A Localized Global Marketing Strategy


A Localized Global Marketing Strategy

Finding the balance between standardization and localization of the web content is one of the preeminent dilemmas that companies face when tapping international markets. Many times companies, either due to lack of coherent global marketing strategy or for cost/efficiency reasons choose to standardize their marketing mix for international markets. Rationales for standardization strategy are many including1:

Standardization seems to be a cost-driven strategy for marketers, as it leads to leveraging the same template/product/service configuration globally, creating economies of scale and cost savings.

Standardization can also lead to development of single and unified brand and corporate identity worldwide. This can lead to better global recognition and provide global competitive advantage over competitors.

Standardization can lead to having a rationalized product line which includes only a few core global brands instead of multiple localized brands and brand extensions. This could lead to a better allocation of resources, higher efficiencies, consistent marketing, and higher profits

When implementing a standardization strategy, companies assume homogenized consumer needs. Thus investments in international market research related to modifying the marketing mix are minimal. The marketing mix includes company efforts related to four basic P’s of marketing: Product, Price, Place (distribution), and Promotion.

Companies following a standardized approach to marketing tend to have a centralized global marketing program, and thus the need for coordinating, managing, and controlling local subsidiaries for local marketing strategy is minimized.

However, both research and business experience suggests that standardization strategy may not be the most effective way to meet international market demands. The complex nature of the international marketing environment promotes diversity in terms of physical environment, political and legal systems, cultures, product usage conditions, and economic development. For example, Intel ads promoting a microprocessor experienced severe backlash in the US for showing black men bowing in front of a white man; this imagery evoked feelings of the dark practice of slavery.

Localization or ”adaptation strategy” takes into account the inherent diversity that exists in international markets and treats individuals as “cultural beings” whose values and behaviors are shaped by the unique culture in which they live. Localization strategy is geared toward understanding local consumer preferences and other locale-specific requirements and then adapting the marketing mix and other business strategies to best satisfy consumer needs and wants. Several companies have created standardized products and communications that have offended people in international markets.

There is a long list of companies, including Pepsi, Electrolux, Chevrolet, Colgate, and Gerber, whose non-localized messages were misinterpreted in various countries. While several of the publicized marketing blunders came from US or other developed-country multinationals, we are now seeing multinationals from China, India, Brazil, and other countries making the same mistakes. The Chinese automobile industry is growing fast and is poised for global expansion, but the industry faces international barriers related to poor quality perceptions of Chinese cars.

Even the Chinese car brand names seem to be less global. I asked my students what they thought of Chinese car brands such as Geely or Cherry; they responded that they sound too feminine. Another brand name that got a lot of giggles in my class was “Bimbo bread,” for obvious reasons. Bimbo bread is being marketed in the US by Bimbo Bakeries, which is a part of Grupo Bimbo, a Mexican company. The lack of localization strategy can mean missing the consumer sweet spot or, even worse, making costly errors that result in sanctions, product recalls or even consumer boycotts.

So Why Localize?

Proper localization can save a company millions. Why? Because the cost of offending a group of consumer by insensitive marketing messages can be very expensive and in some cases permanent, leading to costly efforts in terms of re-positioning. In 2002, Abercrombie & Fitch’s T-shirts with Asian stereotypes led to consumer protests in the US, especially among the Asian-American community. T-shirt slogans such as “Two Wong’s can make it White” or “Get your Buddha on the Floor” were widely condemned and led to petitions for consumer boycotts2.

Localizing brand names into other languages without compromising brand identity is a crucial international marketing challenge for many companies. This becomes more of a problem when brand names need to be localized for languages wherein phonetic and semantic issues pose a challenge. The most common example is when companies use transliteration strategies to localize their English brand name to a completely different writing system, as in the case of Chinese script. For example, Carrefour chose its Chinese brand name (Jia-le-fu) based on how it sounds (phonetic appeal), and its positive meaning in Chinese: It means “home/family-happy-fortunate”3. The famous example of a bad brand name translation into Chinese is that of Coca Cola: The translation of ko-kä-kö-la meant something like ‘bite a wax tadpole.”

Leaders of India’s Jewish community expressed outrage over a line of bedspreads called “The Nazi Collection” from a Mumbai (Bombay)-based home furnishing company that used swastikas in its promotional material4.

