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Standardization/adaptation strategies of South Korean food product companies.
Abstract:
Whether to standardize or adapt marketing operations in international markets is the major decision companies need to make. Despite significant research on this topic, there are significant knowledge gaps that still persist: (1) do companies operating internationally favor a standardized or adaptive strategy, (2) is the level of standardization or adaptation consistent across the various elements of firms' marketing mixes and (3) what are the internal and external factors that drive companies' standardization/adaptation decisions?

The study is based on a mail survey from 82 Korean food companies engaged in international marketing. The survey asks about the deployment of the firms' marketing standardization/adaptation strategies and the factors supposedly related to the decision for the firms marketing products internationally. Possible explanations for findings and recommendations for future research are suggested.

Keywords: standardization, adaptation, marketing strategy, consumer goods

Subject:
Food (International marketing)
Food industry (International marketing)
Trading companies
Authors:
Hise, Richard T.
Choi, Youngtae
Shin, Jongkuk
Park, Minsook
Pub Date:
01/01/2010
Publication:
Name: International Journal of Business Strategy Publisher: International Academy of Business and Economics Audience: Academic Format: Magazine/Journal Subject: Business Copyright: COPYRIGHT 2010 International Academy of Business and Economics ISSN: 1553-9563
Issue:
Date: Jan, 2010 Source Volume: 10 Source Issue: 1
Topic:
Event Code: 240 Marketing procedures Advertising Code: 84 Global Marketing Computer Subject: Food and beverage production/distribution software
Product:
Product Code: 0101100 Food; 2000000 Food & Kindred Products; 8821000 Consumer Expend-Food & Tobacco NAICS Code: 111 Crop Production; 311 Food Manufacturing; 81411 Private Households
Accession Number:
237533584
Full Text:
1. INTRODUCTION

Perhaps the most important (and usually the first) decision facing companies beginning to operate in overseas markets is the extent to which those operations will be the same (standardization) or different (adaptation) from their domestic ones. These decisions also must be made by firms currently plying international waters which want to expand into additional markets, but with another dimension: will the operations mirror those currently in play in the firm's already existing foreign markets, or will they deviate from them? Cavusgil and Zou (1994) state that "in international marketing, the key consideration is whether the marketing strategy should be standardized or adapted to the conditions of the foreign market." Cavusgil (1995) identifies standardization vs. adaptation as one of the four "special challenges in international marketing," along with market/customer assessment and selection, methods for getting close to international customers, and branding, labeling and packaging.

The literature dealing with this topic has generally taken three approaches: developing arguments for whether standardization or adaptation, or some combination thereof, would be most appropriate; the conditions or factors that impact the standardization/adaptation decision; and the extent to which standardization or adaptation is, in practice, being deployed by companies in their overseas operations.

2. ARGUMENTS FOR STANDARDIZATION AND ADAPTATION

Wang (1996), in reviewing the literature, states that "the decades-long debate about standardization and adaptation has recently reached the general consensus that the real issue is not whether to standardize but rather to what degree of standardization...." Buzzell (1968) writers, "management should not automatically dismiss the idea of standardizing some parts of the marketing strategy...." Several advantages of standardization are offered by Carpano and Chrisman (1995), including economies of scale, increased learning, and cost savings from "making a uniform product." Walters (1986) cites cost savings as a major benefit of uniformity (standardization). Schuh (2000) advances cost advantages due to scale economies and product standardization. Theodosiu and Katsikeas (2001) cite several advantages of standardization: economies of scale, consistency and reduced managerial complexity.

Levitt (1983) developed the most comprehensive and compelling arguments for standardization, making his case on the basis of improved technology, increased worldwide communications, and homogenization of cultural preferences and tastes. According to Levitt, "the global competitor will seek constantly to standardize his offering everywhere. He will never assume that the customer is a king who knows his own wishes."

Levitt's article elicited several critical responses, most notably Douglas and Wind (1987), Boddewyn, Soehl and Picard (1986) and Walters (1986). Douglas and Wind rejected Levitt's premise on a number of bases, such as, lack of homogenization in world markets, greater levels of heterogeneity within countries, the reluctance of consumers to trade off product features for lower prices, economies of scale able to be obtained at lower levels of output, the existence of various external obstacles to standardization (governmental and trade restrictions, different marketing infrastructures, and competition), and such internal factors as inability to standardize current international operations which are adaptive and represent management's disposition against standardized strategies. Boddewyn et al. (1986) fault Levitt for the lack of empirical evidence to support his assertions. Walters (1986) cites the lack of expected benefits as a reason not to embrace full-scale standardization. Chung and Wang (2006) refer to previous studies whose results suggest that a product adaptation strategy is likely to result in better financial and strategic performance, especially export performance (Cavusgil and Zou, 1994; Chung, 2003).

3. FACTORS AFFECTING THE STANDARDIZATION/ADAPTATION DECISION

Various factors related to the standardization/adaptation decision have been identified in the literature as being important. These include such performance measures as percentage of international sales to total sales (Cavusgil and Zou, 1994), the number of years of international experience and size (Yip, 1996).

Non-performance factors which have been examined include laws and regulations (Buzzell, 1968; Theodosiou and Katsikeas, 2001; Theodosiou and Leonidou, 2003; Yorio, 1983), competition (Alashban, Hayes, Zinkhan, and Balazs, 2002; Boddewyn et al, 1986; Chung and Wang, 2006), physical infrastructure (Barker and Aydin, 1991), marketing infrastructure (Alashban et al., 2002; Chung and Wang, 2006; Levitt, 1983; Theodosiou and Leoido, (2003), culture (Alabashan et al., 2002; Dunn, 1976; Yorio, 1983), and customer issues (Theodosiou and Katsikeas ,2001; Theodosiou and Leonidou, 2003).

