Extending International Reach Doesn’t Guarantee Marketing Success
It used to be that companies took their time expanding into international markets. Initially, most companies concentrated on the domestic market, perfecting their product or service offerings and building up their cash reserves. In stage two, they’d start exporting their goods in small volumes to select locations overseas. Next, they might open small offices in emerging markets. As their foreign volumes grew, so, too, did their international offices.
All that has changed. Nowadays, businesses target international markets from their inception. “As soon as a company puts up a web page, it has an international presence,” observes Nataly Kelly, vice president of international operations and strategy at HubSpot, a marketing software supplier.
Many factors are prodding corporations to extend their borders. Technology is the biggest enabler. “Previously, only Fortune 500 companies had the resources to create physical locations in foreign markets,” notes Keith LaFerriere, chief creative officer at Verndale, a customer experience agency with 125 employees in the United States and Ecuador. “Today, improvements in technology and travel make it possible for much smaller firms to go global.”
Businesses’ focus has also shifted. “Rather than concentrate on cost management, companies are trying to pursue economic growth relentlessly, and international markets offer them great potential,” says Allyson Stewart-Allen, CEO of International Marketing Partners, a marketing consulting firm specializing in international ventures.
But while reaching foreign customers has become passé, building a business case is not as straightforward. In fact, many well-established domestic companies have made headlines by misreading international markets. Potential hurdles, such as language differences, payment system inconsistencies, local regulations, and cultural nuances, can easily trip up neophyte international ventures.
One of the first things companies need to consider carefully is which markets to enter. Global economics have shifted dramatically since the turn of the millennium. Traditionally, international expansion meant U.S. companies extending into Europe or vice versa. But both the United States and the European Union have been grappling with slow economic expansion; the high-growth nations have been in Asia and South America. Countries there have taken steps to expand their middle classes by focusing on education and industrialization. China is the poster child for these changes: It increased its gross domestic product, a monetary measure of the market value of all final goods and services produced, from about $1 trillion in 2000 to $12 trillion in 2017. India, South Korea, and Brazil have also built rapidly expanding economies. And recently, Colombia has become a hotbed for tech talent in South America. Vendors like Facebook are building large data centers there, and the government is extending its educational systems to prepare the locals for tech jobs.
Such high growth entices executives, but simply entering a new market does not mean reaping rewards. While the world has become smaller, country distinctions remain. The European Union was formed to provide enterprises with business process consistencies and to increase the buying power of its members. Traditional barriers, like inconsistent currencies, were smashed with the rollout of the euro, but Europe is still not a completely homogeneous market. “Most brands underestimate the need to localize their international approach,” says Thomas Husson, a vice president and principal analyst covering marketing at Forrester Research. “For example, too many U.S. companies make the mistake to use London as a Trojan horse to invest in the European market. They underestimate the cultural and business differences of their go-to-market approach for the different countries in continental Europe.”
Indeed, selling a product in Germany is vastly different from selling one in Greece.
When entering new markets, businesses need to account for a bevy of potential differences. Issues begin with creating content. U.S. companies rely on English-language materials. That language is spoken in much of the world, but not every consumer wants to be approached in English. Speaking to them in their native languages can go a long way toward winning their business.
Traditionally, the translation and localization process was time- and resource-intensive. Recently, the number of tools to perform such tasks has grown dramatically. However, more options do not always lead to better results. “Do not use Google Translate for your marketing materials,” warns Kelly. “In fact, Google does not even use it for its own marketing materials.”
Commoditized speech translation engines do an adequate job translating generic statements, like “What is on TV tonight?” But marketing documents are word-parsed by professionals, and the voice translations solutions often do not recognize subtle nuances.
SETTING THE RIGHT TONE
Sometimes even moving into a country that speaks English also creates challenges. Businesses need to be aware of differences in local dialects. “A Canadian protein bar used the acronym SHYTE (Seriously Helps You to Energize), which Brits took as a polite way of saying ‘shit,’” says International Marketing Partners’ Stewart-Allen.
English is not the only language where such dialect challenges exist. “Translation issues also arise with Spanish; there are 30 ways to say popcorn,” Kelly adds.
Humor is often used in messaging to grab consumers’ attention. But what is considered funny in one culture can be perceived as confusing or even insulting in another. For instance, the U.S. brand Boudreaux’s Butt Paste, a diaper rash ointment, is a product name that is not easily translatable.
ADAPTING TO CULTURAL NUANCES
Where should a marketing manager start when adapting a company’s marketing materials? As a general rule, the more customer-facing the content, the stronger the need for accurate translations. In some cases, a brand name or logo might have to be adapted because of cultural differences. “Pampers found that the tales behind its stork delivering newborns were not known in Japan,” points out Patrick Reynolds, chief marketing officer at SessionM, which makes customer analytic solutions.
Similarly, grass seed and garden products manufacturer Scotts had to change the green used in its Miracle Grow labeling because that color meant fungus rather than healthy plant life in Asia. There are countless other examples, some of them steeped in reality and some more a product of marketing folklore.
A website is often a first and common point of customer contact. Consequently, companies should check their most visited pages and most helpful pages. Changes might need to be made to items like product feature listings so they have the appropriate wording.
