By Peter N. Golder, Professor of Marketing
Published Jul 30, 2013
1. Think globally—even before going global.
Even in the early days of a company, have a vision for where it will eventually go. Even if globalization seems far ahead, you should start planning early as you consider things like brand positioning, company name, brand names, distribution channels, and trademarks and patents. Develop your cultural intelligence by being open-minded and flexible in your thinking, and consider now how your business model could be adapted for an eventual jump overseas. Globalization is a mindset within companies as much as it is a location decision.
2. Avoid the standardization trap.
The most common mistake in companies that go global is thinking that the business model that brought success at home can be simply cloned abroad. For example, Walmart is the model of efficiency in the U.S., but its stores in Argentina didn’t initially consider that Argentines shop more frequently, buying less each time. Stores needed to support higher foot traffic, with wider aisles and different floor surfaces.
3. Remember that consumers buy the same product for different reasons in different countries.
Depending on the cultural context, consumers may have a different purpose for the same product, enormously affecting how you would advertise and promote it. For example, in China, Wrigley’s chewing gum is used for oral hygiene more than as a refresher or a treat. In the city of Dalian, my family and I took part in a big outdoor promotion for Wrigley’s in which free samples of gum were paired with dental hygienists providing quick checkups.
4. Don’t confuse your short-term and long-term strategies.
When companies enter a new market, the moves that provide traction and initial success may not be the same strategies that do so in the long-term. The Chinese consumer appliance brand Haier entered the U.S. market selling small low-end refrigerators for dorm rooms and offices. Those low-cost associations then made it harder to migrate the brand into $3,000 kitchen refrigerators. By contrast, LG (previously branded Lucky GoldStar) entered the market more consistently with its higher-end appliances and did not have to take a sharp turn to achieve its long-term plan.
5. Stay true to your brand.
Even though a business model doesn’t need to be uniformly standardized across countries, it does need to share the company DNA. Find the balance between preserving your brand’s essence that made it a success and tweaking it for different markets. When people travel around the world, they should find something enduringly similar about your brand. While people and cultures differ, the most successful global brands identify similar consumer segments across countries for whom their product has consistent appeal.
An expert on both global marketing and new product development, Peter Golder looks at product innovation and business model innovation, uncovering what makes a new product successful and what makes it successful as it enters a new market. Never shy about exploring topics on a large scale, Golder and co-authors Sue Chang at the University of Georgia and Joel Steckel at NYU Stern School of Business are currently studying why international brand market shares are stable or dynamic. Looking at over 30,000 brand market shares in 34 categories across 52 countries, they have found certain countries have fairly frozen market shares (Switzerland, Hong Kong, India, France) while others fluctuate widely (Argentina, Romania, South Korea, Morocco). There are numerous factors that play a role in these differences, from income levels and infrastructure development to how large and rapidly growing a market is to how intensely competitive a category may be. These insights will help managers understand what drives market share volatility in different categories and countries.