Extent of Standardization/Adaptation in Companies' Overseas Operations

Ward (1973) reported that two-thirds of Europeans firms adapted their product for the U.S. market. However, the adaptations were mainly low-cost modifications. Kacker (1972, 1976) concluded that 45% of U.S. companies reported significant changes in products marketed in India. Weinrauch and Rau (1974) discovered that about half of exporters claimed that product modifications were required. Boddewyn et al. (1986) provided a longitudinal analysis (1973, 1978, 1983, and 1988 projected) of standardization/adaptation strategies of U.S. manufacturers of consumer nondurables, consumer durables, and industrial products doing business in the European Community. The major findings for 1988 compared to 1973 were:

1. For consumer nondurable products (1988 projected), 42% of the respondents reported "very substantial product standardization." This compared to 25% for 1973.

2. For consumer durable products, 38% of the respondents reported "very substantial product standardization" for 1988 (projected), up slightly from 33% in 1973.

3. For industrial goods, the 33% figure in 1988 was down from the 50% figure found in 1973.

Douglas and Wind (1987) believe that few companies "pursue the extreme position of complete standardization with regard to all elements of the marketing mix.Rather, some degree of adaptation is likely to occur relative to certain aspects of the firm's operations or in certain geographic areas." Several researchers (Hult, Cavusgil, Deligonul, and Lagerstrom, 2007; Theodosiou and Leonidou, 2003) assert that standardization/adaptation is not usually found at the extremes of the concept but, rather, companies generally pursue a mid-point strategy, a middle-of-the road approach.

Sorenson and Wiechmann (1975) found that three-fourths of companies employed highly standardized national advertising. Martenson (1987) concluded that consumer products were becoming more standardized, as did Walters (1986). Ryans and Donnelly (1969) found that 90% of the companies surveyed made some use of uniform advertising policies, but only one-sixth did so for more than 50% of their international advertisements, and Britt (1974) concluded that little standardization for international advertising was occurring. Dunn (1976) reported that the percentage of companies using similar advertisements in international markets had declined between 1964 and 1973. Schuh (2000), in analyzing the marketing operations of eight western companies doing business in central and eastern Europe found that six cases showed a high degree of marketing program standardization." Hise and Gabel (1995) concluded that 151 U.S. companies with international operations in at least five foreign markets were using the same customer service strategies in those markets as they were employing domestically.

Limitations

The limitations of earlier research on standardization/adaptation have been promulgated by various authors, especially Alshban et al., (2002), Cloninger and Swaidan (2007), Hult et al., (2007), O'Donnell and Jeong (2000), Theodosiou and Katsikeas (2001), Theodosiou and Leonidou (2003), and Subramaniam and Hewett (2004). The most significant of these shortcomings include:

* Most of the standardization/adaptation literature involves U.S. MNCs operating in foreign markets. Few studies deal with companies located in other regions of the world, especially Asia and the Middle East.

* Little attention has been devoted to the pricing and distribution elements of the marketing mix.

* Most of the previous studies are concerned with only one segment of the marketing mix. Few address the broader spectrum of the entire marketing mix.

* Most studies elicit information from headquarters personnel instead of seeking input of personnel located at overseas, subsidiary levels.

* Almost all analyses of the standardization/issue are cross sectional, rather than longitudinal.

* Many studies involved comparisons of companies in multiple industries, instead of focusing on firms located in the same industry.

* Relatively few independent, associative variables have been scrutinized.

* When independent, associative variables were examined, variables external to firms were usually emphasized to the virtual exclusion of internal factors.

Because of these limitations, we lack sufficient information to fully answer the following questions: Do companies operating internationally favor a standardized or adaptation strategy? Is the level of standardization or adaptation consistent across the various elements of the marketing mix? If not, which aspects exhibit a standardized strategy and which show an adaptation pattern? What are the factors that are associated with a company's standardization/adaptation strategy? Are some more or less important?

This article will deal with these questions by reporting the results of a study of 82 South Korean firms doing business in international markets.

THE STUDY

Based on the standardization/adaptation literature, a three-part questionnaire was developed. The first part requested information about the company, such as, annual sales, percentage of sales from international operations and location of international operations. The second segment required respondents to indicate the extent to which 33 marketing mix elements deployed in their international markets are similar to or different those used in their domestic markets. The response alternatives were "very different," "somewhat different," "somewhat similar," and "very similar." Part III asked the executives to identify the extent to which 15 factors (external and internal) were considered important in determining the similarity or differences of their international marketing mixes from their domestic ones. The response options available were "not important," "somewhat important," and "very important."

An analysis of the relevant literature prompted the formulation of 16 hypotheses which were believed to be helpful in answering the questions posed above.

Are Companies Employing a Standardized or Adaptation Strategy?

The type of product is a strong determinant of whether a standardized or adaptive strategy will be in place. High tech products are more likely to be associated with a standardized strategy than an adaptive one (Cavusgil and Zou, 1994; Duprez, Diamanto, Poulos, and Schlegelmich, 1994; Wang, 1996). Industrial products are more likely to be marketed through a standardized strategy than through an adaptive approach according to Boddewyn et al. (1986), Quelch and Hoff (1986), and Samiee and Roth (1992). However, Theodosiou and Leonidou (2003) and Solberg (2003) do not concur.

Consumer products will usually be marketed through an adaptive strategy (Quelch and Hoff, 1986; Samiee and Roth, 1992). Among consumer goods, non-durables are less likely to be marketed via standardized means that are consumer durables (Boddewyn et al., 1986; Wang, 1996; Whitelock and Pimblett, 1997). Within the consumer non-durable sector, adaptive strategies are generally believed to be more appropriate (Chakravarthi and Perlmutter, 1985; Rau and Preble, 1987), with food offerings particularly constrained to an adaptive strategy (Barker and Aydin, 1991; Boddewyn et al., 1986; Martenson, 1987; Rau and Preble, 1987; Subramaniam and Hewett, 2004; Wang, 1996; Whitelock and Pimblett,1977) because the purchase of such items is strongly driven by cultural factors, consumer tastes, habits, and incomes (Martenson, 1987).

