ABSTRACT
Companies marketing their product and/or services are forced with the decision of which to standardize their product offerings or not. This decision concerns firm commencing to market their products in foreign countries as well as those already operating internationally and is considering expanding into further markets. The standardization of products across cultures is increasingly becoming an important issue that the managers of global firms are today facing. As international marketing in the 21st century receives significant research attention, it seems the cost benefits and administration of standardization strategies has simplified the international marketing approach as well as being an attractive choice for many firm. Seeing that past research has established that standardization enhances performance outcomes, more recent theories suggests that this may not always be the eve. In today’s localized world, the choices of standardization of international products are no longer seem as an inflexible choice. However with the emergence of homogenous (identical) markets world, it is still a question of whether MNCs will or will not standardize their product offerings. To that aspect, it would perhaps be more interesting to look beyond the dichotomy of standardization as a product strategy. Through a case study of a multinational consumer goods producer, Unilever Nig. Plc, a researcher agenda was placed on investigating the level of standardizing of products by multinational corporations (MNCs). Based on the illustrations and findings of the research, it was concluded that the choice of complete standardization of products is not an all or nothing proposition, but a matter of degree. Hence MNC, should standardize their product to attain market leadership, penetrate the international market and as well serve as a means of development to the host country by given self-employment.
TABLE OF CONTENT
Title
page i
Declaration
ii
Certification
iii
Dedication
iv
Acknowledgement.................................................................... v
Table
of content.................................................................................... vii
List
of tables x
List
of figures xi
Abstract.................................................................................. xii
CHAPTER
ONE
INTRODUCTION
1.1 Background
to the study 1
1.2 Statement
of Problem..................................................................................... 4
1.3 Objectives
Of The Study 6
1.4 Research
Question 6
1.5 Research
Hypothesis................................................................................ 7
1.6 Significance
Of The Study 7
1.7 Scope
of Study and Limitations 8
1.8 Limitation
of the Study 9
1.9 Definition
of Terms 10
1.10 A
Case Study Unilever Nigeria Plc (Company’s History and Profile)…...................................................................... 11
CHAPTER TWO
LITERATURE REVIEW
2.0 Literature Review.................................................................................... 15
2.1 Conceptual Framework.............................................................................. 15
2.1.1 Standardization Of
Different Elements Of The Product.................................................................................... 15
2.1.2 Why standardization of products? 18
2.1.3 Is standardization possible across cultures? 22
2.1.4 Impact of
standardization in marketing mix blending on 26
2.1.4.1 Price and Pricing..................................................................................... 26
2.1.4.2 Promotion............................................................................... 27
2.1.4.3 Distribution............................................................................. 28
2.1.5 Standardization
In Packaging: Marketing Impact..................................................................................... 29
2.1.6 Standardization
In Global Market Leadership............................................................................... 30
2.1.7 The role of
multinational companies on economic development of a nation...................................................................................... 31
2.2 Theoretical
Framework.............................................................................. 33
2.3 Empirical Framework.............................................................................. 36
2.4 Summary...................................................................... 37
CHAPTER THREE.
RESEARCH METHODOLOGY
3.0 RESEARCH METHODOLOGY.
3.1 Research Design..................................................................................... 39
3.2 Area Of Study 39
3.3 Population
of study 39
3.4 Sample Size 39
3.5 Method Of Data Collection............................................................................... 39
3.6 Sampling Technique............................................................................... 40
3.7 Method Of Data Analysis.................................................................................. 40
3.8 Model specification............................................................................ 41
3.9 Definitions
of Variables................................................................................. 42
3.9.1
Dependent Variable................................................................................... 43
3.9.2
Independent Variables................................................................................. 43
3.9.3.
Stochastic Disturbances or error term 43
CHAPTER
FOUR
DATA
PRESENTATION ANALYSIS
4.0 Data
Presentation Analysis.................................................................................. 44
4.1 Findings
and Discussions............................................................................. 54
CHAPTER
FIVE
SUMMARY,
CONCLUSION, IMPLICATIONS AND FURTHER RESEARCH AREAS
5.0 Conclusion, Implications and Further Research.................................................................................................. 54
5.1 Summary..................................................................................... 55
5.2 Conclusion................................................................................... 56
5.3 Implications.................................................................. 57
5.4 Further
Research Areas 58
Bibliography
APPENDIX I
APPENDIX II
LIST
OF TABLES
Table 4.1:
Distribution Retrieval of copies of Questionnaire.......................................................................... 44
Table 4.2:
Standardization and Market Leadership............................................................................... 46
Table 4.3:
Standardization Characteristics and Product Global Market Penetration Rate 49
TABLE 4.4:
Standardization and Economic Development........................................................................... 51
TABLE
4.5:
Components Of The rs .......................................................................................... 53
LIST OF FIGURES
Figure 2.1: The four "P"s ............................................................................................... 17
CHAPTER
ONE
1.1 Background to the study
Multinational or international marketing
is becoming a major trend in modern businesses, to this effect, numerous
studies concerning the consumer demand and purchase behaviours for different
products across national boundaries have been and are still being undertaken.
