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When the pace of globalisation began to pick up in the middle of the last century, experts imagined this would spell the death knell of multinational companies with specific marketing concepts for different countries and individual national subsidiaries. Global companies would be the future, with centralised management and sales teams on the ground in the individual countries. This would be underpinned by increasing homogenisation of consumer needs. It was felt that local differences would level off. According to the convergence hypothesis, the globalisation process would have a self-amplifying effect.
This hypothesis seems to apply in the city centres, shopping malls and airports of industrialised nations, where you’d be hard pressed to tell whether you are in Shanghai, New York or London simply by looking at the brands and ranges.
There are obvious benefits to manufacturers in offering the same range worldwide. Economies of scale bring down manufacturing costs and streamline processes. The number of SKUs offered around the world can also be kept to a minimum. Brand image is managed consistently worldwide for a more precise focus.
However, although this represents an attractive model for market entry in terms of speedier retail penetration, it also poses certain challenges. In particular, the economies of scale are also used on the retail side to exert price pressure on manufacturers through order bundling. Furthermore, companies operating on a global footing are slower to respond to trends and country-specific nuances.
However, the different preferences and characteristics within each country are often crucial to the success or failure of products, so a “one product fits all” approach only works in limited cases. To stand out from the crowd on the retail side but also use national and regional features and individuality to best advantage, it is worth taking a multinational approach which allows more freedom for product range decisions within individual countries.
Quality and service advantages come to the fore with such an approach. It is also good to be in a position to respond faster with tailored ranges in individual countries and respect consumer habits that have evolved over time.
Modular strategies are tried and tested in practice. They compensate for the disadvantages of both systems – multinational and global – by facilitating basic global ranges that can be adjusted for each country based on the product category and pricing, while also providing for specific add-on ranges locally.
Attractively priced basic ranges that sell anywhere in the world form the basis. On top of this, seasonal and culturally specific add-on ranges anchor the product portfolio at a local level.
However, this also means that national distributors have to be given a certain level of decision-making authority. By offering the right products, the manufacturer can build a convincing brand image in the various markets.
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