Describe the Internationalization ‘balance’ between standardization and adaptation over the history of Raleigh
Dawson and Lee (2005) argue that any company which wishes to make forays in the international market must ensure that it considers standardization and adaptation. One of the issues that the company must contend with is whether to standardize their products in all markets or to develop products that are responsive to the local markets.
The proponents of standardization feel that the companies that adopt it are able to cut down the operation costs since it can take advantage of customer’s taste homogenization. Additionally, standardization is seen as a means of reducing managerial complexity. It allows better coordination in the international market since the company is dealing with a stable brand. On the other hand, proponents also argue that standardization helps the company to increase its market. This is because the product is responsive to the needs of the individual markets. Additionally, different markets are characterized by different needs and, therefore, a standardized product may not necessarily meet the needs of all the customers in different localities (Culpan 2002).
By around 1930s, the marketing strategy which had been adopted by Raleigh was not selling a standardized product in all the markets. Instead, Raleigh ensured that his products are responsive to the needs of the local markets. This trend continued until the end of 1960s and, at that time, the Raleigh brand had 60,000 models, each adapted for a specific market. During that time, the Raleigh brand was very successful and enjoyed impressive sales.
However, when the Raleigh brand was taken over by the TI, the bicycles were standardized. This had an adverse effect on brand sales since the customers would not accept the standardized model that was not responsive to their needs. Additionally, the Raleigh model faced stiff competition, mainly from the local competitors where previously they had the upper hand.
However, the concept of standardization and adaptation should not be viewed in isolation; but rather, they should be dictated by the context of the market that the company wants to venture into. Some markets would work best with standardization, while others would operate optimally using the adaptation model (Culpan 2002).
Does the iconic bicycle brand still have a chance on the world market? You may bring contemporary news into this answer. Justify your answer
In the year 2002, the company had made a loss of about 6 million pounds. However, in 2007, the Raleigh model commanded a market share of about 20%. This was in sharp contrast with the previous record of 60%, which is used to enjoy before. The company’s financial statements for 2008, however, indicated that the company had made a profit of 1.4 million pounds against a turnover of 31 million pounds.
Looking at the above-mentioned trends, it can be noted that there has been an increase in the sales of Raleigh bicycles in the recent past. Part of the reason why Raleigh is still marketable is the introduction of e-bikes, which have gained huge popularity in China. As it is well known, China is a big market, and if the Raleigh Company is able to take advantage of this vast market, it could be on its way to reclaiming its market share (Jones, Lewis and Eason 2000).
According to Franzen and Moriarty (2008), one of the factors which can help the brand to remain relevant in the global market is the because the brand is known to have a wide variety of products which can adequately meet the needs of the customers. Additionally, the fact that Raleigh is a well-known brand ensures that the customers will still have confidence in their products, especially if the company continues with the tradition of manufacturing quality bikes.
Please compare and evaluate Raleigh’s current entry modes (business models): franchising and licensing with other alternatives
In the United Kingdom, Raleigh uses franchise models in order to market their products. Additionally, the company utilizes licensing as another method of gaining a foothold in the international market. Under the licensing model, the company looks for partners who are willing to pay a royalty fee in exchange for the right to sell using the Raleigh brand. This allows the company to vet all partners and refuse to give license to those who are not willing to uphold the standards which are stipulated by the company. In this way, the company can vet all the bicycles sold to ascertain if they are conforming to the standards set by the company. This will prevent those partners from selling substandard bicycles.
Additionally, the licensing model used by the company gives the partners the leeway on how they can market the products in their local markets. As a result, the company is becoming stronger in those local markets. This model has been found to be effective since it enables the company to penetrate into new markets like in Finland, where it had not sold before. It has also resulted in a situation where the Raleigh brand is perceived differently in various markets. For example, in Holland, the bicycle is perceived to be the preserve of the top-notch executives and is subsequently sold at a very high price, in order to match with the image (Sherman 2011).
There are other alternatives to franchising and licensing like distributorships. This is an arrangement where the distributor purchases directly from the supplier and then sells to the customers. In this model, the distributors are not limited to purchasing from a particular supplier and, therefore, may purchase from other suppliers. This, to some extent, indicates that the suppliers sell fairly standardized products. The other business model which can be explored is the partnership. In this model, one of the parties contributes the patented technology while the other one contributes the capital and services (Spencer 2010).
E-bike sales are increasing across Europe. Electric bicycles are being seen as a commuting alternative to the car, allowing customers to arrive at work on their bicycle without having to shower and change. This is an area where Raleigh already has a product. Should Raleigh sell a standardized e-bike concept, or should it adapt its marketing mix to each local market depending on the culture and potential future e-bike sales? 35%
Doole and Lowe (2008) point out that the decision by the company to either standardize or adapt to a particular market should be determined by the market context where it intends to venture into. The reason for this is that both of these two models have inherent weaknesses, and none can be taken to be the remedy applying in all situations. The company should decide to adopt either of the two strategies after carrying out a thorough study of the said market.
The decision to either standardize or adapt the e-bike concept, therefore, should be determined by the impact of the decision on the performance of the company in the global market. Subsequently, the challenge of the company is to decide on the factors that necessitate the need to adapt or to standardize products and to what extent. It can be concluded that the decision to either adapt or standardize depends on the comparison of the merits and the demerits of either choice.
Doole and Lowe (2005) claim that it is impossible for a company to adopt either standardization or adaptations entirely for its marketing strategy decisions. It is therefore important for a company to strike a balance between both strategies in order to ensure that it reaps optimally in the global market. In this regard, the company should determine which aspects of its global marketing operations should be standardized and which ones should be adapted. There are some elements of the company which are easier to standardize, and there are others which are easier to adapt. Some of the aspects of the company which can be standardized include advertisement and brand names. On the other hand, those which can be adapted include pricing, distribution and promotion. Any company should be aware of the fact that different markets have different needs, and this should inform the marketing strategy which should be adopted by any company. The only constant in all the markets is the desire of all the companies to make a profit.
Mowen, Minor and Mowen (1998) claim that standardization is usually easier when it comes to industrial products since the customers are less sensitive, and the needs for the customers in different markets are fairly the same. It must also be remembered that those companies which are making forays in the international markets will, most of the times, encounter local competition and their success will mainly be determined by their ability to meet the needs of their customers.
Ultimately, it can be seen that the decision to either adapt or standardize is informed by the objective of the company to either minimize the operation costs or increase the market share for their products.
Reference list
Culpan, R 2002, Global Business Alliances: Theory and Practice, Westport, Greenwood Publishing Group.
Dawson, J & Lee, J 2005, International retailing plans and strategies in Asia, Binghamton, International Business Press.
Doole, I & Lowe, R 2005, Strategic marketing decisions in global market, London, Cengage Learning.
Doole, I & Lowe, R 2008, International Marketing Strategy: Analysis, Development and and Implementation, London, Cengage Learning.
Franzen, G & Moriarty, S 2008, The Science and Art of Branding, Armonk, M.E. Sharpe.
Jones, R, Lewis, M & Eason, M 2000, Raleigh and the British bicycle industry: an economic and business, Surrey, Ashgate Publishing Ltd.
Mowen, J, Minor, M & Mowen, J 1998, Consumer behavior, New Jersey, Prentice-Hall.
Sherman, A 2011, Franchising & Licensing, New York, AMACOM.
Spencer, E 2010, The Regulation of Franchising in the New Global Economy, Cheltenham, Edward Elgar Publishing.
Srinivasan, R 2005, International Marketing, New Delhi, PHI Learning Pvt. Ltd.