Product Standardisation Essay
Definition : Product standardization in business is the process of developing same product for multiple countries. Advantages: The main advantage of product standardization is cost saving. Cost reduction will give economies of scale. Since you are making large quantities or the same, non-adapted product – you benefit from the advantages associated with manufacturing in bulk. For example, components can be bought in large quantity which reduces the cost-per-unit. These savings can then be applied to your business’s margin, lower price to consumer, or reinvested into the company for research and development.
In an age where trade barriers are coming down – standardization is a plausible product strategy. Quality is improved since efforts are concentrated upon the single product. Staff can be trained to enhance the quality of the product and manufacturers will invest in technology and equipment that can safeguard the quality of the standardized product offering. Standardization reinforces positive consumer perceptions of your product. One of the payoffs of great quality for a single product category is that the reputation of your product will help you sell more of it. Positive word-of-mouth pays dividends for brand owners.
Disadvantages : Since the product is the same wherever you buy it, it is wholly undifferentiated. It is not unique in anyway. This leaves the obvious opportunity for a competitor to design a tailor-made, differentiated or branded product that meets the needs of local segments. Of course products have different uses in different countries. Local markets have local needs and tastes. Therefore by standardizing, you could leave yourself vulnerable. Another problem with standardization is that it depends largely upon economies of scale. With global businesses, your business will manufacture in a number of nations.
However, some countries implement trade barriers (and yes – this includes the USA and the European Union). If this is the case, then localization and the resultant adaptation is inevitable. Standardization has the potential to get a business into a rut. Standards, once implemented, soon become the status quo and may become entrenched in the corporate culture, making them hard to change when change is needed. However, market conditions often change, and companies that change quickly are best positioned to take advantage of them. Standardization may also stifle creativity, particularly in product design.