3 Lessons Consumers Have Taught Businesses About Global Expansion
BY Diane Hessan
A successful overseas venture requires a keen understanding of the new market that you can only get by engaging local consumers before your launch.
We have all heard unfortunate stories about global brands misjudging consumer sentiment in new markets. But it's the lessons learned from consumers that make companies stronger.
One story that has long stuck with me is that of Intuit's initial global launch of its Quicken tax prep software in the mid-1990s. Global sales never took off because foreign consumers found nothing intuitive about using software designed for Americans. Intuit founder Scott Cook rightly admitted his company "should've known better" than to assume that merely translating the language was enough. The company neglected to tailor its product to the nuances of the ethos, culture, and native languages of consumers abroad.
Years later, equipped with what it had learned from the error, Intuit hired people locally to gain a complete understanding of each new market. With software specifically tailored to local consumer groups, Intuit enjoyed a more successful global expansion.
Despite the missteps of some companies, many others have succeeded in entering new markets either the first time or, like Intuit, in due time. Here are three stories that provide lessons about how success in new markets always hinges on a deep understanding of--and respect for--consumers.
1. Collaborating with local consumers and using their insights as a compass provides a low-risk pathway to success.
Back in 2009, when Spanish bank Santander acquired U.S. bank Sovereign, the financial climate was grim. It was not the right time to introduce a new global bank to the U.S. market, so before launching, Santander collaborated with consumers to draw the roadmap. The bank engaged directly with a private online community of hundreds of U.S. customers to understand their perspectives, concerns, and ideas on banking and personal finance.
As a result, Santander successfully made the voice of consumers a priority in shaping brand strategy, using very personal feedback to truly connect with their needs, challenges, and ideas. The bank made its official debut in October 2013 in nine eastern states. Santander was able to move forward with confidence after getting inspiration from consumers on a host of new initiatives, including a mobile app, its "A Bank For Your Ideas" ad campaign, and a flagship deposit account for the U.S. market, extra20 checking.
2. Thoughtful innovation inspired by local consumer preferences has the potential to become successful in other markets as well.
After introducing America's favorite cookie to China in 1996, Kraft Foods experienced year after year of slumping cookie sales in the country. While it's hard to believe that Oreos could be unpopular anywhere, something clearly was wrong.
Kraft set out to solve its Chinese Oreo problem by turning to local consumers. The company discovered that most Chinese consumers found the Oreo to be too sweet and too expensive. Kraft also learned that wafer-style cookies were far more popular than biscuit-style cookies in China.
So in 2006, Kraft redesigned the Chinese Oreo cookie to taste less sweet, offered it at a lower price point, and introduced consumer-preferred rectangular wafer-style cookies (as well, even, as cookies shaped like straws for sipping milk through). Oreos are now the best-selling cookie in China, and sales of the popular Oreo wafers have expanded throughout Asia, Australia, and Canada.
3. No matter where you expand, stay true to your company values.
In 2013, IKEA, the Swedish furniture mega-retailer, translated its product catalog into 27 languages and circulated it throughout 38 countries. But when a Swedish newspaper got its hands on the version distributed in Saudi Arabia, editors noticed one thing missing from its pages: All of the women and girls had been Photoshopped out of its pages. How could a company based in a country with strong foundations of tolerance and equality deliberately exclude females from its catalog?
IKEA suffered a backlash as the story went viral. The company admitted it was wrong to omit females from the catalog--something not required by Saudi law--and issued a formal apology. "As editors of the catalog, we are sorry about this. We should have reacted and seen that this is in conflict with IKEA's values," said company spokesperson Josefin Thorell.
When entering a new market, a global brand must be willing to stand up for its identity, even in the face of local customs that don't align completely with company values. Failure to do so will cause consumers everywhere to take notice.