Going local- creating effective
multi-country strategies
by Martin Payne
Globalisation has become a highly
emotive subject. Many companies have been criticised for their
approach and, on occasions, international marketing has been portrayed
as the new imperialism. However, while there are arguments for and
against different approaches, the fact is that there is an
inevitability about globalisation. Furthermore, major companies are
under an increasing level of scrutiny by consumers. The question
should be posed how international marketing strategies should be
optimised for greater effectiveness under this scenario.
Operating across borders has become
less of an option for companies. Brands and their owners are operating
in a worldwide economy and, even if they do not move into other
countries, they have to face new entrants from overseas in their own
national markets. New entrants can often make a market not just more
competitive but also more efficient.
The drivers of globalisation are a
combination of push and pull factors that have driven companies to
look outside their home markets for new opportunities. These are
acting to open up new economies and new markets. Liberalisation of
international trade is a core force and includes deregulation of
various industries that allows incumbent companies to expand but can
also attract new market entrants from within and outside the home
country. Furthermore, innovation in technology is impacting across a
number of areas from product development to distribution and marketing
communications. In addition, many companies are moving towards a
global or multi-country presence through saturated or over-regulated
home markets.
Different strategies
There has been a clear evolution in the
nature of marketing across multiple markets. While it was once seen as
offering the same product, often with little differentiation, in many
countries, there are now many indications that going international is
about being a "local" marketer but in a large number of
countries. We are now moving towards the next level of globalisation.
In the past, companies have adopted a
range of strategies for marketing on a global or multi-country basis.
These may be summarised as:
- Highly centralised with one product
and one set of communications. (One sight, one sound, one sell)
- Central control with limited local
adaptation of products and communications.
- Central control with products and
communications developed locally to fit global template.
- Totally local offering different
products and communications in different countries.
The type of strategy varies across
categories with different companies preferring different options.
However, there are now clear indications of a new type of strategy
that involves companies becoming instantly global and then moving
towards a more localised offer. This is driven by the new environment
including new types of cross-border communications. This will
frequently be the case with start-up companies. In addition, many
companies have a global mind-set. However, it need not be limited to
new companies and brands. Many established marketers are moving from a
centrally-controlled strategy towards a more local approach. This
strategy is far more receptive to local market sensitivities. Within
the new market scenario it may be easier in many ways to be global
than local. The development of a strong and effective local
positioning may prove to be a greater challenge for marketers.
Opportunities in new product
development
One of the dangers of taking a global
view is that the desire to produce an international brand has the
potential to result in a lowest common denominator approach. This
means that the brand offer is effectively diluted to appeal to as
broad a range of consumers as possible although it may not be ideal
for any of them.
Against this, the recognition of an
international market may enable a company to develop a new product or
category where economies are scale of required. For example, a new
category may be able to override local differences as consumers will
be offered a totally new type of product or service and will not be
constrained to existing usage patterns or perceptions. Here the
centrally driven strategy may be the only way in which the necessary
investment can be justified and funding obtained.
In addition, operations across a number
of countries provides a company with a deep vein of consumer insight
that can help to transfer ideas across borders. This gives the
development of new products and services an additional boost and
potential richness.
Where have all the borders gone?
While companies are able to source
products, services and raw materials from all around the world, new
distribution and communications channels already enable consumers to
do the same. They can choose where and when they want to buy. This can
include ways of identifying the best price across not just a series of
retailers but also across a series of countries, bypassing local taxes
and, sometimes, regulatory authorities. Shopping outside the national
market is already common in a number of product categories and extends
beyond shopping via the Web.
But what does local really mean? The
first thought is that local relates to geography; local marketing
means individual countries or regions. However, local could also mean
getting closer to the consumer, developing an intimate understanding
of similarities and differences, needs and opportunities. In the
global economy there are no borders, so it could be argued that local
should not mean individual countries but the focus is on the
identification of consumer groups across borders that share common
values, beliefs and product usage patterns. Companies tend to be
structured around geographic and/or product lines but is this
appropriate in today’s world?
Implications
Too often companies develop their
international strategies from a supply rather than a demand
perspective, even if the latter is frequently given as the reason for
the approach. Consumers are primarily local and so it is imperative to
develop marketing strategies that reflect this. It is important to
identify the similarities across boundaries but it is vital to
recognise the differences. In the same way that market segmentation
will appeal to the lowest common denominator, a local approach, even
if based on a central theme, will be more appropriate to the consumers
and, therefore, more effective. A smart marketer will focus on the
differences as much as the similarities and exploit these. An
effective international strategy requires a fine balance between
multi-country drivers and local sensitivities, supply versus demand.
This does not mean that there is no requirement for central control.
The highly focused central discipline will be even more important.
However, the similarities and
differences between cities and rural areas may be equally apparent
across borders as within countries. Major urban centres in different
countries may have more in common with each other than with other
towns and cities within the same country. They are more likely to
access the same media, have the same retailers, etc. While consumers
are primarily local, there is a level of convergence where they are
exposed to common media, common brands and common retailers. Early
adopters or opinion formers may be very similar in different
countries.
Is there a conflict between
globalisation and individuality? Today it is far easy to develop
strategies that go way beyond this to reach the sub-segment or
individual level. It will become increasingly difficult to maintain
purely local brands. A launch in one country will be visible in a
different country and marketing strategies that are widely dissonant
will be viewed as contradictory. This can apply to cross-border media
such as Web sites where communications designed for one country can be
received in another where a product’s positioning and marketing
strategy could be very different. For this reason there is a
likelihood that multi-local marketing strategies will start to
converge, even if they do become one. Some marketing processes will
need to be common to ensure consistency even if the execution is
locally driven. Strong discipline and balance are pre-requisites.
This leads in to how companies choose
to handle international marketing internally. Traditional
organisational structures tend to be built around the products and
services offered or countries/sales territories. The question may be
asked whether this approach is still valid. It may be more effective
to focus the organisation around the consumer or consumer type so that
product and service development can be aligned to recognise and
exploit similarities and differences. In addition, companies will have
to improve their information flows so that learning can be rapidly
transferred across countries.
Our own Knowledge Development Programme
has recognised that even those marketers who are viewed as primarily
are moving towards a more local approach, McDonald’s adjusting its
menus, Amazon.com and Yahoo! launching local sites alongside the
global one. Note that in the Web examples the global site preceded the
local one. Is this is a taste of things to come where a brand or
company is first global and then local? Much of Through the Loop’s
recent consumer work has uncovered as many differences as
similarities, if not more, between consumers in different countries
and this feeds into implications and recommendations for the
development of marketing and communications strategy. An intimate
understanding of the consumer is crucial.
Action points
- How can an international strategy
address local needs and opportunities?
- What scope does the worldwide
economy provide for developing innovative products?
- Local products from other countries
may often have greater brand strength than multi-country products,
e.g. Italian coffee, German cars.
- What competencies are required for
operating in a worldwide market? Should these be acquired or
gained through a joint venture?
- Are new types of organisation
structure more appropriate in today’s and tomorrow’s economy?
- Globalisation should be viewed as an
opportunity for consumers as well as companies.
- How can you reach an intimate
consumer understanding?