So what exactly is appropriate? The reality is that companies cannot follow a set formula to determine how to approach each international opportunity. What motivates consumers to buy products varies from country to country. A community meet-up, social media competition, or treasure-hunt campaign might resonate well in one market and bomb in another. Traditional Western advertising techniques, like celebrity endorsements, produce inconsistent results because the latest Hollywood trends do not interest consumers in every country.
In addition, consumers develop set behaviors and have preferences in how they want to be contacted. In Brazil, for example, marketing campaigns are often successful through Facebook, which is quite popular there; however, in other Latin America countries, Twitter draws a bigger audience.
CHANGING BUSINESS PROCESSES
Marketers also have to consider business process issues, such as interacting with consumers in different time zones. While it might be early afternoon for a company based in New York, it’s the middle of the night for its Middle Eastern customers, who probably don’t want to be called then about a new promotion.
Local regulations present other hurdles. “Sometimes key ingredients used in different products are forbidden in other markets. For instance, food preservatives used in Bush’s baked beans are not allowed in Europe,” Stewart-Allen points out.
Adhering to regulations means including the legal department in the early stages of any new marketing plans. Nowhere is this more important than in the data privacy area, which has been grabbing plenty of headlines lately. Businesses now need to adhere to the European Union’s General Data Protection Regulation (GDPR), which went into effect in May. Those rules lay out very specific requirements for how companies collect and use consumer information, and the costs for violations can be quite steep.
Business process differences between countries also can arise. “U.S. companies rely on certain payment systems, like Visa, but those systems may not be supported in the target country,” HubSpot’s Kelly says. For instance, PagSeguro, an online and mobile-payment-based e-commerce service for commercial operations, is more widely used in Brazil.
THE LIMITATIONS OF DATA ANALYSIS
In sum, a deep understanding of the culture, customs, morals, business processes, and even religious views found in the target country is required to be successful. Problems can crop up if firms examine opportunities theoretically rather than practically. Enterprises collect more information than ever before, and increasingly, executives rely on analytics and metrics to make expansion decisions.
Sometimes, the data does not tell the full story about an opportunity, and egregious mistakes occur. A year ago, Betty Crocker brought its cake mix to Japanese grocery stores. Women there were perplexed by the product. Many put the ingredients in rice cookers, which resulted in a number of explosions. Betty Crocker did not realize that ovens are rarely used in Japan.
Likewise, supersizing is a marketing technique that resonates well with U.S. fast food consumers, but it often flops in other countries.
To truly understand the differences, businesses need to fully immerse themselves in the local culture, according to Stewart-Allen. “One can read about doing business in China, but that will not give you the smell of the place.”
PUTTING FEET ON THE STREET
Since determining the viability of a marketing plan is more than an academic exercise, when does a company put boots on the ground and have employees in the target area? Again, no set formula exists. Stewart-Allen recommends that companies send at least one marketing executive to live in a target country for several months before they enter it.
But business drivers occasionally speed up the time frame for opening foreign offices. “Sometimes corporations open international offices because they need local talent,” HubSpot’s Kelly maintains. A business might, for example, need Japanese speakers to develop marketing materials and have difficulty finding qualified help domestically. That could force it to set up a presence in the country ahead of schedule
Ironically, while it has become easier for businesses to expand internationally, few executives have experience working abroad, so those who do are in high demand and highly compensated, according to Kelly.
In addition, companies often need to retool their organizational charts and business processes as they expand. Companies could reduce costs by leveraging the same marketing materials—like brand names, packaging, products, advertising messages, pricing, product launches, and sales campaigns—across markets when appropriate.
But, as has been noted, what sells on Main Street USA might not be as popular on Minzhu Road in China. Companies must clarify what is driven globally and what is managed locally. In practice, large organizations divide the work up into tiers. The home office typically sets the framework and parameters, and local marketing teams tweak them. Some areas overseen at the central level include branding and brand guidelines, strategic marketing planning and budgeting (with autonomy given to local teams as to how they spend their allocated budgets), large-scale marketing campaigns, social media strategy and guidelines, research strategy, and global public relations. Other areas, such as tactical campaigns and local media outreach initiatives, are done locally.
Venturing into new international markets presents companies with high hurdles, but certain organizations have successfully cleared them. Coca-Cola has been using social media to connect with its customers worldwide, creating separate Twitter handles for dozens of geographic regions. Though the company tweets in English from its central handle, other accounts send tweets in other languages and share general brand messages as well as content that is highly targeted for the specific regions. McDonald’s has become adept at localizing its meals, selling vegemite sandwiches in Australia, banana pies in Brazil, veggie burgers (no beef) in India, beer in Germany, and wine in France.
International markets certainly present corporations with tremendous opportunities as well as challenges. Firms must recognize and then overcome issues, like language barriers and varying cultural norms. If they do, they position themselves for success in the 21st century, where technology and other advances are making the world smaller but far more complex.
Paul Korzeniowski is a freelance writer who specializes in technology. He has been covering CRM issues for more than two decades, is based in Sudbury, Mass., and can be reached at firstname.lastname@example.org or on Twitter at #PaulKorzeniowski.