Özsomer and Simonin (2004) found that performance was positively affected by overall marketing programme standardiza- tion but that the performance impact was

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negative for centralization of non-product related marketing decisions. This finding could explain why brand and product elements have typically been found to be the most standardized across a range of studies. Another study, based on PIMS data, reported a positive perform- ance link between standardization of the strategic resource mix, defined as the relative allocation of resources between marketing mix elements, and performance (Szymanski et al. 1993). This bears some similarity to the discussion that the potential to standardize the marketing process is greater than the potential to standardize marketing programmes (Sorenson and Wiechmann 1975). There is also limited support for a positive impact of a hybrid approach between adaptation and standardization. In an economic modelling paper, Hadjinicola and Kumar (2002) argued that performance is maximized by combining a strategy of standardized and centralized core products, providing economies of scale, together with customized pricing and product policies. Subramanian and Hewett (2004) found that

performance was optimized for products where a balance had been made between standardi- zation and adaptation during the design phase. The relationship was stronger in instances where there was a high degree of co-operation between the parent and the subsidiary.

Summary Model

Figure 2 draws together the key relationships that appear to be supported by the literature reviewed. We have only included those contextual factors that have stronger support across the studies reviewed. Given the limited amount of evidence available regarding standardization of web pages, we have put the web in paren- thesis to urge caution regarding this particular finding. Working from the left of the figure, we have identified the contextual variables that appear clearly to differentiate strategies of higher marketing mix standardization from those with lower standardization. In determining a strategy for marketing standardization, it appears that type of product (industrial, consumer,

Figure 2. Summary model.

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high-tech, culture-bound), product /market sim- ilarity, level of local competitive intensity and ownership control over subsidiaries are most influential. The figure reflects the fact that brand and product attributes are more likely to be standardized, and pricing the least likely mix element to be standardized. Multinationals seeking to develop standardization strategies appear to benefit from decision processes that are aided by clarity of strategic objectives, use of cross-country research and segmentation, mapping feasibility vs desirability of stand- ardization, use of a variety of matrix mapping tools and adopting a customer rather than product orientation. Successful implementation of a standardization strategy seems to be sup- ported by achieving cross-border co-ordination, alignment and knowledge between organiza- tional units, allocating clear responsibilities and implementing a modular product approach. The outcomes of a standardization strategy have not been subject to a great deal of empirical research, but we have indicated the key generative mechanisms (in terms of PUV or costs) and outcome variables that mix standardization is likely to impact.

Discussion and Future Directions

This review has tried to synthesize the evidence base in relation to marketing mix standardization. In this section, we discuss some of the limita- tions of the literature at present and provide some suggestions for future research.

Stronger theoretical foundation. We note a strong emphasis on description across a majority of the studies we have reviewed. The impact of this is that theoretical foundations are often not satisfactorily addressed. We would call for a stronger link to theory to advance the field further. The somewhat atheoretical nature of the marketing literature means that linkages with other related areas are not obvious. As a result, much of the marketing standardization literature tends to exist in isolation from the key theoretical debates in other fields.

Need for prescription. In addition to stronger theoretical links, we would also call for studies that aim to derive managerial prescrip- tions. The current body of literature is vast in richness but full of contradictory findings. As a result, it is not obvious how to distil ‘best evidence’ for use by management practitioners.

Stronger links to the strategy literature. We also conclude that literature on marketing mix standardization has the potential to be more closely integrated with the strategic manage- ment literature. This could help to provide both a stronger theoretical foundation and more appropriate and credible prescriptions. As an example, it would be helpful if studies that explored differences in marketing standard- ization distinguished between firms following international, global, transnational or multifocal strategies (Bartlett 1986; Bartlett and Ghoshal 1987a,b; Prahalad and Doz 1987). It is remarkable that the literatures on international marketing and multinational strategy exist in parallel with so little cross-fertilization between the two domains.

We also suggest further research that combines marketing mix standardization with research on integration of the value chain to understand better the relationship between customer experience and operational delivery. Some steps towards this have already been taken by Lim et al. (2006). Multinational value chain configuration and co-ordination (Porter 1998), a concern addressed in the strategy literature, appears to be treated in isolation from marketing mix standardization. This is unfortunate as these dimensions of global / international strategy clearly complement each other. We believe that it would be useful to unbundle ‘integration’ in multinationals into an external dimension focused on standardizing elements of the customer experience across borders, and an internal dimension focused on co-ordination of business activities. We might suggest that the degree of marketing mix standardization on the one hand, and value chain integration on the other, are orthogonal. As such, firms might be faced with strategic

December 2007

choices regarding the degrees of mix stand- ardization and value chain integration they are striving for. Different combinations of mix standardization and value chain integration could yield different configurations of MNC strategy.

