Localization-The Holy Grail of Market Expansion

I had a discussion with my friend (who is a journalist by profession and doesn’t appreciate management jargon) about my work and told her about a project I am working on, which involves identifying how companies localize. She wanted to know what localization is and I tried my best to explain in a way we relate best - sharing a recipe!

Have you ever tried eating Chinese cuisine in a Chinese Restaurant in India? It is adapted for the Indian taste, keeping in mind the availability of Indian vegetables and probably a Chinese person wouldn't appreciate that dish as much as an Indian does! That’s localization for you in a layperson’s term.

For a company to capture new markets, especially companies offering consumer-based products, it needs to tweak the product for the local use. A simple task of checking various country portals of Yahoo! can give anyone a fair idea of how companies look at minor details to win the attention of natives. They use a videogame console as a sports icon in Korea (a country known for its popularity of video games), while they use a football in the United States and cricket wickets in India.

There are a few questions that revolve around this issue and I have tried to answer them in this blog.

How important is localization?

A lot of people might shrug and call it over-rated. I have given some examples here to validate my point. Kelloggs was a flop in Indian market. Cornflakes, popular in other countries, did not match well with the Indian habit of eating cereals with hot milk. How many of us like the advertisements of Head & Shoulders or Garnier Fructis? They both show young models of countries we don’t relate to! These companies saved money by using the same advertisement everywhere, but did it really help? On the other hand, we have examples like Nokia, which offers SMS texting in Hindi, a made-in-India version which is prone to dust. Nokia has been such a hit in India that they are expecting India to be their second largest market, next only to China.

What are the strategies usually used for localization?

Strategy for localization itself has to be localized depending on the culture and nature of people. It also depends on the similarity between nationals of the country the product originally belonged to and the country where the product is being launched. Besides looking at practical things like usability issues, regulations, and infrastructure support, companies can follow strategies listed below:

• Partnering/buying with local players
• Hiring local teams/native CEOs
• Competitor strategies - Looking closely at the existing products to understand the needs and familiarity of the nation
• Hiring advisory companies for market expansion, which have experience of that country
• Partnering with the existing ecosystem—suppliers, complementary goods, etc.
• Pricing and volume of sales have to be calculated on the basis of realistic market trends and not on boardroom meetings.
• Having a clear sales strategy roadmap defined for the localized product and setting up processes to take regular feedback from customers

All said and done, we will never stop having paradoxes like Hyundai Santro. When Santro was launched, analysts told them it would be a flop in the Indian market and that the company needed to localize the look of the car. However, the product proved everyone wrong by becoming a roaring success!

-- Priyanka Rana, Consultant - Market Expansion