According to Doole & Lowe (2008) international marketing is defined as the
process of identifying, anticipating and satisfying customer requirements,
needs and wants across international boundaries. Doole & Lowe (2008) still
went further by mentioning that within international marketing, companies are
involved in making global decisions in one or more variables of the marketing
mix.
Interestingly, the concept of product
standardization is not new in regards to global marketing strategies. According
to Doole & Lowe (2008), product standardization strategy refers to uniform
representation and improvement of technical standard, product quality, raw
materials to be used, product name and product packaging for all markets,
regardless of location around the world. In the last decades, businesses in
general has increased and most companies have extended their product offspring
across national boundaries and cultures respectively.
In
addition Czinkota & Kainen (2004) have pointed out that it is vital to note
that companies have four basic alternatives when deciding to internationalize
their products;
i.
Selling the same product everywhere
ii.
Make changes and adjustments on already
existing products for different markets.
iii.
Creation of new products for foreign
markets.
iv.
Merging all differences from markets into
one product where this will be introduced as a global product.
Moreover, despite the various
interpretations of the motivations behind the choice of product strategy one
common theme is the challenges faced by multinational companies in
standardization on of their product because the concept “Standardization of
products” gives them competitive edge in the field of international business
marketing. Therefore, as the product being part of the marketing mix it’s
crucial for the strategy to be analysed with caution and finally conducted
suitably across organizations operating multinationally.
When
multinational corporations expands their products to international markets.
They have to consider the approach of standardization in order to formulate
their global product strategy following the increase in globalization,
companies still struggle to decide as to which product strategy employ in the
different markets. As the world becomes smaller and the marketers seen as being
the same, others have been advocating a standardized product strategy as they
view the market to be the same as increasingly becoming homogenous. For
instance, Mesdog (1999) argues that it is crucial to standardize as much as
possible the elements of the marketing mix, as it is the main characteristics
of global marketing.
However,
it’s inevitable to note that is as much as global marketing may seem to be the
solution to generating profits at lower production costs, culture around the
world are very different and as such consumer preference over products will
vary. For instance Horska Ubreziova, & Kekale (2007) finds that products must differ more
from the original, in several different ways, as the culture differs more
suggesting that the differences in language, religion, education, materials,
culture and aesthetics are what highly motivates multinational corporations to
start an adjustment process in the marketing mix and especially their products.
Is it then safe to say that the industry that the multinational corporations
are active in also very important factor for the choice of the level of
standardization to be used in their international product strategy?
Czinkita (2004) mentioned that industrial
products do not require an adaption, while consumer goods highly requires
adaption as they are more interrelated with culture. Hise and Young-Tao (2011)
stated that although there has been a great deal of attention paid by scholars
to the topic of standardization over the last three decades, a careful analysis
of the relevant literature results in the conclusion that we really do not know
much about it. In addition, Kolter and Armstrong (1986), states that most
research has only a limited perspective in that they deal with a single,
non-global market. It is also noted that most studies have analysed the
characteristics of the actual product rather than the product as a whole.
One such area of interest is the consumer
goods industry that has expanded globally in recent years. Also we are to
consider the ways in which these multinational corporation present their goods
across cultures. For instance, the use of internet marketing also pays a part
in which these goods are put across to both existing and potential customers.
The manner in which the products are displayed on these company’s websites is
very crucial. The colour and the debility is also of great importance.
1.2 Statement of Problem
Multinational companies wishing to enter
international markets are faced with the challenges of considering the option
of standardizing the elements of their marketing mix, which is four “Ps”
(product, price place and promotion). It is observed that in the quest to
maintain a market to realize profits, multinational corporations like Unilever
Nigeria plc are faced with the challenges of remaining economically afloat by
deciding which product strategy to use as they enter and strive to survive in
international markets. Some findings show that the degree of the level of
standardization alters depending on specific characteristics of the product.
Consequentially, it is said that multinational corporations choose to adjust
those characteristics that are less costly, easier to make and prevent a
competitive advantages of price in foreign markets.
Over the last few decades, the process of
globalization and standardization has created unprecedented opportunities for
global businesses, that is why many multinationals companies are attempting to
expand their business internationally by many strategies their joint ventures
subsidiaries and standardization of their various marketing mix elements
especially the product line because its the corner stone of every business.