Therefore, because this study involves companies selling food products, the first hypothesis is:

[H.sub.1]: The marketing mixes of the respondent companies will exhibit a pattern of adaptation.

Is The Level of Standardization or Adaptation Consistent Across the Various Elements of the Marketing Mix?

There is a strong consensus in the literature that there will not be homogeneity in the level of standardization/adaptation in companies' marketing mixes (Boddewyn et al., 1986, Douglas and Wind, 1987; Quelch and Hoff, 1986; Rau and Preble, 1987; Yip, 1996). In other words, different levels of standardization/adaptation will exist for the various components of the marketing mix. Thus, the second hypothesis is:

[H.sub.2]: Respondent companies' standardization/adaptation strategies will not be consistent across their marketing mixes.

A number of researchers have examined the standardization/adaptation question within the context of specific marketing mix elements. Based on their analyses, they have identified those marketing mix components that are likely to be standardized and which are likely to be adapted. Advertising is likely to be adapted (Boddewyn et al, 1986; Britt, 1974; Harris, 1994; Walters, 1986). The product dimension is considered to be the element most likely to be standardized. As far as specific elements of a products are considered, Theodosiou and Leonidou (2003) conclude that quality, design, features, and branding are the least likely to be adapted. Packaging was slightly more likely to be adapted. Some level of adaption was discovered for labeling and warranties. Customer service is likely to be standardized (Buzzell, 1968; Hise and Gabel, 1995; Theodosiou and Leonidou, 2003). Pricing strategies are likely to be adapted (Barker and Aydin, 1991; Douglas and Wind, 1987; Martenson, 1986; Theodosiou and Leonidou, 2003; Walters, 1986) as are channels of distribution (Barker and Aydin, 1991; Martenson, 1987; Rau and Preble, 1987; Theodosiou and Leonidou, 2003; Walters, 1986). Theodosiou and Leonidou (2003) concluded that physical distribution was likely to be adapted. Two major elements of the promotion mix--sales promotion (Barker and Aydin, 1991; Kashani and Quelch, 1990; Theodosiou and Leonidou, 2003) and personal selling (Barker and Aydin, 1991; Theodosiou and Leonidou, 2003) are also likely to be adapted.

Based on the above findings, the following nine hypotheses were suggested:

[H.sub.3]: The respondent companies' advertising mixes will exhibit an adaptive pattern.

[H.sub.4]: The respondent companies' sales promotion mixes will exhibit an adaptive pattern.

[H.sub.5]: The respondent companies' personal selling mixes will exhibit an adaptive pattern.

[H.sub.6]: The respondent companies' product mixes will exhibit a standardized pattern.

[H.sub.7]: The respondent companies' channels of distribution will exhibit an adaptation strategy.

[H.sub.8]: The respondent companies' logistics mixes will exhibit an adaptation pattern.

[H.sub.9]: The respondent companies' pricing mixes will exhibit an adaptation pattern.

[H.sub.10]: The respondent companies' credit policies will exhibit an adaptation pattern.

[H.sub.11]: The respondent companies' after-the-sale service policies will exhibit an adaptation pattern.

What Factors Are Associated With Companies Standardization/Adaptation Strategies?

Several performance factors which are likely to be associated with companies' standardization/adaptation strategies have been the concerns of various researchers and are incorporated into Hypotheses [H.sub.12] through [H.sub.14]:

[H.sub.12]: Companies with higher percentages of international sales to total sales are more likely to be pursuing an adaptation strategy than those with lower percentages of international sales to total sales (Cavusgil and Zou, 1994):

[H.sub.13]: The greater the number of years of international experience for respondent firms, the more likely they will be pursuing an adaptation strategy (Cavusgil and Zou, 1994; Chung and Wang, 2006).

[H.sub.14]: Smaller respondent companies are more likely to be pursuing a standardized strategy than are larger ones (Yip, 1996).

A wide array of non-performance, external factors have been hypothesized as being important in formulating standardization/adaptation strategies. These have been incorporated into hypothesis H15. (In addition, the authors believed that physical distance of firms' international markets from their domestic location should also be included as one of the external factors).

[H.sub.15]: Laws and regulations (Buzzell, 1968; Theodosiou and Katsikeas, 2001; Theodosiou and Leonidou, 2003; Yorio, 1983), competition (Alashban et al., 2002; Boddewyn et al,. 1986; Chung and Wang, 2006), physical infrastructure (Barker and Aydin, 1991), marketing infrastructure (Chung and Wang, 2006; Levitt, 1983; Theodisiou and Leonidou, 2003), culture (Dunn, 1976; Yorio, 1983), customer issues (Theodosiou and Katsikeas, 2001; Theodosiou and Leonidou, 2003), and physical location will be perceived by the Korean firms as being important in formulating their standardization/adaptation strategies.

Internal, non-performance factors are captured in hypothesis [H.sub.16]:

[H.sub.16]: Economies of scale, resource availabilities, strategic goals and objectives, level and type of training provided their sales forces, company financial condition, and availability of competent personnel to staff international marketing positions will be perceived by the Korean firm as being important in formulating their standardization/adaptation strategies.

Survey Procedure

The original survey questionnaire was constructed in English. The survey was translated into Korean by one of the authors, who is bilingual, for Korean respondents. The translated Korean survey questionnaire was checked by the other two Korean authors to ensure the correct meaning and wording of the original survey for Korean respondents. Their comments were incorporated into the final Korean survey questionnaire.

The food industry in Korea was chosen for the survey because the importance of the Korean food industry has been increasing in recent years. The proportion of value added by the food industry's agrofood sector improved from 38.7% to 47.9% in 2005. Food exports in 2005 were slightly over $2 billion, compared to $6.97 billion import (Hwang, 2005). The increasing level of exported food products may help to reduce this trade disparity (Lee, 2001).

