What You Should Know About Product Standardization

4 min read

Learn about:

  • Using product standardization to increase profits
  • How product standardization can be economically beneficial
  • The ins and outs of global standardization

Are you looking for new means to upgrade marketability and spur profits? In the intensely competitive environment of retail, it is imperative to reach first and second place in the market. Let us begin by discussing a strategy for product standardization to keep the momentum going. 

Setting standards on a product range is an efficient way to reduce costs and raise quality levels. When you reduce the dissimilarities in your products, for example by making them exchangeable, you can quickly scale up production, optimize distribution, lower the cost of raw material and strengthen product branding. With ideal product standardization, you can offset the requirement for a targeted adaptation in addition to the saving on normalization.

The economics of product standardization

Despite the fact that product adaptation is unavoidable when it comes to specific products, it is important to understand that there is a valid economic rationale supporting product consistency in every market. Let us take a look at three economic benefits of global product standardization.

  1. Economic marketing: If you are releasing one product in multiple markets, it is possible to save costs on sales literature, salesforce training, inventory management, advertising, and after-sales service.
  2. Economic product research and development: In the same way, by using product standardization, you can recover the costs borne in product research and development by reducing product iterations. This reduction in exploration will shorten the sales recovery time and further reduce the break-even point. Product standardization will also help sidestep extra expenses on making sure the item adapts to every single market. 
  3. Economic scale in production: With product standardization, you can mass-produce a single standard variant across the board, thereby leading to reduced production costs.

In addition to these, there are also multinational elements that might influence your decision to standardize your products:

  1. Customer movement: Customers are becoming more and more mobile, and inter-continental travel is not as rare as it used to be. Consumers loyal to a specific brand in their domestic market have a greater chance to purchase it in a different country, more so when the concerned product is the same. Gillette razors and Kodak films are perfect instances of this.
  2. Country of manufacture impression: When the consumer establishes a link between the name of a country and high levels of quality, a product made in that country may gain a psychological superiority in the overseas markets. French perfumes and Swiss chocolates are examples of this idea.
  3. Effect of technology: Industrial products usually tend to have standard specifications and do not undergo too many adjustments for foreign markets, except if weather-related or similar factors demand them to. Changes made to manufactured goods will be minimal, such as alterations in voltage or transferring specs to metric. Goods wherein the technical specification is crucial are likely to be consistent. Nevertheless, directions for use must be in the local language.

Related Reading: The Importance of Product Standardization

Product standardization across the globe

A consistent, multinational product strategy is less costly with respect to manufacturing costs as well as marketing expenditures. The mass production of a limited spectrum of standardized products can lower the spending on development and marketing, allowing you to increase your market share globally. 

Nevertheless, the business goal is to maximize profits and without playing down costs, and a consistent product strategy might not be an important tool to maximize profits. However, the development of a uniform product strategy is feasible. PepsiCo and Coca-Cola are two exceptional instances that provide the same product and practice similar strategies of promotion in every market. 

Before implementing product standardization, you must determine the extent to which uniformity would be practical and simultaneously, develop a strategy that will be lucrative. Due to a range of technical and legal aspects, it is less likely that an export company will not have the choice of product adaptation. 

Let us suppose you export electrical goods to Japan. These products must have an electric potential of 110 volts and not 220 volts. In the same way, if you export edible products, you must follow the health and food safety standards enforced by the importing countries. 

To sum up

You must weigh the costs of product standardization with the different approaches of consistency versus adjustment. The approach of adjustment is more expensive but assures a higher degree of flexibility and marketing success. The uniformity approach is very economic but lacks flexibility and as a result, may not be much of a success in spreading across the market.

Related Resources

Written by The SupplyPike Team

About The SupplyPike Team

SupplyPike builds software to help retail suppliers fight deductions, meet compliance standards, and dig down to root cause issues in their supply chain.

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