However, multinational companies finds it difficult in choosing the level of
standardization and adaption to be sued for their product line’s quality, name,
brand, symbol and packaging because of the existence of challenging factors
like cultural differences in the locality where the company’s branch markets
are situated. This product line features are what attract, retain and maintain
customers, so therefore multinational companies must standardize them in order
to remain outstanding and competitive.
Most companies analyse the characteristics
of the actual product rather than the product as a while not knowing that the
level of standardization alters depending on the specific company’s product
line. Today, global market is much more interested in academicians than
practitioners and several arguments whether to standardize or not a product has
been a puzzling question with which international marketing have wrestled over
the last decades because most multinational companies lacks the expertise
(technical knowledge), experts effective, specialized and efficient human
resources) and finance to engage in the standardization process.
1.3 Objectives of The Study
Thus, the broad objectives of this study
is to investigate as to what extents multinational corporations go in
standardizing product in international markets as well as to find if there are
any differences between markets in which the multinational corporations like
Unilever Nigeria plc operates.
The specific objectives are then listed as
follows:
-
To determine the degree to which product
standardization in terms of contents aid organizations achieve global market
leadership position.
-
Assess the role of product standardization
in global market penetration for international markets
-
Determination of the place of product
standardization in macroeconomic development of developing nations.
1.4 Research Question
This work research questions is formulated
in order to address mentioned research objectives and problems, they includes;
-
To what extent does product
standardization in terms of content aid organization to achieve global of
market leadership?
-
To what extent does a product
standardization in terms of packaging aid organizations penetrate international
markets?
-
Assess the place of product
standardization in terms of product content, package, price and promotion in
macro-economic development of developing nations given self-employment.
1.5 Research Hypotheses
This study in an effort at actualizing its
objectives built its variables of analysis on this hypothesis.
H01 = Product standardization
in terms of product content does not
Significantly
contribute to the achievement of global market
Leadership.
H02: = product standardization
in terms of packaging has no significant
Impact in global market
penetration.
H03 = product standardization
in terms of product content, package, price,
And
Promotion does not play any significant role in the development
Of
macro-economy of developing nations.
1.6 Significance of the Study
It
is apparent that the debate on whether multinational companies should
standardize international marketing behaviour is contradictory. For a
multinational company to be successful, it should incorporate ingredients of
standardization strategy. Multinational companies in their effort to be
effective and enjoy as much as they can the benefits the concept, try to
standardize various marketing mix elements and marketing strategies. This research
hypothesis that in practise multinational companies are mutually exclusively
adopting international or global standardization across their marketing mix
elements, but seeking to identify the right level of integration that will
allow them to achieve both customer satisfaction and organisational
profitability. This will increase the understanding and knowledge of the
approach and develop new theory to aid marketing practitioners, compel
effectively and efficiently within the highly competitive international place.
This
work as a study of product standardization on multinational and global
companies like Unilever Nigeria plc is built to supply input for policy
decision making on standardization for the purpose of adding value to market
offers for the creation and sustenance of consumers delight. This work is
important as an attempt at bridging the gap between the developed and
developing economies in the adoption of the policy of standardization and
multinational adaption. It will also offer solution to the death of literature
in this field of study.
1.7 Scope of Study
A great deal of research has been carried
out on the various dimensions of multinational corporations, yet far more
important to any systematic study is the definition of the problem that is what
it is about multinational corporations that bothers the government, the
legislator, the country in general and the researcher in particular.
The
research will not provide a comprehensive survey of the role of multinational
companies in the overall development of Nigeria because it is not definite
enough, nor will it be on the historical development of multinational
operations in Nigeria nor on multinational and international control over
multinational companies nor is it on the reason why companies go multinational
neither is it interested providing
reasons why multinational companies have
certain kind of attitude towards investment rather than the aspect of the
multinational companies that is being focused in this research work is their
role in the economic development of Nigeria case study of Unilever Nigeria plc.
A critical approach of the role of multinational companies on the economic
development of Nigeria normally would require an indebt study of all the
existing multinational companies in the nation so as to be able to objectively
assess their role on the economic development of Nigeria.
1.8 Limitation of the Study
However this study is to be limited to
multinational company like Unilever Nigeria plc, this is due to the following
constraints;
The time available for carrying out this
research is so short that it cannot permit the in-depth study which this
project ordinarily demands. Furthermore, this research is limited by financial
constraints. Its my earnest wish to cover as many multinational companies as
possible but this limited by high cost of transport that is prevalent in this
country now. Added to the above constraint is lack of materials with Nigerian
background. Most is the books in our libraries have foreign background and this
affected their presentation of materials. Also is the problem of collecting
primary data required for this research, this problem relates to the issues of
removing bias from primary information. The last but not the least is Nigerian
attitude to giving information. The researcher had to call on some offices
several times before the required data was given.