The mail survey questionnaire was sent to the 450 companies on the list of the Korean International Trade Association and the Korean Food Industry Association. The first mailing was sent to the person who was responsible for international marketing and sales. After the first mailing, a phone call was made to those who did not complete the mail survey.

A total of 87 surveys were returned. However, five of the surveys were not used because of missing information. The final number of the surveys used was 82, resulting in an 18.2% response rate. In order to check for non-response bias, t-tests were conducted to compare the early returns (those who responded to the first mailing) with the late returns (those who responded to the phone call) on annual sales, percentage of sales from international operations, and years of international experience (Armstrong and Overton 1977). The tests showed that there were no significant differences on the three variables (p=.69, p=.26, and p=.93, respectively) between the two groups. Thus, non-response bias was not a concern.

4. RESULTS

Respondent Profiles

Table 1 provides profile information about the 82 South Korean companies that participated in the study. Their mean annual sales were $179 million, with a median of $30 million. The mean value for the percentage of sales accounted for by their international operations was 38.5% compared to a median of 31.0. The mean years of international experience was 8.4; 7.0 was the median figure. Four was the median number of foreign countries in which these companies operated; the mean was 4.55.

Exporting (96.3% of the firms) was the preferred type of international operation, followed closely by importing (90.2%). International joint ventures (58.5%) and strategic alliances (48.8%) were the next favored options. Overseas sales and marketing offices (39.5), licensing (34.1%) and franchising (31.7%) were employed by about one-third of the respondent firms. Less than 10% indicated the use of manufacturing facilities.

Level of Standardization/Adaptation on the 33 Marketing Mix Variables

Table 2 presents the findings regarding the extent to which the South Korean companies were employing a standardization or adaptation strategy for the 33 marketing mix variables, the seven marketing mix clusters and the two stand-alone elements (credit policies and after-the-sales service). In computing the mean scores to be subsequently discussed, a value of 1 was assigned to the "very different" response, 2 to the "somewhat different response, a 3 to the "somewhat similar" response, and a 4 to the "very similar response."

Advertising

On the advertising cluster, respondent companies pursued a middle-ground strategy. Advertising copy, advertising appeal and advertising media had means only slightly above 2.50 and, for advertising as a whole, the mean was 2.60. For each element of the advertising mix, the percentages of "very similar" were, however, about twice those of "very different" responses.

Sales Promotion. For sales promotion, similar results to those found for advertising existed. The mean for all sales promotion elements combined was 2.63. The highest means occurred for premiums (2.74) and contests (2.70); the lowest means of 2.49 and 2.55 were found for sponsorships and point-of-purchase displays, respectively. For each component of sales promotion, the percentages of "very similar" responses exceeded those of "very different," responses.

Personal Selling. The mean score for personal selling was 2.66. They were 2.63, 2.66 and 2.71, respectively, for level and type of training provided the sales force, background and experience of the sales force and compensation and support provided the sales force. For each element of personal selling and personal selling as a whole, the percentages of "very similar" responses were about twice those found for "very different," responses.

Product. The combined mean score for the product cluster was 2.60. The highest mean scores for elements of the product mix occurred for product quality (2.73), product line (2.68), and product brand names (2.66). Product design and product warranties were the two elements of the product mix (out of nine) for which the percentages of "very different" responses exceeded the "very similar" responses.

Channels of Distribution. The mean score for the channels of distribution cluster was 2.55. In regard to the components of the channels of distribution mix, the mean scores were 2.62, 2.44 and 2.60 for types of channels of distribution used, incentives provided channels to carry our product and aggressively market them, and dealer margins, respectively. The percentage of "very similar" responses exceeded those of "very different" responses for two of the channels of distribution mix; incentives provided channels to carry our products and aggressively market them was the lone exception.

Logistics. A mean score of 2.55 was found for the logistics mix. Transportation mode was the only element of the logistics mix to which the Korean executives assigned a mean score of less than 2.50 (2.46). Whereas the percentage of "very similar" responses exceeded those of the "very different responses (about a 2-1 ratio) for order cycle, inventory policies and warehousing strategies, the percentage of "very different" indications for transportation modes was greater than that found for the "very different" category (19.5% to 14.6).

Pricing. The pricing mix had one of the highest mean scores (2.68) of the marketing mix clusters examined in this study. The mean scores for prices and pricing objectives were 2.65 and 2.71, respectively. And their percentages of "very similar" responses, as well as that for the pricing mix as a whole, exceeded those of "very different" responses by about a 2-1 margin.

Credit Policies. The highest mean score (2.77) for any marketing mix element existed for credit policies and the percentage of "very similar" responses exceeded that found for "very different" responses by more than a 2-1 ratio (19.5%-7.3%).

After-the-Sale Service. The mean score for after-the-sale service was 2.72 and the ratio of "very similar" responses to "very different" responses was 2-1 (14.6% to 7.3%).

Given the results indicated above, it is hardly surprising that the mean (2.62) for the 33 marketing mix variables combined demonstrated a compromise standardization/adaptation strategy. The percentage of respondents (16.6%) revealing a "very similar" strategy exceeded the percentage (10.6%) existing for the "very different" approach to operating in overseas markets.

Based on the above findings, it is not possible to accept Hypotheses [H.sub.1] and [H.sub.3]-[H.sub.9]. This conclusion is based on the fact that none of the mean scores was greater than 3.0 (an indication of standardization) or lower than 2.0 (an indication of an adaptation strategy). It should be noted, however, that since all of the mean scores for the major marketing mix areas exceeded 2.50, it could be argued that these respondent firms are pursuing an international strategy that leaned toward standardization. This same conclusion appears relevant for the majority of marketing mix sub-areas (29 out of 33), the exceptions being sponsorship, product warranties, incentives provided channels to carry our products and aggressively market them, and transportation modes.