Need for rich qualitative studies. The review found that only 5% of the articles primarily relied on qualitative research methodologies. We also noted that our understanding regarding decision processes and implementation of marketing mix standardization is limited. Based on this, we believe it would be valuable if future studies used qualitative research methodologies to capture the richness of both marketing mix standardization decisions and implementation.

Call for research in forgotten locations. We note that extant research has largely focused on the advanced economies of the US, Japan and Western Europe. This literature is thus prone to the same geographic bias found in a great deal of published research. In light of the increased importance of other countries and regions, including ASEAN countries, Brazil, Greater China, Eastern Europe, India, and Russia, we would encourage researchers to focus more on emerging markets. This includes subsidiaries of foreign companies operating in those markets and, perhaps more importantly, multinationals originating from emerging markets such as Embraer, Hutchison, Lenovo, Mittal, Nandos, Proton, Severstal and Videocon.

Call for research into service industries. The review also identified a clear dominance of manufacturing (product) industries in both consumer and industrial goods. This is not unique to this literature but reflects an overall bias towards manufacturing sectors in much of management research. This might be due to the fact that foundation disciplines such as micro economics and industrial organization have historically focused on manufacturing industries. As a result, ‘taken for granted’ frameworks such as the value chain (Porter

1985) exhibit a clear manufacturing orientation. Considering the increased importance of the service sectors across advanced economies, we need research specifically addressing marketing standardization among service firms, e.g. airlines, banking, business schools, enter- tainment, hotels, logistics providers, online brokers, professional services and restaurants.

Mix elements. We identified that more than half the studies concerned a wide variety of marketing mix elements, and 30% focused specifically on advertising. In-depth studies of other mix elements including distribution, pricing and web sites were rare. We believe there is scope for some further research focused specifically on these areas.

Execution quality. We argue that execution quality could be another missing link that should be explored to understand the perform- ance outcomes of attempts to standardize. How firms standardize is perhaps just as important as what they standardize. Bossidy et al. have argued that ‘Execution is the unaddressed issue in the business world today. Its absence is the single biggest obstacle to success and the cause of most of the dis- appointments that are mistakenly attributed to other causes’ (Bossidy et al. 2002, 5; italics in original). There is a clear lack of empirical studies investigating the implementation dimen- sion of marketing standardization. In this regard, we believe it would be especially relevant to explore the impact of procedural justice on effective marketing mix standardization (Kim and Mauborgne 1991, 1993a,b). Ensuring compliance, and beyond that, commitment from subsidiary managers is likely to have a substantial impact on the successful outcome of standardization initiatives. Rather than being just passive agents of headquarters, subsidiary managers are capable of autonomous strategic behaviour (Burgelman 1983a,b) and instigating subsidiary initiatives (Birkinshaw et al. 1998). Kim and Mauborgne’s (1991, 1993a,b) research into procedural justice has informed us that subsidiary managers are less

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likely to be committed to, and follow, corporate integration initiatives and mandates if they perceive the decision-making process as unfair. Following from this, it is quite possible that there is a link between the outcome of marketing standardization and the extent to which sub- sidiary managers perceive the standardization process as ‘fair’.

Performance impact. There are few studies that address the performance impact of marketing standardization, and the evidence that exists is often conflicting. We propose that the framework used in this synthesis could be used to further advance our knowledge of this critical link. This would mean structuring research to understand better the links between contextual factors (C), design parameters (D), generative mechanisms (G), implementation (I), strategic choices (SC) and outcomes (O). Structuring research with a view to provide such grounded ‘technological rules’ should provide an alternative option to pursue to ensure that performance impact is better understood.

Managerial Implications

We argue that the findings of this study have clear practical relevance for managers faced with standardization decisions. Technological rules in management are typically not precise instructions but, instead, serve as design exemplars that practitioners can use to develop their own solutions concepts (van Aken 2005). We propose that practitioners use a four-step process. First, analyse your situation in relation to contextual factors (C) (Table 1) to under- stand overall standardization potential better. Second, review and reflect on the typical standardization potential of different marketing mix elements (D) in relation to your situation. Pay particular attention to the fact that processes often have a higher standardization potential than programmes (marketing mix elements). Third, be specific about what outcome (O) you want to achieve and analyse what generative mechanisms (G) you need to trigger to achieve desired outcomes. Map the links between the

design parameters (D) you can modify through standardization and the expected outcome on generative mechanisms (G) such as PUV enhancements or cost reductions (see Figure 1). Fourth, consider requirements for high quality execution by reviewing the identified areas regarding strategic choices (SC) and effective implementation (I) of marketing standardization.

