Local Adaptation

The following entry is the one originally submitted by the contributors. The previous version of this entry that appeared in the original printing of the encyclopedia was not the one submitted by the contributors and was mistakenly used by the Publisher. The entry was written by Drs. Efthimios Poulis and Konstantinos Poulis, and the Publisher apologizes for submitting the wrong version of this entry for publication.

All firms that operate in a single, domestic context have to design and implement product, pricing, promotional, and distribution strategies so as to compete effectively in their respective markets. On the other hand, firms that operate on an international scale face an additional challenge that must be tackled before they cross borders. The main strategic dilemma for the marketing strategy of such multinational entities is the decision to either follow the same marketing program across all foreign markets or employ a different approach that corresponds to each foreign market's idiosyncrasies. This dilemma is the backbone of the global commercial policy of multinational corporations and, in the business literature, it is identified by the term standardization versus adaptation of international marketing strategy.

In particular, local adaptation is the act of employing a marketing mix that is unique for the market under scrutiny and thus different from the marketing strategy used in other countries. Such a difference denotes modifications of the marketing mix with the purpose of adapting to the cultural diversity of international markets. Local adaptation includes modifications on marketing elements such as the following:

• Product's tangible elements such as size, taste, packaging, or ingredients used
• Product's intangible elements such as brand name and brand positioning
• Promotional message and promotional media
• Pricing toward middlemen and final consumers
• Number and type of middlemen

Locally adapted activities such as the use of different brand names or the use of different promotional efforts within retailing outlets across countries are numerous and have led firms to both success stories and major marketing blunders. For example, the ice cream unit of a giant firm like Unilever is called by different names (either Eskimo or Ola or Algida) in countries such as Sweden, the United Kingdom, Greece, or Spain. Additionally, large U.S. retailers have realized that successful types of promotional activities in the United States (such as “buy 2 extra-large sizes and get 1 free”) have no equal appeal among consumers in a country like Germany and thus they have adapted their in-store promotional strategy.

The main purported advantage of an adapted strategy is that such local responsiveness meets local customers' needs more efficiently than a standardized strategy, which employs a common marketing program for all countries and thus ignores local markets' specificities. On the other hand, though, local adaptation bears a major disadvantage compared to standardization. It is a very expensive task to undertake, since modifications for each country in which a firm operates increase costs enormously. As a result, the effect of such a strategy on typical performance measures such as profitability is debated. However, there are suggestions in the literature that firms that locally adapt their marketing strategy perform better in other measures such as total sales or market share due to their closer look at local markets' needs.

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