Understanding the differences between globalizing and localizing
Before choosing to globalize or localize your brand, you must clearly understand each strategy’s requirements and major differences. Contradicting many beliefs, globalization and localization don’t stop at adding a new language to the brand and the business behind it. In fact, both strategies require an additional concrete set of strategies in business management, product development, and supply chain management. This, in turn, requires significant investment and efforts from the business. Failure to address this requirement will, in extreme cases, prevent the brand from expanding into international markets, leading to significant potential losses. Furthermore, considering the trade-off costs, failing to expand the brand into global markets will also negatively affect its position in its home market. To prevent such failure, business owners and brand managers must familiarize themselves with the said requirements and the differences between the two strategies. Let us take a closer look at them.
Oftentimes, globalization refers to adapting a brand to customers’ demands from different cultures. This usually requires adding new languages to the current products or services and revising them to meet international regulations and standards. Think Apple. After the birth of the iPod and iPhone, Apple became a globally known brand. As a business, Apple adopted the globalization strategy to expand into international markets while staying true to its business philosophy. As a result, although all of Apple’s products and services are available in multiple languages, they stay true to the initial concept developed by the design team at Apple Park. Like Apple, a brand must have a solid centralized management team with vast knowledge of global needs to succeed in globalization. Furthermore, the business will need to strategize and create frameworks to ensure that its brand’s products and services are available worldwide at any point in time and meet the set quality standards.
On the other hand, localization refers to adapting a brand to fit the demands of one or more specific regions and cultures. As a result, a business must not only translate the language but also adapt its products or services to fit with the culture, people, and history of the country or region it settled in. In extreme cases, depending on the product and service, a business may have to develop a new design or recipe for a single market. Take McDonald’s as an example. Although also available worldwide, McDonald’s localization strategy requires the business to adapt to local cultures and ingredients. As a result, McDonald’s Japanese menu may be widely different from its counterpart in the US, its home market. To succeed in localizing its brand, a business must have multiple management teams with a deep understanding of the local users and an additional support management team to ensure that all teams are moving forward with a common goal. Depending on the type of the business, a brand may also require local manufacturing factories or suppliers. These factories and suppliers will be solely responsible for ensuring that the brand’s products and services are available and meet the local users’ demands.
Despite having the same aim of expanding into international markets, globalization and localization require different management styles and strategies. Both have their advantages and disadvantages, and none is better than the other. What’s important is choosing the correct strategy to expand your brand.
Should your brand localize or globalize?
The decision to localize or globalize a brand ultimately comes down to answering two crucial questions:
- Can the brand meet the requirements of these strategies?
- What is the vision of the business behind the brand?
Allow me to elaborate.
As stated in the previous section, in terms of management, globalization requires a centralized control center while localization requires multiple diverse teams. Depending on the nature of the brand and its products or services, it may be easier to implement one management style over the other. Let’s again visit the McDonald’s and Apple examples. For Apple, both the iPod and iPhone are strategic products that are difficult to adjust to match the specific needs of different cultures. At the same time, these products can be manufactured and assembled efficiently with a streamlined production line and shipped out from strategic locations with the help of a few selected partners. As a result, it is more efficient for Apple to employ a centralized management style over the diverse one. On the other hand, McDonald’s menus can be heavily affected by the availability of ingredients. At the same time, by changing the components or the recipe, McDonald’s menus can be easily adjusted to meet local demands. These characteristics alone encourage McDonald’s to undertake a diverse management style with multiple teams that can quickly understand and adapt to local needs.
The supply chain management framework also plays a vital role in the final decision. Finding a few strategic or multiple local suppliers and manufacturers to distribute your products and services poses different challenges. In the first case, the chosen strategic partners must have an extensive infrastructure network available to bring your products to markets. Such partners are few and usually require stringent contracts that may pose issues for smaller businesses. In the second case, although the chosen partners don’t have to have an extensive distribution network, managing and ensuring that these partners are following the agreed contract can also be an issue that requires serious discussion.
Last but not least, the vision of the business for its brand should also be considered. How do you want your brand to develop in the future? Are its products going to be more personalized? Or are they going to house innovations that can reach mass audiences? How do you want to reach your target users in 5 years? How about 10? What about your distribution channels? Are you going to expand physical networks or online channels? These are just a few questions you need to consider before deciding whether your brand should be globalized or localized.
Of course, deciding on which strategy you want to employ is only the first step to internationalizing your brand. Soon, you will have to face more decisions on how you need to adapt both your business and your brand to fit the international markets. This step is a big leap that could make or break your success. Let us take a look at one of the most common mistakes business owners make when internationalizing their brands and what you can do to avoid repeating it.
Don’t forgo the values you are known and loved for
One of the mistakes businesses often make when localizing or globalizing their brand is forgoing the values or cultures they are known and loved for in their home market. This is known as “overfitting.” While it’s sometimes necessary for a brand to change or remove specific values to make itself better suited for international markets, business owners should never forget that these values can also serve to make a brand distinguished from others. By changing and removing values that distinguish a brand from others, business owners risk undermining its attractiveness when it enters international markets and crippling its position in its home market. As a result, when faced with the decision to change or remove specific values, businesses should consider the impact on the brand both internationally and domestically. The following questions provide business owners with a few hints and options to look at when considering the final decision for the brand:
- Does the targeted value distinguish the brand from others in its home market?
- Can the same value be used to elevate the brand’s position? Can it be used also to distinguish the brand in other markets?
- What other values can be used to distinguish the brand in international markets?
- Can the brand shift its communication strategy without adjusting or removing values?
- Can the brand define and develop new values that could help to improve the brand’s position in international markets? Can these new values also be used to strengthen the brand’s performance in its home market?
As seen from the question list above, to avoid “overfitting,” businesses should try to shift their communication strategy or develop new values that can benefit the brand internationally and domestically. Although such tactics may require additional investment and management efforts, they mitigate the risk of undermining the brand’s position. Only when all options have been exhausted should a brand decide to forgo its values.
Some last words
While the option to internationalize your brand may sound lucrative, without proper understanding and consideration, businesses and brands are at enormous risk of weakening themselves both in the international and domestic markets. As a result, as a business owner, you should carefully consider whether your brand is ready for internationalization, your vision for the brand, and how best you could internationalize it. Here is one last piece of advice from me before we conclude this article: Think big and start small. Don’t attempt to roll out your brand everywhere in the world immediately. Having your brand available around the globe should be your goal but should never be your first step. Instead, expand slowly into neighboring markets with similar cultures and customer trends. This helps mitigate the friction and the risk you may encounter when entering new markets. If your business is in Japan, consider China, South Korea, and South-East Asia. If your brand is in France, think of the UK, Germany, and Spain.
That’s it from me. Now, it is time for you to tell me about your success in internationalizing your brand.