In regard to Hypothesis H2, that the level of respondent companies' standardization/adaptation would not be consistent across the elements of the marketing mix, it should be pointed out that the mean scores are different but do not appear to be meaningfully so. The means for the major clusters of the marketing mix (advertising, 2.60; promotion, 2.62; personal selling, 2.66; product, 2.60; channels of distribution, 2.55; logistics, 2.55; and pricing, 2.68) were tightly grouped. The same conclusion can be applied to the components within each of the marketing mix clusters and across the 31 marketing mix elements included in the seven marketing mix clusters, that is, little dispersion among the mean scores occurring.

The mean scores for credit policies (2.77) and after-the sale services (2.72) were higher than those found for the seven marketing mix clusters, but it should be pointed out that, unlike the seven marketing mix clusters, the mean scores for these aspects of the marketing mix were based on only one component.

In sum, Hypothesis H2 could be only partially accepted.

Independent Variables

Table 3 contains the findings involving the effect of companies' percentage of sales attributed to their international operations, years of international operations and annual sales (i.e., performance variables) on their standardization/adaptation practices.

Hypothesis [H.sub.12], that companies with higher percentages of international sales to total sales would be more likely than those with lower percentages of international sales to total sales to be pursuing an adaptation strategy was partially accepted. The mean score on the 33 marketing mix variables combined for companies with percentages of international sales below the median was 2.67, compared to 2.59 for those respondents with percentages of international sales to total sales above the median. However, the 2.59 mean score, although closer to an adaptation strategy than the 2.67 mean, did not achieve the 2.0 or lower threshold. The results for the nine major marketing mix variables showed that firms with higher percentages of international sales to total sales were closest to implementing an adaptation strategy only for promotion (mean=2.45). On the 33 individual marketing mix variables, respondent companies were found to be pursing a strategy approaching standardization for 29 of the 33 marketing mix variables.

Hypothesis [H.sub.13], that firms with greater number of years of international experience, would be more likely than those with fewer years of international experience to be pursing an adaptation strategy could not be accepted. Companies with years of international experience exceeding the median showed a mean score on the 33 marketing variables combined of 2.64, virtually the same (mean=2.63) as those with fewer years of international experience. Because the mean score of 2.64 exceeded 2.50, there is some justification for concluding that there is, if anything, slight evidence that there is at least a modicum of accommodation toward a standardization strategy. The same conclusion exists for the 33 marketing mix variables because on only 10 of the 33 marketing mix variables was a lower mean score found for more experienced companies as opposed to less experienced ones.

Hypothesis [H.sub.14], that smaller companies (based on annual sales) would be more likely to be pursuing a standardization strategy than larger ones, could be partially accepted. Companies with annual sales less than the median were found to have a mean score of 2.68, compared to 2.58 for larger companies. For all elements of the marketing mix combined, however, the 2.68 score does not exceed the threshold mean of 3.00 or higher to qualify as a standardization strategy. Personal selling (mean=2.76) and pricing (mean=2.74) were the two major marketing mix categories closest to the 3.00 cut-off figure. Of the 33 individual marketing mix variables, credit policies (mean=2.88), premiums (mean=2.88), and pricing objectives (mean=2.85) were closest to the 3.00 figure.

Table 4 contains the perceptions of the 82 South Korean executives regarding non-performance factors hypothesized to impact their standardization/adaptation decisions. If the criterion to decide whether Hypotheses [H.sub.15] and [H.sub.16] can be accepted is a majority of "very important" responses, then Hypothesis [H.sub.15] (dealing with external variables) can be accepted and Hypothesis [H.sub.16] (internal variables) must be rejected.

All factors external to the firm were indicated by a majority of the respondents as being "very important" in crafting their standardization/adaptation strategies. Only one internal variable (availability of competent personnel to staff your company's international marketing positions at 54.9%), however, was cited by a majority of respondents as being "very important."

5. DISCUSSION

What would explain these Korean firms' reluctance to pursue either a standardization or adaptation strategy but, rather, put into play a compromise effort? One of the reasons may be that they are not able to be assured that either extreme position would benefit them and so they have elected to pursue this compromise strategy with the understanding that if either standardization or adaptation would eventually emerge as more desirable than the compromise approach as they gained more experience in international markets, they could jettison the former and institute either a standardization or adaptation strategy.

The companies' attitudes toward risk may be an explanatory factor. If these Korean firms are risk averse, they might ply a middle-of-the road approach, believing that a consistent adaptation or standardization approach might incur more risk than they are willing to accept. That risk may be an important consideration in these companies' standardization/adaptation decision is supported by their executives placing a higher level of importance on external rather than internal variables. External variables involve more risk than do internal ones because companies are forced into a reactive, rather than a proactive, mode in coping with the magnitudes, timing and direction of events occurring outside the firm.

The authors intuitively believe that the standardization/adaptation decision may be approached from a modeling perspective. Trade-off analysis appears to be particularly germane in helping companies to decide which standardization/adaptation strategy to employ. This analysis should be based on the movement of costs and revenues along the standardization/adaptation continuum, that is, costs increase but revenues increase as a standardization strategy is forsaken in favor of an adaptation strategy, and vice versa. The modeler would seek that point on the continuum that would maximize profit. Perhaps these Korean firms conducted such analysis and found that the compromise strategy employed by them is the one that maximizes their profits.

The methods of operating in international markets favored by the respondent firms may provide a clue as to why the compromise standardization/adaptation strategy is employed. The most widely deployed forms of operating overseas were exporting and importing. These operations are usually employed by companies just beginning to ply international waters; one of their major downsides is that learning and experience are stunted because these operations (especially indirect or "piggyback" exporting) are usually performed by some outside entity which may be recommending a compromise standardization/adaptation strategy. Export management companies and export trading companies (the latter very prevalent in South Korea) are two such options which essentially act in a consultative capacity for exporters and importers and offer advice across a wide spectrum of international decisions, such as , entry strategies, product development, advertising and promotion, selecting agents and distributors, and providing information about foreign markets.

The next most important operating option evidenced by these firms--joint ventures and strategic alliances--involve a partnership arrangement wherein the partners to the Korean firms may be giving advice as to how the Korean firms should operate overseas; franchising and licensing (used by about two-thirds of these respondent firms) often involve franchisees and licensees making recommendations as to what strategies franchisors and licensors should institute in foreign markets.

