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Multinational Agricultural Manufacturing Companies’ Standardization & Adaptation

Summary

Standardization is an approach to marketing that lies in developing certain samples of products, pricing, placement & distribution, or communication to apply to all cases. By contrast, adaptation presupposes modifying any of those in accordance with the peculiarities of a particular market. The biggest multinational companies that perform in the sphere of farming prefer to use both strategies in parallel.

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For instance, John Deere, one of America’s oldest manufacturers of farm and industrial equipment, has flexible product policies along with strict principles of pricing. Its competitor MAJOR Equipment Ltd. may adapt prices, but the quality remains unchanged in accordance with the standards. In the case of another agricultural machinery brand, AGCO, maximal possible flexibility actually is the key principle of work that the company follows strictly. The examples illustrate possible forms of coexistence of standardization and adaptation, which allows for broader market prospects than applying these approaches separately.

Introduction

Multinational companies use a wide range of marketing strategies, including standardisation and flexibility (Vrontis et al.,2009). To better serve a worldwide clientele, companies may change everything from the products, pricing to promotions and even physical locations. In the simplest of terms, standardisation, according to (Vrontis et al., 2009) defined as the use of the same marketing mix in all the countries. Unlike standardisation, adaptation requires the modification of the marketing mix by taking the conditions of the local market into account (Vrontis et al., 2009).

Several factors can affect the behaviour of the companies with regards to the selection of the standardisation and the adaptation approach (Vrontis et al., 2009). Several things are considered when determining strategy, from the cost of operations to year of operations and the knowledge of a market.

This report aims to discuss the factors which affect the decision making of the company. It will follow the discussion on the reason by providing an example of three multinational agricultural manufacturing companies John Deere, AGCO & MAJOR Equipment Ltd, and a conclusion on why these multinational companies are using standardisation or adaptation approach on international marketing.

Reasons Affecting Standardisation and Adaptation

There are several reasons which can make agricultural manufacturing companies choose a standardisation strategy. One of the factors is the level of globalisation of the market. When the need for a product is globalised, there is not much requirement of creating a separate marketing mix for the firm, and similar marketing strategies can be implemented across the globe. Another reason favouring a standardisation strategy is a requirement of economies of scale (Chung, 2003).

Unlike the above, several factors might make a company choose an adaptation strategy. The first factor is the different needs of the firm’s customers across all the regions in which the company operates. A difference in local competitive and legal conditions can also be a significant factor in choosing a standardisation strategy. However, firms that want to give excellent service and listen to satisfy their customer’s needs choose an adaptation strategy.

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The difference might be either a single element or more than one element in an adaptation strategy. It is one of many factors that can affect the different aspects of the marketing mix. In the case of products, a firm might need to know what crops the country grows to create and make a product suitable for their customer’s needs.

Regarding pricing, a firm sometimes makes more money in a specific market due to a particular style or type of operation or niche. In the placement or distribution of products, a firm tends to adapt as the company needs to adjust to certain crop types. Lastly, in promotion and communication, firms need to be very careful about cultural differences. (Dooley et al., 2019) Language differences significantly impact how a product may be used, its brand name, and the advertising campaign. Companies should adapt their brand’s message to resonate with the local consumers.

Organisational Background

Farming practices are constantly evolving, and one thing that never changes is the need for reliable tools with the strength and stamina to get the job done (Shahbandeh, 2021). John Deere, AGCO & MAJOR Equipment are examples of agricultural manufacturing companies that constantly create machines to help agriculture.

Let us start with John Deere, one of the largest American major manufacturers of farm machinery and industrial Equipment, started in 1837 in Grand Detour, Illinois. They are producing products for the agriculture and turf segment, financial services, and construction & forestry. The company now has over 69,600 employees in over 30 countries.

While MAJOR Equipment Ltd is a family business manufacturing company, it is an award-winning manufacturer of innovatively designed agricultural machinery, professional mowers, and construction equipment based in Ireland. It started in 1976, and MAJOR products are exported and sold through a dealer network in over 30 countries worldwide.

However, AGCO is an American agricultural machinery manufacturer founded in 1990 and headquartered in Duluth, Georgia, United States. AGCO designs, produce and sell tractors that combine foragers, hay tools, self-propelled sprayers, intelligent farming technologies, seeding, and tillage equipment. According to (Shahbandeh 2021), AGCO now has 21,426 employees as of 2021.

They are all multinational agricultural and manufacturing companies, but one is a family-run business while the others are a big corporation.

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In this discussion, we will provide the marketing strategies and determine whether both companies are using standardisation or adaptation for their International markets.

International Marketing of Multinational Companies

Marketing consists of individual and organisational activities (Strategic Marketing MCQs – Customers and marketing – MCQs Club, n.d.) that facilitate satisfying exchange relationships in a dynamic environment through creating, distributing, promoting, and pricing goods, services, and ideas. (Dibb et al., 2019).

At a Fundamental level, according to (Brenner, 2019) “Marketing is a process of understanding your customers and building & maintaining relationships with them,” which John Deere, AGCO & MAJOR Equipment invest a significant amount of time and financial resources. John Deere refers to it as a higher purpose, and their customers are at the centre of everything they do. MAJOR also believed that they are the provider of the solutions by listening to their customers’ needs. Like AGCO, they create excellent solutions for their customers by carefully listening to their needs and exceeding their expectations.

On the other hand, International Marketing is a marketing strategy that involves operating across a number of foreign country markets (Doole et al., 2019). Whether the company is working in only one country or more, it is still considered International Marketing.

