Going Global - Why Localization Can Make Or Break Your Business
Is your business considering entering a new market?
There are varying degrees of how one can define “market” - but for the sake of simplicity, for this post I am referring to foreign markets - I.e. an international market separate from your primary market.
While mature businesses understand the importance of localization, it is very common for even the most successful businesses to struggle to “get it right.”
According to one analysis of companies selling abroad, on average, it takes 10 years for businesses to reach a mere 1% ROA (Return on Assets), with the average ROA being minus 1% for multiple years. It's evident that it’s extremely challenging for most companies to build their businesses abroad.
Having grown up in Japan and US, there are several brands off the top of my head that I can think of that have struggled to enter from one market to the other. Both Ebay and Burger King have struggled to gain traction in Japan, and stateside, despite having a huge following, Muji has struggled to gain traction. Even Uniqlo, which has seen tremendous growth over the past 10 years failed miserably the first time they attempted to expand internationally.
To be fair, the Western and Eastern divide might be one of the most challenging to overcome. A US brand entering a European country will not have the same challenges as when they enter say, Korea or Hong Kong, or vice versa.
Here are some key considerations when thinking about localization:
1. Give Your Business Ample Runway
When entering a new market, the odds are stacked against you. You’re the new guy, and there are likely plenty of successful competitors who call that market home. Be strategic, and play your cards well. Study the market, the culture, the consumer behavior and most importantly find ways to “get your finger on the pulse” by talking with people on the ground.
Design ample time into plan. Set aside reserves for “Plan B”. And rather than setting “normal” goals that you would set for your business in your primary market, set realistic goals.
2. The Right Partnership Could Pave the Way to Success
Having the right partner, whether it be a retailer, or a distributor could position your business for success for numerous reasons. If you pick the right retailer, you will A) have a built-in audience (presumably) and B) have the added benefit of their merchandising team who will aid in finding the right way to appeal your brand to their audience.
In some cases, it may be that the “right way to appeal your brand” is embedded in the retailer itself, where perhaps their client-base is seeking foreign brands due to the retailer’s positioning - a prime example being a US brand selling through Sephora stores in international markets.
3. Don’t Translate Your Brand; Re-Map Your Brand
Localization is not just a matter of “translating” the brand into the local language. This goes without saying, but culture and context play a significant role, and while consumers in your target market may find international brands appealing, learning how to re-map your brand concept so that the local market can understand and relate to them is important.
For example, if you’re a brand entering the US market, you must understand consumer perception about the country your brand is from, your brand values/concept, and the key product features in order to map how the brand will appeal to a US customer.
Localization is more of an art, than it is science. But at the core is the understanding customer perception - so if you can get into your target customers’ head, to better understand where they’re coming from and how they're making their purchase decision - the better chance you’ll have at succeeding as a global brand.
Let me know what your challenges are with your global expansion!