The world has changed impressively because of advances made in technology, which has also influenced the way businesses are conducted. Through technology, communication, travel, and transportation has been made easier, especially for places that were isolated and impoverished. Customers have much information on the products available in the markets, their prices, and the suppliers. Technology has resulted in a novel commercial reality, which is, the establishment of global markets for consumer products that are highly standardized.
The standardization of products is beneficial to corporations, because of the enormous economies of scale associated with it in the distribution, marketing, management, and production of those goods. Currently, multinational corporations are being replaced by global corporations. This research will focus on the concept of Glocalization, in global marketing by assessing how it relates to the standardization-adaptation debate. And later, analyze two global companies, Starbucks and The Coffee Bean and Teal Leaf application of glocal strategy.
Critical Review of Relevant Literature
The terms glocal and glocalization are formed by contracting the words global and local to create a blend of the two. The idea originated from a Japanese dochakuka farming principle in the 1980s, obtained from dochaku which means living on one’s land (Roudemetof, 2016, p.1). According to the Japanese, the farmers adapted their farming techniques to their local conditions but adopted a business for global localization. Japanese had a global outlook for the agricultural practices adapted to local conditions (Robertson, 1995).
Today the term glocalization in business can be explained as micromarketing, which means, modifying and advertising goods and services on either a global or near-global base, to a highly differentiated local and specific market.
Glocal strategy and glocalization, used by many corporations, is a compromise to improve the current usage of global strategy. However, the glocal approach replicated the framework of global strategy but incorporates aspects of local adaptations and tailoring of activities. It comprises of various approaches, that is, local, international, multinational, and global strategy. An important part of glocalization is the global strategy approach, whose emphasis is majorly on standardization and homogenization of the business practices across all the markets worldwide (Makles, no date). The global approach tries to manage worldwide businesses and truth be told, it is impossible to oversee all deals in the markets, so this could be a management utopia (Levitt, 1983).
The limitations of the global strategy approach are overcome by glocalization, which admits that harmony and balance between standardization and adaptation, and also between homogenization and tailoring, of operations involved by corporations.
Contextualizing Glocalization about Globalization
Globalization of activities and global strategy began in the 1980s and has continued to advance by day. The world today operates as one large market in which, superficial national and regional disparities are completely ignored. Corporations that want to continue enjoying their freedom in markets must adapt to new global realities or else, they become victims of their counterparts. Witt (2018, pp. 1055-1060) posits that companies are forced into globalization by four primary drivers which include; marketing forces, cost factors, government drivers, and competitive reasons. Other reasons why businesses go global are the increased access to foreign markets, improved degree of standardization of products and standards in an international context, and higher chances of mergers, acquisitions, and joint ventures.
Other researchers also argue that businesses globalize for internal efficiency, to compete in a homogeneous marketplace, and for added synergies. The traditional business activities in which the prices abroad were higher than the home market has changed, and now companies sell products at one price everywhere (Martin et al., 2018, p. 6). While multinational corporations operate in several countries and modify their products and practices in each market, global corporations, operate at a constancy, as if the world is a single entity.
This is mostly boosted by advanced technology majorly in communication and distribution (Appel, 2020). Companies use social media to reach their customers, get feedback, and promote their services or products.
Glocalization and Globalization, yet two opposing approaches, cannot be separated because they depend on the local and international systems. While globalization changes the nations, glocalization transforms the world, through global corporations and interconnection between the local and the global (Tsai et al., 2020). Globalization allows the corporation to conduct business at a global level but the companies do not change or modify the products depending on the market (Svensson, 2001).
Glocalization highly depends on globalization but improves the concept by, adjusting the product or service, to accommodate the consumer in a local market. For example, a company producing cars for global usage, would not only focus on having their product all over the world but also consider some local criteria for specific customers in various regions. This would include issues such as consideration of what side the steering would be or emission standards, depending on the country or region’s recommendations.
How Glocalization relates to ‘Global’ and ‘Local’ Business/Marketing Strategies
Glocalization is a simultaneous manifestation of both universalization and particularization of economic, social, and political systems. The importance of global and continental levels has risen tremendously, similar to the need for local and regional levels. There is more interconnectedness of the local and global strategies especially in marketing for glocalization to occur successfully (Giulianotti and Robertson, 2018, p. 5).
Local spaces and identities are formed by globalized contacts and the indigenous circumstances, which means that globalization does not affect heterogeneity in any way and does not eliminate geographical considerations.