Even a simple thing such as the use of a number in a culturally inappropriate way can derail product sales. A golf ball manufacturing company packaged golf balls in packs of four for convenient purchase in Japan. Unfortunately, pronunciation of the word “four” in Japanese sounds like the word “death” and items packaged in fours are unpopular. Similarly, in the US, the number 420 is associated with the cannabis culture, and in India 420 spoken in Hindi refers to a conman or con-woman and has negative connotation.

Thus, these are just few examples of how lack of consideration for local culture, norms, practices etc. can lead to major business blunders. To better target their international audiences, many companies have proactively adapted or localized their products and marketing mix.  Some examples are Nabisco, McDonald’s, and KFC.

Yum! Brands, the parent company of KFC, Taco Bell, Pizza Hut, and Long John Silver’s, has become a success story in China by adapting its menus and food retailing strategies. Now Yum! Brands is experimenting with the idea of  East Dawning, a quick-service restaurant brand, providing authentic Chinese food to the Chinese customer that leverages the successful KFC business model.

A company’s products and communication are not the only areas that need adaptation; prices may also need to be adjusted to meet local market needs. For example, McDonald’s and KFC might be considered inexpensive fast food in the US but in India and China they are considered higher-priced alternatives to local cuisine. For example, in India, the menu items for KFC and McDonald’s range from Rs 20 to more than Rs 300, which is still more money that Indians pay for food from street vendors5.

Some of the food alternatives available from street vendors and local shops in India cost less than half of these prices. Thus, these American brands have localized their pricing effectively to match the Indian consumers’ perception of relatively higher-end family dining.

On the other hand, in an attempt to reach rural markets in countries such as India, Indonesia, Philippines, and other emerging markets, various multinationals are creating product packaging and product sizes that can be sold at cheaper prices. The goal is to enable populations with low monthly incomes to afford their products. For example, Colgate sells economically priced small “sachets” of tooth paste and small containers of tooth powder to appeal to the price-sensitive rural population of India and other south Asian countries.

Companies need to localize their distribution, logistics, retailing infrastructure, and even merchandising based on local consumer preferences. Logistics and distribution infrastructure vary globally. In India, major multinationals such as Coke, Colgate, Nestle, and others use non-traditional channels of distribution to reach the vast majority of the Indian population that resides in small towns and villages.

Some of the distribution and retailing methods used to reach consumers in rural India include rickshaws, bullock carts, boats, cycles, trucks, and dukandaars (small mom and pop stores).

In Japan, companies leverage the extensive network of corner stores to achieve maximum market penetration. “Konbini Commerce” represents the merger of Japanese convenience store and e-commerce.

There are more than 50,000 Konbini or Japanese convenience stores across Japan. Konbini are an integral part of Japanese shopping culture and daily life. They are also an integral part of Japanese e-commerce as they allow the consumer to order online and pick up and pay for the merchandise at the store.

7-Eleven is the largest chain, followed by Lawson and FamilyMart. 7-Eleven Co. Ltd has set up a shopping site, 7dream.com, where Japanese shoppers can purchase from more than 100,000 items and then pay and collect the orders at the nearest 24-hour 7-Eleven store.

Similarly, Amazon Japan (amazon.co.jp) allows its Japanese customers to shop online and pay at their local convenience stores such as 7-Eleven, Sunkus, FamilyMarts, Daily Yamazaki, and others. McDonald’s in India has localized its delivery service with the introduction of a “McDelivery” option in some cities: Indian consumers can order online or call 6600666 for home delivery.

Thus, it is neither desirable nor feasible for firms in several industries to achieve standardization of their marketing activities. Even when dealing with industries or product categories that do not seem to need localization, there is a chance that a certain element of the marketing mix may need adaptation if the product(s) will be marketed internationally. Could companies really standardize customer service, distribution, pricing, and products when global variations in institutions, cultures, and other peculiarities are considered?

References:

  1. Adapted and Excerpted from “Singh, N (2012). Localization Strategies for Global e-Business. Cambridge University Press”.
  2. One of the petitions is still available as of November 1st 2010 at http://boycott-af.com/.
  3. Brand Source (2009), “Insights into Branding in China and Abroad. Accessed on Jan 2011. http://www.labbrand.com/brand-source/chinese-transliteration-strategies-foreign-brand-names
  4. The Sunday Times (October 2, 2007). Accessed Jan 2011. http://www.timesonline.co.uk/tol/news/world/asia/article2570559.ece
  5. An American dollar is worth around 40-45 Indian Rupees.