When brands expand beyond their home markets, they are tempted to repeat their tried and tested formula in the new market as well. Brands in the current globalized world signify more than just products with recognizable logos.
One of the biggest implications of globalization for companies seeking to expand to foreign shores is the task of balancing standardization with customization. From a branding perspective, this issue assumes even more significance. When some of the world's biggest brands expand beyond their home markets, they are tempted to repeat their tried and tested formula in the new market as well. In fact this has been the path followed by many brands. The assumption in such a case is that customers would be too eager to consume the great brand because of its authenticity, heritage and associations.
Brands as channels of self expression
Brands in the current globalized world signify more than just products with recognizable logos. Brands have transcended the commodity trap and have seeped into peoples' lives in many aspects. Brands have come to signify avenues through which people tend to express their personalities, attitudes, likes and dislikes, association to groups/ communities and so on. As such, brands succeed if they offer customers opportunities to express. Being global brands with entrenched identities and personalities and still be able to adapt to local demands is a Herculean task. The following steps would facilitate brands to make a smoother transition:
Understand the local market: Companies would do themselves a huge favor if they do not generalize the markets based on some superficial parameter. Each market has its own subtleties, unique characteristics and customer preferences. Many of these unique characteristics are deeply inspired by the cultural underpinnings of the society. To understand these underlying parameters would allow companies to effectively target the customers.
Finer segmentation for faster adaptation: Markets by nature are known for their multiple segments. Segmentation though a very basic exercise in marketing, is indeed one of the fundamental tools that can equip a company to effectively channel its resources. With emerging economies integrating into the global market, the diversity is bound to multiply. This not only offers companies a huge increase in potential customers but also an opportunity to segment finer and leverage the market situation. Based on the product category, the product line, the brand strategy and the availability of channels, companies must decide on the segment that they wish to target.
Channels – A strategic brand component: In many markets, reaching the customer at the right place at the right time differentiates success from failure. In China and India, channel management is the key to success. Many global brands that are used to huge supermarket chains such as Wal-Mart, Sears, K-Mart and others tend to think in similar terms in foreign and developing markets as well. In many Asian markets unorganized retail still dominates. In such scenarios, global brands would succeed if they recognize the criticality of building strong channels and adapting their model to ground realities in the market they are present.
Bottom of the pyramid customers: In spite of the growing economy and increasing spending power, emerging markets and still developing countries are characterized by a sizeable bottom of the pyramid segment. This segment mainly consists of customers who are gradually aspiring to integrate into the main stream. They are low on resources but high on aspirations and ambitions. This segment also shows the promise of being a very lucrative segment in the long run. But majority of this segment are not ready to pay high prices. Customers always look for a proper quality-price balance. Customers in this segment seek products that offer considerably good quality at an affordable price. This poses new challenges for global brands that are used to offering customers either a highly priced high quality products or low priced goods with an average quality. Further, with many local brands in many countries already offering products with quality comparable to global brands but with half or even one third the price, the success of global brands depends on their ability to adapt to the local conditions and respond to the local demands.
Global brands' local act: Developing countries are finally seeing light at the end of the tunnel. Countries especially in Asia are in a boom phase. The economies are booming, global trade has increased, technical and knowledge outsourcing has given birth to millions of jobs, disposable income is on the rise and governments have taken the lead to integrate many such countries with the global economy. These factors have led to the emergence of customers who no longer look to the West to build an identity. These customers are confident and satisfied with many local brands. Though these customers do like and purchase many global brands, they also have a strong preference for many local brands that have managed to provide high quality products with a distinct local feel. This once again compels the established global brands to balance the global identities with local subtleties. This balance will allow global brands to be successful. These guidelines will facilitate a smoother transition for global brands into localizing part of their experience to suit the local subtleties in order to attract and retain the local customer. Further, these guidelines will also offer global companies reason to think about the possible challenges that a complete lack of localization will bring to the fore. Unilever and Nokia, two global giants have also proved the point discussed in this article by glocalizing and winning in their game.
Unilever is a classic example of a global brand which has pioneered serving the locals with products that address the local sensitivities. Unilever's Indian subsidiary Hindustan Level Limited (HLL) has been the leader in recognizing the tremendous opportunity lying at the bottom of the pyramid. The customer base that aspires to consume products but in smaller quantities and at lesser prices. HLL literally invented the shampoo sachets – small plastic packets of shampoo for as less as INR 1 (USD0.022). This became such a rage among the rural consumers that many other brands started offering products such as detergent, coffee and tea powder, coconut oil and tooth paste in sachets. Even though the unit price was higher, rural consumers were able to afford to purchase the smaller quantity at their convenience.
Another example is of the leading mobile brand Nokia. Nokia also recognized the growing importance of rural customers in the Indian mobile telephone market which grew from a mere 300,000 subscribers in 1996 to a whopping 55 million subscribers in 2004. Nokia introduced its dust-resistant keypad, anti-slip grip and an inbuilt flash light. These features, albeit small, appealed to a specific target of truck drivers initially and then to a broader segment of rural consumers. These features endeared Nokia to the Indian consumer as Nokia displayed a genuine commitment in responding to local customer needs.
Origin via VentureRepublic