1.9 Definition of Terms
International
marketing: international marketing is simply the application of
marketing mix to more than one country.
However, international marketing can also
be said to be the exchange of goods and services between different national
markets involving buyers and sellers.
Consumer
behaviour: this is the study of individuals, groups or
organization and the process they use to select, secure, use and dispose or
products, services, experiences or ideas to satisfy needs and the impacts that
these processes have on the consumer and society.
Standardization:
this is the process of implementing and developing technical standards. It can help
to maximize compatibility or quality it can also facilitate commodization of
former custom process.
Culture:
is a way of life of a group of people the behaviours, beliefs, values and
symbols that they accept generally without thinking about them and that are
passed along by communication and imitation from one generation to the next.
Multinational
Corporation (MNC): an enterprise operating in several
countries but managed from one (home) country.
Generally, any company or group that derives a quarter of its revenue
from operations outside of its home country is conserved an MNC.
Product:
in marketing, a product is anything that can be offered to a market that might
satisfy a want or need.
International:
it mostly means something involving more than a single country.
Country
of origin: is the country of manufacture, production or growth
where an article or product comes from.
1.10 A Case Study Unilever Nigeria Plc. (Company’s
History and Profile).
Lever brothers Nigeria plc. came into
existence in Nigeria in 1923 when it was incorporated as private company under
the name lever brothers (West Africa) limited. In 1924 the name was changed to
the west Soap Company limited and later lever brothers (Nigeria) limited in
1955. When the company went public in 1973, it subsequently changed its name to
lever brothers Nigeria limited and in compliance with the company and allied
matters decree 1990, the company substituted the word limited in its name with
plc to become Unilever brothers Nigeria plc. In accordance with the Nigeria
enterprise promotion Acts of 1972 and 1977, 60 percent of the company’s equity
is held by Nigerian citizens and institutions numbering 36,923 while the
remaining 40 percent is held by Unilever overseas holding limited, Lipton tea
company limited and cheesebrough pends international limited.
Unilever Nigeria plc is a leading name in
the industrial sector. It is involved in the manufacturing and marketing of
non-scapy detergents, soaps, skin creams, tooth pastes, squash drinks, edible
oil and fats tea and coffee as well as range of petroleum jellies and other
personal care products currently Unilever brothers Nigeria plc operates three
factories which are located in Apapa and Agbara. The company started with the
business of producing bar soaps, using palm oil, in the Apapa factory which was
commissioned in 1924. Ever since, expansion has taken place to include the
production of international toilet soap brand like lux, Astral and Asepso. In
addition to soaps personal products such as pepsodent and close up tooth paste
and petroleum jellies are also manufactured in Apapa.
Unilever Nigeria plc Aba factory in Abia
state which was commissioned in 1958 was producing sunlight and key laundry
soaps initially but in 1980, and additional plant was installed for the
production of Omo and surf detergents while in 1986, another plant for the
production of Rin detergent was installed.
Agbara factory in Ogun state is the
company’s third factory. The Ultra-modern complex was commissioned in 1983 for
the manufacture of edible product. The factory produces blue band and planta
margarine, tree top squash drink, industrial oils and facts, (the masterline
range of products) as well as Oroyo and covo cooking oils. This factory also
refines vegetables oils for third parties.
In December 1989, the factory started
producing a food seasoning Royco. The Liptin tea factory, formerly at Burma
Road, Apapa has been fully relocated in Agbara in order to consolidate the
production of the company’s food products in one location. The masterline
bakery centre is also located Agbara
for the training of bakers and for new products development with specific
emphasis on the use of raw materials.
Chesbrough products division formerly at
Isilo has also now been relocated at Apapa, manufacturing the popular Vaseline
petroleum jelly and ponds range of skin and hair care products.
Unilever Nigeria plc range of quality
products is distributed and sold uniform prices all over the country through an
established and tested distribution Network using appointed distributors
supervised by a trained sales force. Unilever Nigeria plc has been dedicated to
the production of to quality products for Nigeria for several years now. The
products includes – Ox detergent and soap, super blue Omo, Vim, Blue surf, Rim
soap, unidrex 200 detergent, mix me milk, Royco cube, Marva cake margarine,
covo, blue bank, sunlight, sumafoam liquid detergent, planta margarine, wheat
cake, mix oroyo, pure vegetable oil, tree top, kettle tea, lipton yellow label
tea, master foam, extra sheen, breadeen, bakery fat, su active bittle washing
detergent, astra soap, and cream, Asepso, lux Vaseline soap, powder, cream and
jelly, life bouy, close up tooth paste, pepsodent tooth paste, cocoaobutter,
ponds, breeze soap and yellow soaps. The super brands remain “A must have in
every home”.
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