The following are the factors that favour product standardisation:
- Economies of scale in production: Where the product is manufactured at one plant, long production runs can give rise to considerable economies of scale (assuming that the decreasing costs per unit will prevail over the full extent of output required to satisfy export markets).
- Economies in development costs: A standardised product permits amortisation of development costs over a larger production volumes and turnover
- Reduction in stock costs: Additional products give rise to the need for additional records and stock audits. Furthermore, each product must be stocked to a level that not only caters for normal demand but also includes a safety margin to cover unexpected upsurges in demand. Consequently, the minimum ‘safe’ stock level for several different products will exceed that for one standard product.
- Technological content: Whereas consumer products are likely to be affected by cultural and environmental differences in the foreign market, industrial processes are relatively uniform from one country to another and many industrial products can therefore be standardised, especially those in which technical specifications are critical. Even when industrial goods are modified, the changes are likely to be minor, e.g. adjustments may have to be made to the voltage level, or metric measures (metres, grams and litres) may have to be changed to imperial measures (yards, pounds and gallons), etc.
- Consumer mobility: Standardisation is essential to consumer acceptance where products are of particular relevance to travellers or tourists, e.g. camera film, baby foods, etc.
- Economies in marketing: Although sales literature and advertising may vary from country to country – at least in terms of the language in which the advertising message is conveyed – it will be easier to achieve uniformity (and thus, savings) with a standardised product than with one which must be adapted to suit various foreign markets. In addition, it is easier for the company to provide after-sales service and parts for a standardised product.
- Market homogeneity: Some products are homogenous and a world market is available without product modifications being necessary, e.g. blue jeans, CDs, raw materials, etc.