Globalization is becoming increasingly important for businesses all over the world. Not only is it important to expand into new markets, but it is important to localize enough to be accepted while still keeping your brand consistent worldwide. Corporations are beginning to see how difficult this balancing act can be. Expanding into new countries can lead to enormous profits, but it comes at a much higher risk.
One of the most successful global companies is Coca-Cola. Coca-Cola sells their over 3,500 beverages in over 200 countries and works with over 300 bottling plants around the world. The strategy that has made them so successful is keeping their brand consistent worldwide, while making product adaptations to accommodate local preferences. For example, in Mexico, Coca-Cola is made with sugar can rather than corn syrup. They have seemingly mastered the art of succeeding in different cultures, but they are certainly not the only ones.
Barbie is a popular brand (made by Mattel) in many parts of the world. It has had huge success in Argentina, the United States, India, and many more. However, the iconic doll has not had success in every market. China has proved to be a difficult market for Barbie to conquer. Mattel recently had to close their massive Barbie store in Shanghai. The failure was mainly due to a lack of focus for the store, and lack of previous interest in the brand from the Chinese. Since localization is such a critical part of globalization, companies are learning that traditional marketing research is not enough. The Barbie store did not adapt to the Chinese market as quickly as it should have. Mattel could learn from Wal-Mart that has used trial and error in countries like China and been extremely successful.
Language is also a barrier that can be difficult for companies to overcome when looking to expand globally. There are countless horror stories of ‘translations gone wrong’ from companies entering new markets. Now that the internet becoming more prevalent for customers all over the world, creating a website in multiple different languages that caters to each culture is becoming essential as well. Assuring that your website is globally appealing is no small task. Easy mistakes can be avoided by consulting with experts from your target country.
Direct foreign investments come with a lot of risk, so many companies are looking for safer and cheaper options. This could mean taking advantage of joint ventures, opening stores in already existing buildings rather than starting from scratch, or partnering with existing firms. It is also important to note key differences in customers in various markets. Your typical customer for the same product may be drastically different in one country than it is in another. A great example of this is Louis Vuitton; their main European customers are women, while in China most of their sales are to men. It is important for companies to recognize how cultural differences influence the buying tendencies of their customers.
There is no prefect formula for globalization. It is a constant learning experience for companies who choose to actively seek out new markets. Balancing risk with potential reward is the focus of every global company. The keys to success are doing your research, consulting with culture experts, and learning from your mistakes. Being ready to change or alter your strategy is essential for companies entering new markets and can ultimately determine your fate.