In a marketing context, corporations create products or services meant for the global market by adapting them to local cultures. Interactions between local and global marketing strategies encourage diversity, which creates room for the development of hybrids (Kirti, 2019). In global markets, the customers are diverse and all must adjust to each other to co-exists harmoniously. Local marketing practices are shaped by the global techniques adopted although the opposite is also real (Sonmez, 2016, p. 4). The opening of national boundaries in globalization, increases the economic relevance of location, while expansion of the information economy brings no change in production and consumption across the geographic boundaries.
Local marketing strategies help a networked economy by creating content and contextual support necessary for innovation. On the other hand, global strategies link people and places on a divergent scale, hence, increasing the level of innovation worldwide (Cano-Kollmann, Hannigan and Mudambi, 2018, pp. 88-91). Culture, rooted in the local people and strategies, and the environment, currently the world, provide crucial points and perspectives for glocalization through networking and innovation.
How Glocalization Relate to ‘Standardization-Adaptation Debate
Global standardization, which means, the ability to use one standard marketing approach internationally, is essential in glocalization in its adaption efforts across disparate cultures. It is helpful when a product has the same appeal worldwide such that the company has already presented the product to the market. Standardization saves time and resources used in marketing especially because no unique strategy is required in a specific market (Vogt, 2019) However, the different market has unique desires, and therefore, standardization is not entirely effective.
In glocalization, standardization cannot be fully effective since products and services have to be tailored to local markets (Roudometof, 2016). Global standardization exposes a company to loss of customers to local company local competitors, hence the need for adaptation (Cano-Kollmann et al., 2018, p. 90). Generally, glocalization works best for companies with decentralized structures for authority or companies competing in disparate cultural contexts.
Advantages and Drawbacks of Various Strategic Approaches in Global Marketing
The local/adapted approach is the most basic strategy in marketing focusing on the local markets in a company’s home country. It helps the business maximize the local market share by serving the customers with products and services that are highly appropriated and tailored to their culture. However, it’s limited in scope and inhibits the potential growth of a business to a global level, yet globalization is necessary for exposing corporations to new opportunities and innovation. The global/standardized approach has two major benefits in a company (Sun, Paswan, and Tieslau, 2016, p. 240). One relates to cost since a similar strategy is used in all markets worldwide, eliminating the cost of the development of marketing strategy (Holzgreve et al., 2018, pp. 2-5).
The second benefit is brand promotion, such that, the strong brand gets the same effect in the different markets regardless of the cultural difference due to higher social acceptancy (Randrianasolo, 2020). However, the strategy is limited because of sensibility, where one market can accept the service or the product while the other disregards it based on the difference in opinions and preferences.
Glocal /adapted and standardized approach is the most effective because it helps a company get more market shares since products or services are tailored to local needs. There is reduced competition from the local companies and the brand can be promoted easily (Grigorescu and Zaif, 2017, p. 71). Companies get more sales, offer employment to local people, and allow expansion in foreign markets. The primary limitation of this strategy is high costs in marketing due to adaptation considering the cultural diversity worldwide (Sonmez, 2016, p. 5). Businesses should choose the right marketing strategy depending on their strategic goal, resources available, and other internal or external factors important in their respective industry.
Analysis of utilization of Glocal Strategy in Starbucks and The Coffee Bean & Tea Leaf in their Global Marketing Programs
Brief Description of the Companies
Starbucks, an American company founded in 1971, is the largest coffeehouse chain worldwide. Its headquarters are in Seattle, Washington, and has over 30,000 retail stores in the world in more than 80 markets (Vattikoti and Razak, 2018, p. 3). The company’s goal is to serve the best coffee and achieve it by ensuring their coffee is grown with the right standards and sourced ethically. One of the most important assets of Starbucks is the employees who are treated with high respect and dignity and continuously developed (Starbucks, no date). Products offered by this company include coffee, over 30 blends, handcrafted beverages, merchandise, and fresh foods. There are also consumer products at all grocery stores which include coffee and tea, and ready-to-drink products.
The Coffee Bean & Tea Leaf is one largest and first privately alleged coffee and tea retailers. It was founded in southern California and now, has more than 1100 locations in more than 29 countries. They serve over 110 million products each year due to their focus on quality and consistency in production. The company’s brand heritage is established on the selection of top-quality Arabica beans from the world’s best growers (The Coffee Bean & Tea Leaf, 2020). It is also considered the best roaster since roasting is done in small batched and tea/coffee blends are handmade.
Marketing Mix and Glocal strategy
Products policy; Starbucks operates in many countries and offers various products in the stores. In all the stores and markets, the products are similar in all ways, from packaging, sizes, and aesthesis. All markets are treated the same and no unique features are tailored to a specific market.
The stores from which the products are sold are equipped with Wi-Fi, music, good service, and a positive atmosphere for gathering. This helps the company address the needs of their target customer, adults, to maintain them. Price policy; the company has costly products that can only be afforded by working people or the high-class population (Geereddy, no date). In all markets, the prices are similar for the same products mostly because the majority of their store is in the U.S., which is also the main source of their revenue.