The median number of years these South Korean firms have been marketing their products overseas was 7.0. Given the longer-term perspective of Asian firms in operating internationally, as compared to U.S. firms, it may very well be that they are still in the process of finalizing their adaptation/standardization decisions.

Perhaps these Korean firms are pursuing a "glocalization" strategy which follows the mantra of "standardize where possible, adapt where necessary." The opportunities for standardizing their marketing mixes may be viewed as marginally only more effective than an adaptation strategy, which would convert into the coalescence position this research found (with a slight bent toward standardization).

It is hardly surprising that external-to-the firm environmental factors would be perceived by respondents as being more important for developing their standardization/adaptation strategies in international markets than variables internal to the firm. The external variables examined in this study are essentially beyond the control of these firms; thus, they have to be accepted "as is". On the other hand, since the internal factors can be manipulated, they may be viewed as being of lesser importance than the external variables.

The authors believe that the little variation in the standardization/adaptation strategies existing for the 33 marketing mix variables, and within and among the nine marketing mix categories, is an important finding. Perhaps the rationale for this finding is that the Korean firms view marketing mix elements homogeneously and believe that little would be gained by varying the standardization/adaptation strategy across the marketing mix. Or, an unvarying strategy strategy may have resulted from companies' failure to investigate the impact of a differential approach on performance in international markets.

6. RECOMMENDATIONS

Given the large number and significance of the deficiencies existing in the standardization/adaptation literature, it is certainly advisable that additional studies of this highly important dimension of companies' international operations be forthcoming. This study addressed the issues of the paucity of studies concerning non-U.S. firms, little attention being devoted to the pricing and distribution aspects of the marketing mix, failure to deal with a broad spectrum of marketing mix aspects, the problems existing when standardization/adaptation practices from companies in two or more industries are compared in the same study, analyzing only a small number of independent variables, and focusing almost entirely on the significance of external environmental factors to the virtual exclusion of internal-to-the-firm variables. However, future replicative studies are certainly in order and should not only cope with the deficiencies our paper covered, but deal also with the failure to conduct longitudinal studies and ignoring input from expatriate personnel in favor of almost total reliance on data provided by headquarters personnel located in domestic offices.

While some studies-ours did not do/so except tangentially by dealing with the percentage of firm revenues accounted for by their international operations-have examined the effect on performance of the level of standardization or adaptation employed, the authors would like to see more analyses of this type. Hard-core performance measures, such as, market shares, profits, profit margins, and returns-on-investment should be emphasized and comparisons to domestic performance would be informative, as well.

Most of the standardization/adaptation literature is concerned with the "what is" question, rather than the "what should be" question. While the former is a useful and necessary first step, the emphasis of future studies should be on answering the latter query. The ultimate objective of this orientation must be to provide international executives with guidance as to where their firms should position themselves on the standardization/adaptation continuum. Such recommendations cannot be merely anecdotal or descriptive but, rather, must be based on more rigorous and sophisticated methodologies, including trade-off modeling mentioned earlier in this paper.

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Richard T. Hise, Texas A&M University-College Station, USA

Youngtae Choi, University of North Florida, Jacksonville, USA

Jongkuk Shin, Pusan National University, Geumjeong, Busan, Korea

Minsook Park, Pusan National University, Geumjeong, Busan, Korea

Dr. Richard. T. Hise earned his DBA from University of Maryland. Currently he is a professor of marketing at Texas A&M University-College Station.

Dr. Youngtae Choi earned his Ph.D. from Texas A&M University-College Station. Currently he is an assistant professor of marketing at the University of North Florida.

Dr. Jongkuk Shin earned his Ph.D. from Hanyang University in Korea. Currently he is a professor of marketing at Pusan National University in Korea.

Dr. Minsook Park earned her Ph.D. from Pusan National University in Korea. Currently she is a research professor of marketing at Pusan National University in Korea.
Table 1

Profile Information on 82 South Korean Food and Kindred Products
Companies

Factor

* Annual Sales

** [bar.x] = $179 million

** Median = $30 million

* Percentage of Annual Sales from International Operations

** [bar.x] = 38.5%

**   Median = 31.0%

* Years of International Experience

** [bar.x] = 8.4

**   Median = 7.0

* Number of Foreign Countries in Which Operations Exist

** [bar.x] = 4.55

** Median = 4.00

* Percentage of Firms Using a Specific Type of International Operation

** Exporting--96.3%

** Importing--90.2%

** International Joint Venture--58.5%

** Strategic Alliance--48.8%

** Licensing--34.1%

** Franchising--31.7%

** Overseas Sales/Marketing Office--39.0%

** Overseas Manufacturing Facility--9.8%

Table 2
Level of Standardization/Adaptation
Indicated by 82 South Korean Firms on 33 Marketing Mix Dimensions
Percentage of Respondents Citing
Various Different/Similar Perceptions

                                       Very      Somewhat    Somewhat
Marketing Dimension                  Different   Different   Similar

1.) Advertising Copy                   11.1%       38.3%      29.6%
2.) Advertising Appeal                 9.8%        36.6%      32.9%
3.) Advertising Media                  8.5%        37.8%      36.6%

        Total advertising              9.8%        37.6%      33.0%

4.) Sampling                           9.8%        36.6%      34.1%
5.) Trade Shows                        12.2%       25.6%      43.9%
6.) Point-of-Purchase Displays         14.6%       31.7%      37.8%
7.) Contests                           11.0%       28.0%      41.5%
8.) Coupons                            8.5%        37.8%      36.6%
9.) Premiums                           8.5%        28.0%      43.9%
10.) Sponsorships                      12.2%       41.5%      31.7%

