Standardize, Customize, another Perspective

Abstract


This author erred on several counts in the last paper, among them jumping the gun (a uniquely American colloquialism not found in Indonesia). It is here that an exploration of varying products (mostly products) and services will be compared and considered as to their why’s vis-à-vis standardization and customization (for larger context).



Common Context

the Wal-Mart starting point

Perhaps a useful approach would be to look at a large and disparate collection of goods (given that we have such a liberty) and see how that entity is faring. What is being looked at here is Wal-Mart, and the cornucopia of goods that it represents. From a standardization/customization perspective, Wal-Mart has had issues from every direction (bnet [CBS Business Network, CBS News], 1997).

In 1997, Wal-Mart had already partnered with Lippo (a strategic alliance integrating an indigenous powerhouse), and was well on its way to integrating Matahari (another significant strategic move). By the following year, Wal-Mart had split with Lippo, complicating everything. Meanwhile, Wal-Mart was experiencing its own culture shock, trying to integrate Indonesians into its culture. This likely serve to be the source of the large chunk of its growing pains, over the years as it has discovered Wal-Mart needs to integrate into the Indonesian culture. Issues with supply-chain (Wal-Mart's greatest competitive advantage, being the Michelangelo and da Vinci of supply-chain) and competition complicated the picture further. As recently as last in one month from this writing, over a decade later, they were still looking to put strategic pieces in place, like Matahari (BUSINESS WEEK ONLINE, 1998)(Staff, 2010).

This document starts with a consideration of the evolution of in Indonesia because most American readers have a ready connection to Wal-Mart, as well as how many and diverse the products it represents. If the quintessential retail outlet is faced with such challenge, what can one expect to translate within it? In addition, what we find is that it is all very much on a case-by-case basis, dictated against the fabric of what is Indonesian; from a cultural perspective, from a commerce perspective, etc.

“with 1,000 roasted chickens selling each weekend day - and bakery goods, framed art, home storage, small appliances, prerecorded music, H&BC, toys, intimates and bodywear. Although they come at a premium, some particularly American brand products - Tang is an example - are popular, too, store manager Jerry Ashbrook told DSN.



Less stellar categories to date include cosmetics, children's apparel, greeting cards, automotive accessories and white goods.”(bnet [CBS Business Network, CBS News], 1997)


A quick look at the items that tend to work, are a case-by-case study of that which is relatively affordable for which differing rationales advantage the Indonesians. The chickens are a cost-benefit analysis hit. Baked goods shine because the indigenous cuisine has no historical affinity (and is not especially good at) baked goods. And in a recent research pursued, a question related to “small appliances”, there was no ready or easy translation for the term (Americans cannot find enough space in their kitchens for the dozens upon dozens of gadgets, small appliances tends to literally be absent from the general Indonesian vocabulary) (Davis, 2010).

Similarly, the items that tend not to work so well also have a case-by-case rationale. Often it is a matter that Indonesians either have long ago handled the situation themselves, or have enough outsourcing established (automotive accessories) that there is an easy overflow into the general market.

the Shopping Experience generally

Just to wrap the contextual conversation up, it was still a useful to notice also the standardization/customization of shopping itself. The look and feel of shopping as it had evolved in the United States between the 1950s and 2010 seems to be struggling to replicate itself in Indonesia over the course of the last 20 years; with its own flavor of modifications along the way. For a country that is wider than the continental United States, Indonesia has only about a dozen major city centers; all of which are bursting at the seams with citizens trying to gain a foothold. Here is where the majority of the shopping takes place, as we in the United States know it. Americans tended to have “malls” in the form of individual department stores (echoes of Harrods, London); Gimbals’, John Wannamaker’s, Macy’s, and the like. These were vertical entities. A half-century later, for a variety of reasons, we now have (ostensibly) one level shopping malls, and the expertise is broken up storefront by storefront. In Indonesia, primarily for reasons of real estate, echoes of what are now our one level shopping malls take on a vertical shape. These six and seven story malls usually have no organization from floor to floor, as did our old department stores. Instead, on any given floor, you may still see health and beauty care next to apparel, next to entertainment, etc. - and on the next floor something slightly similar (it is confessed that the food courts tends to be on the ground floor).

You can just imagine Indonesian mall rats, the 14 to 18-year-olds, leaning over the balustrade of the fifth floor talking across the center atrium space to their colleagues on the fourth floor. Such is the entertainment value of shopping in Indonesia. For, in Indonesia, if one were to do “practical” shopping (say, a day or two of groceries), one would still go to an open air bazaar.



A Veritable Product Parade

The preceding passages should serve beyond context, offering some insight as well, as to the texture and tone of the Indonesian populace. It may be a broad brushstroke, and this is a proud, stubborn and strong people, rabidly family-centric, and not easily prone to giving up long-held beliefs.

From this author’s personal experience it can be related that Dunkin Donuts, the Six Sigma movement, Pizza Hut, Winston cigarettes, KFC and McDonalds have varying degrees of standardization/customization in Indonesia; to name a few (Davis, 2010).

Dunkin Donuts and Winston cigarettes are the least customized of this half dozen or so products offered up. As noted earlier, the former, being a baked good, shows up on the scene already a star. Moreover, even in the United States, it's not so much that the product line is altered as it is expanded. So, the doughnuts (for now), remain a standardized fare. When Dunkin Donuts is ready, customization may occur by marrying the natural and ready pairings: the inclusion of nutmeg, clove, palm sugar, and fillings made with rose apple, rambutan, lychee, coconut, jackfruit and mango.

Winston's are simply hard to find, and sell for a premium (usually at locations frequented by Westerners). Not changing is part of its allure, and likely its best strategy for remaining viable in this market. The reason is that tobacco was established centuries earlier by the Dutch, slowly evolving into indigenous expressions; not the least of which are kretek (clove cigarettes).