Distribution policy; Starbucks has many stores which serve as their main outlet but also has implemented other strategies such as mobile outlets to serve more customers. An example of the integration of technology is what is done in China. Starbucks noticed that China is a potential market since the Chinese are prominent Coffee takers (Heng, 2019, pp. 1-5). Considering the level of e-commerce and technology in that country, the company came up with-flagship store which allows social gifting for Chinese customers.
It is also contemplating establishing reserve stores in China for Coffees that are limited in quantities (Trefis Team, 2016). Another example of a tailored activity is the supply of specialty tea for Indians since the majority of them do not take coffee. The company’s distribution strategy utilizes a glocalization strategy by treating Markets in China and India differently.
Communication policy; Starbucks does not invest much in the advertisement or promotion of its products primarily because the brand is known globally. Most of the advertisement is done online through media platforms such as Starbucks ’ website, Social media channels like Facebook, Instagram, Twitter, and others. The company also uses TV and mobile applications, which allow payment, tipping, and redeeming of rewards as the company continues engaging with customers. However, the communication policy used is similar in all markets and no specific approach is designed for a particular target region.
The Coffee Bean & Tea Leaf
Product Policy; Standardization is very important to The Coffee Bean and Tea Leaf company because to them, it ensures that the brand image and perceived consistency is achieved by customers in all market. It, therefore, ensures that products are similar in all markets. However, they also consider unique features in each market, and where possible, add another product necessary for the local community to consume coffee. In the U.S., it is home country, there is a limited range of food and beverage products than in other outlets.
For instance, in Asia, the company offers a wider range of hot food items than in other regions because, Asians require food when having coffee (Veerasamy, 2017). The price of products is the same in all regions and markets and is highly constant because of standardization. Consumers, who are mostly teens and working-class adults are rarely concerned about the prices and therefore despite the products being expensive, loyalty from customers is high.
Further, Coffee Bean and Tea Leaf company have various outlets, concerning distribution policy, across the world, which are run by a manager with knowledge about the region. All the stores are located at high traffic and visible locations for the customers. They use two different types of distribution to serve different markets considering the mode of entry acceptable in the region and cultural differences. In markets with similar cultures and reduced entry barriers, the company prefers owning a store and running it themselves for instance.
It has done this in Hong Kong, the United States, and Australia, while in complex markets, such as the Middle East, Japan, and others, they use franchising strategy (The Coffee Bean and Tea Leaf, no date). However, franchising is associated with many challenges due to cultural differences considering the low adaptation level of the company’s products. Concerning communication policies, the company uses advertising for the promotion of its products as well as in supporting technological advances (Budi Indra Setya, 2018). They also have social platforms which include, online banners, Facebook advertisements, Instagram crowd participation, Pinterest page, and Twitters hashtags. Despite the wide coverage of the audience, this communications policy is similar in all markets.
The two countries do not fully implement the glocal strategy in their global marketing. Since both were established many years ago, they stick to global standardization. Their marketing mix has some concepts of glocalization, but it is still in its early stages of development. Price and communication policies are regulated in both companies and their global presence is majorly promoted by their brand image (Saputra and Margaretha, 2020, pp. 294-296). However, the companies have used glocal strategy in products policy and distribution differently. Overall, The Coffee Bean and Tea Leaf are more global and standardized while Starbucks is more local and adapted but also standardized.
Starbucks uses a glocal approach in marketing in which the products, prices, and communication are standardized to ensure that the brand image is consistent. It is also adapted because, in some markets, they use different distribution criteria or offer different packages of products that fit a specific market (Jun, Ma, and Lee, 2019, pp. 28-30). This strategy has helped the company attain higher market shares, while still enjoying economies of scale and higher brand recognition.
On the other hand, The Coffee Bean and Tea Leaf, use a more standardized global approach in which, all markets are treated the same (Taecharungroj, 2017, p. 568). The main goal of this approach is to protect the brand by ensuring that consistency is achieved in all markets. It is less adapted and has encountered numerous challenges because of variations in culture and local needs.
The concept of glocalization, though still not fully integrated into most corporations, is essential. Acknowledging that markets are different and tailoring the services and products to accommodate disparities in culture, does not only increase the company’s market share but also improves the customers’ loyalty and satisfaction. Although it has some limitations, the overall benefit outweighs the shortcomings especially those associated with costs in marketing. Global markets have unique features different from local ones, and therefore, a different approach is required. It is also important to ensure that the brand image is maintained while still tailoring the products and services to various local markets worldwide.
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