Imagine, for a moment, that you’re in charge of a major brand-name company. As a wise CEO, you recognize that the time has come to expand into markets abroad. So you tap into your contacts, start doing a little research and prepping your team. Overseas in India (or Brazil or China, etc.), you’ll apply the same creativity and strategy that has worked so well at home. It’ll be slow at first, but soon you’ll get the hang of it and the numbers will start rising. Then you just rinse and repeat: switch up India for Greece (or South Africa or Mexico, etc.) and do it all over again. Nothing could be simpler, really.
Really? I have one question: does the foreign market know your story? Is it safe to assume that a college student or a housewife in New Delhi has the same familiarity with, say, Harley Davidson that people do in the US? Why would one assume such a thing?
Believe it or not, I’ve seen major brands make exactly this mistake. They assume that their target foreign audience will respond to their products just as their domestic market does. They seem to truly believe that they can continue to sell on the power of preexisting name recognition alone—even if that brand story has never once been told abroad.
But as marketers, we have to acknowledge and accept how long it takes a major company like McDonald’s and Ford to become an iconic domestic brand, then emulate that effort in other markets. The time and resources required to build and propagate such an effective brand story is extraordinary. Are you familiar with the sacrifices made by people like Steve Jobs or Ray Kroc? If so, you should be willing to imitate that effort in any foreign market you choose to enter.
“In Paris they just simply opened their eyes and stared when we spoke to them in French! We never did succeed in making those idiots understand their own language.”
Mark Twain, The Innocents Abroad, 1869
Most people have at least once experienced their own lack of understanding as the ignorance of others. We can’t believe we’re so inept, so we project our own failure onto other people. It’s so common, in fact, that it has its own name—the Dunning-Kruger effect.
It’s far more common than you think. Even so, in a sense it’s understandable that a large and successful company might assume that it can succeed no matter what—whether moving into a foreign market or not—because they have decades of experience and tons of resources. But it’s precisely this overconfidence that tends to get in the way. With overconfidence comes assumption. And assumptions will kill your sales.
So, Who Are We Marketing to Again?
The question is: How do we transfer brand value to each new market and help local consumers embrace a product or service as part of their daily life? Since it’s something I have experience with, I’ll talk about this issue in reference to the opportunities and challenges presented by the massive Indian market. There, I’ve helped brands including Weber grills develop category and brand-launch strategies, segmentations, and go-to-market strategies to successfully navigate evolving consumer market dynamics. I know from experience that commercial success in the Indian market relies on three major factors:
1. Story: Making your products and services matter to the customers in your specific market segment.
Indian middle-class and upper-middle-class consumers place strong importance on brand names and luxury brands. Status is a key factor—many Indians will buy luxury goods not because they necessarily like them, but because they are representations of success. Wealthier Indian consumers are willing to spend more on status items, while non-status items are likely to be chosen based on price alone.
The key is to create a truly aspirational story that allows consumers to feel that they are attaining status, moving up in the world. In my view, this is why luxury and top-rated brand names are the ideal pitch in a country like India. If you can give consumers something to aspire to, you’ve given them a reason to buy.
The problem comes when the right story is told in the wrong context.
2. Strategy: Executing market entry and delivering your value proposition in the right context and at the right time.
The key issues in marketing lifestyle category brands in India are identifying and pitching to those households that are interested. These are the international class, with experience abroad and familiarity with global brands, so they have an appreciation for certain brands while being able to afford premium pricing.
In India, the luxury demographic is more of a needle in a haystack than a market niche. Out of the 260 Million households, finding the 6.5 million elites and 17 million affluent households that can be your buyers and giving them an “exclusive” relationship is a real challenge. To identify pockets of opportunity in an ever-changing and highly diversified market, managers need to apply a sophisticated approach to regional segmentation and do lots and lots of research.
3. Systems: Ensuring that you can deliver products or services through the best distribution and sales networks.
I have seen many companies fail in their attempt to enter the Indian market because they don’t have the right partners to help guide them through certain complexities. The managers and the distributor celebrate the entry as the initial sales grow, not knowing that the real challenges follow the celebration as the distributor struggles to sustain that growth.
Over time, frustrated management may decide that the local partner isn’t a right fit for their overall strategy. They may make hasty decisions to start their subsidiary, which is an expensive and disruptive route. Or they may simply shut down and exit the market.
To succeed, companies need to think beyond the traditional sales-focused market entry. Introducing the brand story and communicating that story to your team and channel partners is of the utmost importance—but it’s only the beginning. You will need knowledgeable and reliable boots on the ground in the region to help you hook up with the best distribution and sales networks available.
One important aspect of this is product education. In a country like India, consumers may buy a product—like a Trek bike or a Weber grill—purely as a status symbol. This means that after purchase they often leave the products in unopened boxes at home. This may amount to high sales on paper, but it produces nonexistent word-of-mouth and social impact. If people aren’t talking about your product, you risk a major sales dip in the following years.
Sales and marketing in foreign markets never ends with just selling to end consumers. Marketers need to devise creative ways to make sure the consumers use and enjoy the products as an integral part of their social, work, or home life.
This may pose a challenge to international brands in a country like India, but it can and should be done.
A major US name once made a sloppy foreign market entry into India. When things didn’t work out, they attempted to slap a band aid on it by offering a useless 10% discount on their products. Things got worse. The company did little or nothing to establish brand story, and I watched a top-heavy international brand drown itself in a sea of indifferent customers who knew little about what they had to offer.
As marketers, we must understand something: every country’s market is unique in its underlying economic, demographic, cultural, and regulatory factors. That’s why dipping your toe into foreign waters can so quickly get complicated—you don’t know what’s beneath the surface. To ward off chaos, establish story, implement the right strategy, and maintain quality distribution systems. All of this is essential for success in foreign markets.
Come back next week for more from TopRight’s Insights blog. To learn more about download the 3S Playbook for Transformational Marketers here or check out a preview of Dave Sutton’s new book Marketing, Interrupted here.