Acknowledgements

We are grateful to David Denyer, Mats Lingblad, Siri Terjesen and two anonymous reviewers for providing insightful comments which have helped us to considerably improve the manuscript.

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December 2007

Appendix

Table A1 summarizes the articles reviewed at different stages in the review process.

Of the 84 articles, 61 were concerned with various aspects of marketing mix standardiza- tion, 16 with cross-border segmentation, and 7 categorized as ‘other’. The ‘other’ category included articles of relevance to the topic without clearly falling into either the marketing mix standardization or segmentation categories. The most common themes within this category were articles that dealt with implementation or organizational issues in relation to interna- tional marketing.

The 84 articles were classified as concep- tual (31), qualitative (4) or quantitative (49). From this it is clear that more than half the papers report quantitative research (58%), slightly more than a third are conceptual papers (37%), and only a very small proportion of papers report qualitative research (5%). However, there are clear differences between the marketing mix papers and the segmenta- tion papers. Two-thirds of marketing mix papers report quantitative research (69%), while cross-border segmentation papers are

instead dominated by conceptual papers (63%) and empirical evidence is more limited.

Of the 61 marketing mix papers, more than half (54%) concerned overall marketing mix standardization. The second most researched area is advertising standardization, which represents slightly less than a third (30%) of marketing mix papers. Papers about product standardization constitute 8% of studies, and research specifically about distribution (3%), price (3%) and web standardization (2%) are rare. These data are summarized in Table A2.

The amount of relevant and high quality research published has also increased over time. Breaking down the research by decades of publication illustrates that 7% were published in the 1970s, 27% in the 1980s, 39% in the 1990s and 26% between 2000 and mid-2005 (see Table A3).

It is significantly more challenging to try to break down the empirical papers by type of industry, origin of researched MNC and location of the study. This is a result of considerable variation in terms of terminology used by different authors. There is thus a greater risk of error in the findings reported in this section. This breakdown is only meaningful for the 45 empirical papers on marketing mix standardization (42 quantitative, 3 qualitative) as country characteristics or consumers are typically the unit of analysis in the cross- country segmentation studies.

Researched industries. Of the 45 empirical papers on marketing mix standardization, 25 papers are best described as cross-sectional (55%) and 14 papers (31%) as consumer goods (durables and non-durables) oriented.

Table A1. Articles included in the review

Review stage Articles under review

Total articles for full-text relevance review 150 Excluded based on relevance criteria −47 Total articles for quality review 103 Excluded based on quality criteria −19 Articles included in systematic review 84

Table A2. Categorization of reviewed articles

Overall marketing mix Product Advertising Distribution Price Web

Marketing mix total Segmentation Other

Grand total

Conceptual 8 1 6 1 0 0 16 10 5 31 Qualitative 2 1 0 0 0 0 3 1 0 4 Quantitative 23 3 12 1 2 1 42 5 2 49 Total 33 5 18 2 2 1 61 16 7 84

Marketing mix standardization in multinational corporations

Origin of researched MNCs. Of the 45 empir- ical papers on marketing mix standardization, the most common origin of researched MNCs was the US with 16 papers (36%), 11 papers

(24%) concerned MNCs from a wide variety of countries, 10 papers (22%) North America, Europe and Japan, and 8 papers (18%) other countries of origin including UK, Japan, Sweden, Norway, Colombia.

Location of studies. The studies display a wide spread of geographic locations. Of the 45 empirical papers on marketing mix standardi- zation, 6 papers (13%) concern European countries, 6 papers (13%) include empirical material from a broad range of countries, 7 papers (16%) the US, 5 (11%) papers Latin America, 3 papers (7%) the Middle East and the rest Turkey, Japan, Asia Pacific, India, Australia and Canada.

Table A3. Date of publication of reviewed articles

1970s 1980s 1990s 2000s Total

Marketing mix standardization

3 15 27 16 61

Other 0 2 1 4 7 Cross-country segmentation

3 6 5 2 16

Total 6 23 33 22 84