My market is different
By Niraj Dawar
Professor of Marketing at the Ivey Business School
International markets offer alluring opportunities for Canadian private businesses. But there is a catch. The catch is you will feel pulled to localize when your entire reasoning for going there was to benefit from scale – to standardize.
Speak to enough local managers of international companies in countries around the world and you’ll soon come to expect the all too common refrain: “...but my market is different.”
Ask them to elaborate, and you’ll get the low down on how consumer habits in their market are different, their consumers' purchase behavior is different, preferences and tastes are different, how the media and the retail trade are different, and how their consumers and customers require unique, tailored, and delicate handling.
And while you're wondering "different from what?", the manager is on to her next refrain: “why do the folks at HQ just not get it?” “How can they not see, or choose not to see the differences?”; “why do they prefer a standardized, cookie-cutter approach, when a tailored approach would put us miles ahead of our competitors....”
In the eyes of the HQ, these protestations are either irrelevant, or they are merely ways for local managers to justify (magnify?) their crucial role as interpreters of the global strategy for the local market.
Fact is, it’s a bit of both – local differences exist, and local managers love to dwell on them.
We can all agree that there are some differences you have to adapt to: Even companies that strive for and rely on global standardization for efficiency and economy must concede some local differences. McDonald’s must advertise in French in Quebec, and will not serve beef patties in India. And measurements are metric everywhere, but not in the United States and Myanmar. So these aspects require localization or you can’t play in the local market. Smaller companies must be even more careful – their costs of localization can quickly add up and eat into the bottom line.
But the friction when going international tends to be about the more subtle differences: the Kellogg’s manager who says Raisin Bran® is too bland a breakfast choice in Korea; or the chocolate company brand manager who says that black is not the right packaging color choice in China. Should you listen to the local manager, or stay the course?
Of course, both HQ and the local managers are really trying to assess:
- How large are these local differences, and do they “matter”?
- In other words, should they affect how the brand is positioned and presented, whether the strategy is adapted or not?
- Are the differences sufficiently important to undermine the central premise of the brand and strategy?
The tricky part is that the answers to the questions are subjective. Local managers see these differences up close, so they seem big; global managers see plenty of such differences in local markets, so they seem trivial.
How the company responds to them depends on the culture of the company and the extent to which local managers have a say. And of course, on the size of the market opportunity – does it justify localization.
Over the next couple of decades any business operating internationally expects a good chunk of its growth to come from China, India, and other emerging economies. And even companies that have so far resisted localizing are now re-examining their strategies.
As these markets grow in size and importance, so will the influence that local managers in those markets have on the direction of the global brand, product portfolio, and company strategy.
Savvy companies may even take new product ideas and even brand propositions from China and India, and bring them to the rest of the world. In an ideal scenario, the flow of products and ideas becomes a two-way street. The business opportunity here is to spot the potential of local ideas, and bring them back home or apply them to other markets in which you operate.
Take a Canadian multinational that began as an entrepreneurial venture in New Brunswick a few decades ago, and is well known for its deep roots in many local markets around the world: McCain Foods. The company is the world's largest frozen French fry maker – nobody knows potatoes better than McCain. On entering the Indian market, managers find that there’s a large market for aloo tikki (Indian potato patties), a product that the company has never made or sold before. But since no one in India sells them frozen, McCain seizes the opportunity. The company develops and launches the popular snack in India. It’s a success, and it even wins the SIAL d'OR (at one of the world's largest food trade shows, the Salon international de L'alimentation) prize in Paris.
And eventually, the company may even find that there is a global market for a well-positioned aloo tikki.
In that not too distant scenario, the local manager in India may be placed in the unfamiliar position of arguing that consumer preferences worldwide are in fact similar: "everyone'll love an aloo tikki!".
The lesson for Canadian private businesses is that operating in international markets is not just a cost, it is an opportunity. You’re not just bringing a bit of Canada to those countries, you’ve also got the opportunity to learn from those markets – about new products, new processes, new competitors, and new ways of competing. International expansion is not just about making more money elsewhere – the real value is that it will change your company for the better.
An earlier version of this article appeared on Just Marketing (www.nothingbutmarketing.blogspot.com) under the title “No, Really, My Market is Different.”
Business Adviser is published by KPMG Enterprise™ specifically for owners and executives of private companies. KPMG Enterprise is devoted exclusively to helping business owners and entrepreneurs build thriving enterprises. For further information about how KPMG Enterprise can help private companies, visit www.kpmg.ca/enterprise.