KFC is also extensively unchanged, in so far as Indonesians have always enjoyed chicken, as well as fried foods; although, they do afford their patrons sambal (as opposed to Tabasco).

Among the other examples, however, significant customization has taken place. Books on Six Sigma have been readily available for over a decade, and it is clear the design of the book jackets were done domestically.

Pizza Hut and McDonalds are the most customized from among this bunch. At Pizza Hut the most popular offering is tuna pizza. A regular pizza can be had, but it is significantly blander (a fraction of the basil, oregano, garlic, etc.). The burger is still present at McDonald's, and it, too, is blander. However, also on the menu is fried chicken, chicken soup and balls of rice.



Concluding thoughts

As we survey, even casually, the possibilities of customization/standardization, we find that the over arching theme is not so much to plug-and-play, hoping against hope that the Indonesians will integrate to our perspective, so much as there is a welcoming opportunity if we integrate to their perspective. Although advertising and branding or alluded to, they echo the same template we see with the product itself; i.e., essentially the same dynamic one would see in the United States, however, was a strong Indonesian slant (mostly television for the sweet spot demographic, all other media channels taking a distant backseat; and everything on a case-by-case basis).

So much of this is on a case-by-case basis, and the driving factors all seem grounded in the Indonesian perspective itself. These tend to include considerations of what they already have, or do well at, versus what they do not have, or do not excel at, what they are already used to and comfortable with, and ramifications of where the shopping populace is regards their growing economic status.





Appendix

Top Indonesian Exports to US

The following products were the top-selling products from Indonesia imported into the United States during the first half of 2010.

Shown within brackets in the list below is the product’s percentage of total value of shipments from Indonesia to America.



1.Natural rubber … US$711.9 million, up 105.1% (9.1% of total)

2.Crude petroleum, 25-degree testing and over … $273.5 million, up 313.4% (3.5%)

3.Cotton pullovers … $250.8 million, up 17.4% (3.2%)

4.Cocoa beans, raw or roasted … $189 million, up 84.2% (2.4%)

5.Crude petroleum, under 25-degree testing … $164.5 million, up 23.7% (2.1%)

6.Shrimps and prawns, frozen … $128.2 million, down 11.1% (1.6%)

7.Digital video cameras, still image … $118.4 million, down 12.6% (1.5%)

8.TV set top boxes … $90.8 million, down 21.1% (1.2%)

9.Insulated ignition wiring sets … $74.6 million, up 88.1% (1%)

10.Aluminum plates … $74 million, up 808.9% (0.95%).

Out of the top 10 Indonesian products exported to the United States, 7 items showed percentage gains. Increases ranged from 17.4% for cotton pullovers (harmonized tariff system code 6110.20.20.79) to 808.9% for aluminum plates (7606.12.30.90).



Top Indonesian Imports from US

The following Indonesian imports from the United States had the highest dollar values during the 6-month period ending June 2010.



1.Civilian aircraft including parts … US$625.3 million, up 67.7% (19.7% of total)

2.Soybeans … $346.7 million, up 12.9% (10.9%)

3.Soybean oilcake and other solid residues … $86.5 million, up 641.2% (2.7%)

4.Milk and cream concentrates, powder and granules … $71.2 million, up 256% (2.2%)

5.Cotton, staple length 1 1/8 inches or more … $70.7 million, up 24.7% (2.2%)

6.Cotton, staple length over 1 but under 1 1/8 inches … $60 million, down 13.4% (1.9%)

7.Corn gluten meal … $51.6 million, up 89.4% (1.6%)

8.Residues of starch manufacturing … $42.9 million, down 25.6% (1.4%)

9.Disodium carbonate … $38.6 million, up 176.8% (1.2%)

10.Wheat … $32.7 million, up 68.6% (1%).

American exporters were able to post percentage gains in 8 of the top 10 product categories shipped to Indonesia. The fastest-growing U.S. exports were soybean oilcake (HTS code 2304.00.00.00), milk and cream concentrates (4021.00.00.00), and disodium carbonate (2836.20.00.00). The latter chemical export is used to make ceramics, detergents, fertilizers and pharmaceuticals.
(suite101.com, 2009)



References

BUSINESS WEEK ONLINE. (1998). OUT OF INDONESIA: WAL-MART SPLITS WITH LIPPO . Retrieved from http://www.businessweek.com/bwdaily/dnflash/feb1998/nf80225b.htm

Bharat Book Bureau. (2009). Foreign Companies in Indonesia. Retrieved December 01, 2010, from http://www.bharatbook.com/bookdetail.asp?bookid=18780&publisher=
Davis, F. (2010). [personal journaling; video, audio, photo, written]. Unpublished manuscript.

Staff (2010, Thu, Nov 04, 2010). Wal-Mart eyes bid for Indonesia Matahari units . Reuters. Retrieved from http://www.asiaone.com/Business/News/Story/A1Story20101104-245751.html

US Dept. of Commerce. (2010). Doing Business in Indonesia. Retrieved December 01, 2010, from http://www.buyusa.gov/indonesia/en/doingbusinessinindonesia.html

bnet [CBS Business Network, CBS News]. (1997). Wal-Mart redefines retail in Indonesia. Retrieved from http://findarticles.com/p/articles/mi_m3092/is_n2_v36/ai_19064738/
cheaponsale.com. (2010). [Indonesia]. Retrieved December 01, 2010, from http://www.cheaponsale.com/buy-indonesia_cigarettes/

suite101.com. (2009). Indonesia’s top exports and imports with us so far in 2010. Retrieved December 01, 2010, from http://www.suite101.com/content/indonesias-top-exports-and-imports-with-us-so-far-in-2010-a276256