In 1983, Theodore Levitt, the famous Harvard marketing professor wrote an article entitled, "The Globalization of Markets". Since then, the field of marketing has not been the same. According to Levitt, a new economic reality—the emergence of global consumer markets for single standard products–has been triggered in part by technological developments. Worldwide communications ensure the instant diffusion of new lifestyles and pave the way for a mass transfer of goods and services. Adopting this global strategy provides a competitive advantage in cost and effectiveness. In contrast to multinational companies, standardized (global) corporations view the world and its major regions as a single entity rather than a collection of national markets. These world marketers compete on a basis of appropriate value, i.e. an optimal combination of price, quality, reliability, and delivery of products that are identical in design and function. Ultimately, consumers tend to prefer a good price/quality ratio to a highly customized but less cost-effective item. Levitt distinguished between products and brands. While the global product itself is standardized or sold with only minor modifications, the branding, positioning, and promotion may have to reflect local conditions.
Critics of Levitt's perspective suggest that his argument for global standardization is inaccurate and that market strategy should be customized to each country. According to Kotler, one study found that 80 per cent of US exports require one or more adaptations. Furthermore, the average product requires at least four to five adaptations out of a set of eleven marketing elements, namely, labeling, packaging, materials, colors, name, product features, advertising themes, media, execution, price, and sales promotion. Kotler suggests that all eleven factors should be evaluated before standardization is considered.
To date, no study has empirically validated either perspective. While critics of Levitt can proffer thousands of anecdotes contradicting the validity of standardization, a more careful read of Levitt's ideas indicate that he offers standardization as a strategic option, not a fact. Although, global marketing has its pitfalls, it also has some great advantages. Standardized products can lower operating costs. More importantly, effective coordination can exploit a company's best product and marketing ideas. Too often, executives view global marketing as an either/or proposition-either full standardization or local control. But when a global approach can fall anywhere on a spectrum - from tight worldwide coordination on programming details to loose agreements on product ideas - there is no reason for this rigid view. In applying the global marketing concept and making it work effectively, flexibility is essential. The big issue today is not whether to go global, but how to tailor the global marketing concept to meet the specific needs of each business.
International Coca Cola
Like many product companies, Coke has used a mix of standardization and localized marketing. For instance, the classic red and white colors remain the same globally while the flavor profile is slightly tweaked based on region of distribution.