      Total Sales Promotion            11.0%       32.8%      38.7%

11.) Level and Type of Training        8.5%        34.1%      42.7%
Provided to Sales Force
12. Background and Experience of
Sales Force                            9.8%        34.1%      36.6%
13.) Compensation and Support          9.8%        28%%       43.9%
Provided to Sales Force

      Total Personal Selling           9.4%        32.1%      41.0%

14.) Product Quality                   8.5%        31.7%      37.8%
15.) Product Line Width                7.3%        35.4%      39.0%
16.) Product Line Depth                7.3%        42.8%      35.3%
17.) Product Packaging                 12.2%       30.5%      43.9%
18.) Product Brand Names               12.2%       28.0%      41.5%
19.) Product Labels                    12.2%       31.7%      42.7%
20.) Target Market Segments for
Products                               8.5%        31.7%      43.9%
21.) Product Design                    12.2%       37.8%      37.8%
22.) Product Warranties                15.9%       35.4%      36.6%

          Total Product                10.8%       33.9%      39.6%

23.) Types of Channels of
Distribution Used                      13.4%       30.5%      36.6%
24.) Incentives Provided Channels      19.5%       34.1%      29.3%
to Carry Our Product and
Aggressively Market Them
25.) Dealer Margins                    6.1%        34.1%      51.2%
Total Channels                         13.0%       32.9%      39.0%
26.) Transportation Modes              19.5%       29.3%      36.6%
27.) Order Cycle Lengths               12.2%       37.8%      30.5%
28.) Inventory Policies                9.8%        36.6%      34.1%
29.) Warehousing Strategies            8.5%        36.6%      37.8%

         Total Logistics               12.5%       35.1%      34.8%

30.) Prices                            7.3%        32.9%      47.6%
31.) Pricing Objectives                7.3%        32.9%      41.5%

          Total Pricing                7.3%        32.9%      44.5%

32.) Credit Policies                   7.3%        28.0%      45.1%
33.) After-the-sale service            7.3%        28.0%      50.0%

              Totals                   10.6%       33.5%      39.3%

                                      Very
Marketing Dimension                  Similar     X

1.) Advertising Copy                  21.0%    2.57
2.) Advertising Appeal                20.7%    2.65
3.) Advertising Media                 17.1%    2.57

        Total advertising             19.6%    2.60

4.) Sampling                          19.5%    2.63
5.) Trade Shows                       18.3%    2.68
6.) Point-of-Purchase Displays        15.9%    2.55
7.) Contests                          19.5%     2.7
8.) Coupons                           17.0%    2.62
9.) Premiums                          19.5%    2.74
10.) Sponsorships                     14.6%    2.49

      Total Sales Promotion           17.8%    2.63

11.) Level and Type of Training       14.6%    2.63
Provided to Sales Force
12. Background and Experience of
Sales Force                           19.5%    2.66
13.) Compensation and Support         18.3%    2.71
Provided to Sales Force

      Total Personal Selling          17.5%    2.66

14.) Product Quality                  22.0%    2.73
15.) Product Line Width               18.3%    2.68
16.) Product Line Depth               14.6%    2.57
17.) Product Packaging                13.4%    2.56
18.) Product Brand Names              18.3%    2.66
19.) Product Labels                   13.4%    2.57
20.) Target Market Segments for
Products                              15.9%    2.67
21.) Product Design                   12.2%     2.5
22.) Product Warranties               12.2%    2.45

          Total Product               15.6%     2.6

23.) Types of Channels of
Distribution Used                     19.5%    2.62
24.) Incentives Provided Channels     17.1%    2.44
to Carry Our Product and
Aggressively Market Them
25.) Dealer Margins                   8.5%      2.6
Total Channels                        15.0%    2.55
26.) Transportation Modes             14.6%    2.46
27.) Order Cycle Lengths              19.5%    2.57
28.) Inventory Policies               19.5%    2.63
29.) Warehousing Strategies           17.1%    2.63

         Total Logistics              17.7%    2.55

30.) Prices                           12.2%    2.65
31.) Pricing Objectives               18.3%    2.71

          Total Pricing               15.3%    2.68

32.) Credit Policies                  19.5%    2.77
33.) After-the-sale service           14.6%    2.72

              Totals                  16.6%    2.62

Table 3
Effect of Various Independent Variables on Elements of the Marketing
Mix
(Criterion Used: x's for Marketing Mix Element)

                                                    Annual Sales

#   VARIABLE DESCRIPTION                      < 30     [greater than
                                                      or equal to] 30

 1  Advertising copy                          2.53         2.63
 2  Advertising appeal                        2.62         2.70
 3  Advertising media                         2.53         2.58
               Total Advertising              2.56         2.64
 4  Sampling                                  2.53         2.67
 5  Trade shows                               2.56         2.72
 6  Point-of-Purchase displays                2.50         2.57
 7  Contests                                  2.76         2.64
 8  Coupons                                   2.76         2.49
 9  Premiums                                  2.85         2.62
10  Sponsorships                              2.59         2.72
             Total Sales Promotion            2.69         2.63
    Level and type of training provided
11  sales force                               2.76         2.49
    Background and experience of sales
12  personnel                                 2.76         2.54
    Compensation and support provided sales
13  personnel                                 2.76         2.64
            Total Personal Selling            2.76         2.56
14  Product Quality                           2.76         2.71
15  Product line width                        2.71         2.62
16  Product line depth                        2.47         2.64
17  Product packaging                         2.65         2.43
18  Product brand names                       2.62         2.68
19  Product labels                            2.71         2.36
20  Target market segments for product        2.65         2.67
21  Product design                            2.64         2.31
22  Product Warranties                        2.74         2.18
                 Total Product                2.66         2.53
23  Types of channels of distribution used    2.77         2.36
    Incentives provided channels to carry
    our products and aggressively market
24  them                                      2.52         2.33
25  Dealer margins                            2.65         2.53
                Total Channels                2.65         2.40
26  Transportation modes                      2.53         2.38

27  Order cycle lengths                       2.56         2.57
28  Inventory policies                         2.5         2.63
29  Warehousing strategies                    2.66         2.61
                Total Logistics               2.56         2.55
30  Prices                                    2.65         2.61
31  Pricing Objectives                        2.82         2.54
                 Total Pricing                2.74         2.58
32  Credit policies                           2.88         2.62
33  After-the-sale service                    2.62         2.77
    Totals                                    2.68         2.59

                                                     % Sales
                                                       Int.