Multinational companies mainly use international marketing to determine or identify the customer’s needs internationally. It is the marketing activities that global companies (John Deere, AGCO & MAJOR Equipment) use to distribute their product to the international target market (Doole et al., 2019). To also understand their customer’s needs by using the 4P’s & 4C’s or marketing mix of strategic marketing (Kotler & Armstrong, 2014).

Marketing Strategies of Multinational Companies

Marketing strategies and activities are detailed programmes on how the company will segment and target its international markets (Dooley et al., 2019). According to (Huang, 2021), one of the most common marketing strategies used by multinational companies is 4P’s & 4C’s, a marketing mix, which commonly consists of product/customer value, pricing/cost, placements (or distribution), and promotion/communication.

This marketing strategy helps John Deere, AGCO & MAJOR Equipment position itself competitively and achieve its business goals & objectives. Please see figure 1 whether John Deere, AGCO & MAJOR Equipment are using standardisation or adaptation approaches for their marketing strategies

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John Deere is customer-centric and always wants to understand their customer’s needs and wants. That is why their product strategy is divided into three segments to provide the right machinery to their customers, including agriculture and turf component, financial services, and construction & forestry. Their product strategy also has to consider the different sizes depending on the customer’s needs, such as large, medium, and small machinery and tractors. Moving to price strategy, John Deere is well known for its quality, and they never decide the pricing of their products based on competitors’ prices. Instead, they believe that somebody would never offer their products at lower costs.

In placement & distribution, according to the MBA School team (Team, 2016), John Deere products are available worldwide. That is why with their placement or distribution strategy, they are using distribution channels to boost their products worldwide. John Deere used extensive dealer and retailer connections to promote and distribute their products. John Deere allows their dealers to sell the products by giving them a financial credit or financial package, making the dealership special (Team, 2021). Lastly is the communication strategy; as John Deere says, “Customer is the centre of everything we do.”

For them to satisfy their customers’ needs and wants, their communication strategy always starts with listening. They always focus on listening and staying tuned to the audience. As (Lewis 2020) says, John Deere always begins with “Listening before creating” They make sure that the team creates content and protects their brand. On social, this means following communities such as Twitter & Instagram. These communities are places for farmers and ranchers to share best practices and insights on their Equipment seek counsel and advice. It is not only social but also physical, like trade shows and industry magazines.

However, the product strategy of MAJOR is divided into two segments: Agriculture & Turf segments. Regarding the size of machines & tractors, MAJOR also considers the different sizes. The pricing strategy of MAJOR depends their price on competitions pricing. Quality remains long after prices are forgotten. MAJOR Equipment’s placement or distribution strategy differs from John Deere in some aspects, as MAJOR has an ‘informal dealer network’ (Scott, 2021), predominantly tractor dealerships.

That means it could be sold to John Deere’s dealership or AGCO dealership, anywhere where they are selling tractors; MAJOR machines are attached to a tractor. A tractor dealership MAJOR needs to be. The communication strategy of MAJOR is very similar to John Deere, listening to the customer’s needs, understanding the market, and communicating the product correctly in the right publications at the right time to the right people. MAJOR also used trade shows to introduce or launch new products where customer can see their machines and ask customers what they think of their new product.

As per AGCO’s product strategy, they have a wide variety of different brands of tractors and machinery under the company of AGCO. They offer a full product line including tractors, combines, hay tools, sprayers, forage, tillage equipment. AGCO products include the following well-known brands: AGCO(R), Challenger(R), Fendt(R), Gleaner(R), Hesston(R), Massey Ferguson(R), New Idea(R), RoGator(R), Spra-Coupe(R), Sunflower(R), Terra-Gator(R), Valtra(R), and White(TM) Planters.

These various brands give various budgetary offers to the market depending on the customer’s budget and needs, which defers their pricing strategy from John Deere and MAJOR Equipment. Moving to their placement or distribution strategy, it is very similar to John Deere’s distribution strategy. They also have a distribution channel or a dealer network to sell their products. AGCO intends to strengthen its global market position by focusing on its core brands, the quality of its dealer networks, and enhancing service support programs. One of the most important parts of AGCO is its communication strategy, to provide a range of services and products that helps the agency deliver on its strategic objectives in a way that cultivates relationships of trust, understanding, and support with all of its internal and external stakeholders.

Communication activities include issues management, media relations, digital communications channels, content development, planning and supporting agency initiatives, and stakeholder engagement activities. These services help the agency provide stakeholders with the information that matters to them at the right time and in the right place while serving the public interest. Wherever possible, channels are developing to be “two-way” to allow meaningful exchanges between the AGCO and its audiences. Products and information are developing to effectively deliver messages using the latest digital, visual and rich media content. The AGCO is also committed to making content easily accessible and available in English and French.

Conclusion

The most popular approaches that multinational companies use to serve their customers from various countries are standardization and adaptation. The former involves sticking to the same principles in all the markets and is more relevant on a global scale. The latter, to the contrary, means flexibility and considering the dissimilarities in customer needs as well as competition and legal conditions in different locations. In fact, it is most reasonable to combine standardization and adaptation in marketing strategies, as the modern commercial world is actively developing and rapidly changing. Particularly, the biggest and most reputable manufacturers of farming and industrial machinery in the USA can be flexible in ceetain issues while following strict principles in the other. Those are, for instance, John Deere, MAJOR Equipment Ltd, and AGCO.

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