#   VARIABLE DESCRIPTION                      < 31    [greater than
                                                     or equal to] 31

 1  Advertising copy                          2.62        2.23
 2  Advertising appeal                        2.65        2.56
 3  Advertising media                         2.50        2.33
               Total Advertising              2.59        2.34
 4  Sampling                                  2.71        2.10
 5  Trade shows                               2.76        2.38
 6  Point-of-Purchase displays                2.57        2.66
 7  Contests                                  2.83        2.35
 8  Coupons                                   2.57        2.72
 9  Premiums                                  2.93        2.44
10  Sponsorships                              2.62        2.83
             Total Sales Promotion            2.71        2.50
    Level and type of training provided
11  sales force                               2.57        2.85

    Background and experience of sales
12  personnel                                 2.76        2.44
    Compensation and support provided sales
13  personnel                                 2.62        2.65
            Total Personal Selling            2.65        2.65
14  Product Quality                           2.71        2.77
15  Product line width                        2.74        2.41
16  Product line depth                        2.64        2.49
17  Product packaging                         2.62        2.72
18  Product brand names                       2.62        2.72
19  Product labels                            2.69        2.46
20  Target market segments for product        2.67        2.67
21  Product design                            2.50        2.49
22  Product Warranties                        2.38        2.51
                 Total Product                2.62        2.58
23  Types of channels of distribution used    2.64        2.61
    Incentives provided channels to carry
    our products and aggressively market
24  them                                      2.44        2.45
25  Dealer margins                            2.64        2.54
                Total Channels                2.58        2.53
26  Transportation modes                      2.55        2.36

27  Order cycle lengths                       2.57        2.56
28  Inventory policies                        2.57        2.69
29  Warehousing strategies                    2.67        2.56
                Total Logistics               2.59        2.54
30  Prices                                    2.71        2.53
31  Pricing Objectives                        2.73        2.69
                 Total Pricing                2.72        2.61
32  Credit policies                           2.79        2.73
33  After-the-sale service                    2.77        2.65
    Totals                                    2.67        2.57

                                                       Yrs Int.
                                                      Experience

#   VARIABLE DESCRIPTION                      < 7.0    [greater than
                                                      or equal to] 7.0

 1  Advertising copy                          2.60          2.58
 2  Advertising appeal                        2.62          2.68
 3  Advertising media                         2.50          2.65
               Total Advertising              2.57          2.64
 4  Sampling                                  2.57          2.70
 5  Trade shows                               2.55          2.83
 6  Point-of-Purchase displays                2.40          2.70
 7  Contests                                  2.54          2.86
 8  Coupons                                   2.57          2.68
 9  Premiums                                  2.79          2.70
10  Sponsorships                              2.62          2.35
             Total Sales Promotion            2.58          2.69
    Level and type of training provided
11  sales force                               2.65          2.62
    Background and experience of sales
12  personnel                                 2.66          2.65
    Compensation and support provided sales
13  personnel                                 2.60          2.83
            Total Personal Selling            2.04          2.70
14  Product Quality                           2.57          2.90
15  Product line width                        2.67          2.70
16  Product line depth                        2.50          2.65
17  Product packaging                         2.50          2.63
18  Product brand names                       2.62          2.70
19  Product labels                            2.62          2.53
20  Target market segments for product        2.62          2.72
21  Product design                            2.50          2.50
22  Product Warranties                        2.52          2.38
                 Total Product                2.67          2.63
23  Types of channels of distribution used    2.62          2.62
    Incentives provided channels to carry
    our products and aggressively market
24  them                                      2.35          2.52
25  Dealer margins                            2.64          2.55
                Total Channels                2.54          2.57
26  Transportation modes                      2.41          2.53

27  Order cycle lengths                        2.6          2.55
28  Inventory policies                         2.5          2.78
29  Warehousing strategies                    2.53          2.75
                Total Logistics               2.56          2.65
30  Prices                                    2.55          2.7
31  Pricing Objectives                        2.74          2.68
                 Total Pricing                2.65          2.69
32  Credit policies                           2.86          2.68
33  After-the-sale service                    2.64          2.8
    Totals                                    2.64          2.67

Table-4
Extent to Which Various Factors Affect Companies
Standardization/Adaptation

                                        Not      Somewhat      Very
Factor                               Important   Important   Important

Laws and regulations in                2.5%        34.6%       62.9%
international markets

Competition in international           2.4%        36.6%       61.0%
markets

Needs and wants of consumers in        0.0%        43.9%       56.1%
international markets

Cultural dimensions of                 1.2%        39.0%       59.8%
international markets

Physical distance of international     1.2%        46.3%       52.4%
markets from your company's
domestic location(s)

Physical infrastructure (roads,        1.2%        45.1%       53.7%
bridges, electrical power, etc.)
in international markets

Marketing infrastructure (banks,       3.7%        46.3%       50.0%
marketing research firms,
advertising agencies, telephone
service, etc.) in international
markets

Economic conditions in foreign         2.4%        50.0%       47.6%
markets

Your company's strategic goals         3.7%        50.0%       46.3%
and objectives

Your company's desire to obtain        4.9%        51.1%       43.9%
economies of scale

Level and type of training             4.9%        52.4%       42.8%
provided sales force

Your company's financial condition     3.7%        47.6%       48.7%

Availability of resources in your      3.7%        47.6%       48.7%
company to support its
international opportunities

Availability of competent              0.0%        45.1%       54.9%
personnel to staff your company's
international marketing positions

Tax considerations                     1.2%        37.8%       61.0%
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