Emma Herrod looks at the issues of localising a global brand and why bilingualism is not the same as biculturalism.
International trading involves more than overcoming language barriers – there are also cultural hurdles to scale. However much research a retailer does before opening in other countries, there will always be some surprises, which is why so many people advocate employing local expertise. Indeed, in some countries it is a legal requirement for foreign businesses to use local intermediaries if they want to enter the market.
The penetration of luxury brands into the Chinese market is well documented and highlights the value of retailers staying true to their core brand across the globe. Others are now following suit. Ted Baker , for example, is becoming a trusted brand in markets such as the US, Hong Kong, China and Japan, where British heritage and quality are revered. “People are willing to pay a premium for it,” says Jaana Jätyri, Chief Executive of fashion trend forecaster Trendstop.com. “Launching into new markets has been pivotal to Ted Baker’s strategy and, in this sense, its approach has been very similar to that of Burberry but at a more inclusive price. While Burberry was recently exposed by waning demand in the emerging markets, Ted Baker is not in quite the same price bracket and so could have less of a bumpy ride.” When it comes to new markets “retailers need to be flexible, fleet of foot and, above all, be determined,” commented Sir Roger Carr, President of the CBI, at the recent World Retail Congress.
DETERMINATION
There are many retailers showing their determination as they expand into new markets in the current economic climate: Wal-Mart is opening 22 new stores in Japan; Waitrose is partnering abroad; M&S is following a franchising model in Hong Kong and the Philippines while launching ten new country websites; Saks is opening in Kazakhstan; and many others are upgrading their websites to multiple languages or localising into new regions. Spearheading the globalisation of UK pureplays is ASOS , which has customers in 160 countries.
In contrast, others – such as China’s 360buy – are eyeing up the UK and a number of alternative non- domestic markets. Gap , for instance, has just announced a new global brand structure which brings together its North American, international, online, outlet and franchise divisions under a single global executive for each of its Gap, Banana Republic and old Navy brands. It has also formed a new Innovation and Digital Strategy team. “More than ever,” says Philip Clarke , CEO of Tesco , “retailers need to build a strong and trusted brand; one that pulls on heart and head.”
Kamlesh Raichura, Global Head of Ecommerce at electronics retailer Premier Farnell spoke about some of the operational issues of trading internationally at the recent Internet Retailing conference. The multichannel B2B and B2C business, which makes the majority of its circa £500m online turnover each year from international markets, is currently re-platforming its global business to IBM WebSphere. While it makes sense to do things on a global level, Raichura said that having teams regionally are just as important since they can react rapidly to changing customer demands, to competitor initiatives and operational issues. “On a practical issue it is difficult to lead a team around the globe since it’s difficult to get them all together at the same time.”
He raised some of the questions that retailers should ask themselves before expanding into different territories or countries. Issues such as:
- Product: do you have the same ranges in every country?
- Pricing policy: do you have local currency or do you use standard exchange rates. Do you have different competitors for each country or a global pricing policy. How often do you update your prices?
- On availability: how important is next day delivery to your customers. Do you have one distribution centre or multiple distribution centres around the world?
“The cost to household brand names of not getting, and applying, local knowledge is immeasurable, yet we still continue to see major brands fail overseas because they do not have sufficient customer insight to make their brands work outside of their domestic territories,” comments Allyson Stewart Allen, Chief Executive of International Marketing Partners. “It’s not just about product adaptation, such as McDonald’s launching vegan menus in outlets in India, but service adjustments, too, as with the greeters at Wal-Mart in Germany that undermined its business there.” .
She claims: “Poor localisation results not just in abandoned customers but in vanished customer loyalty and corporate reputations, disengaged distributed channels and a low chance of recovery. To get internationalisation right, you need to immerse the business by moving to the target country. Senior head office executives should live there for six months or more, and should hire locals who know the nuances and can help avoid expensive fundamental mistakes. Most importantly, retailers need to assume differences and that adjustments to their proposition will be necessary.”
But just how far do those adjustments need to go? While one company will keep strict control of its brand and remain true to its core beliefs and values, others will shift to match consumers in local markets.
QUALITY CONTROL
The same is true with product. Everyone knows what they will get from global brands such as Apple, for example, or Coca-Cola.
Asda is using IT to control product development, manufacture and logistics to ensure the consistent quality of George-labelled products across franchisees and the Wal-Mart Group. It is using a portal from Momentis which can be set with warnings to reflect local sensitivities – such as fashion items with religious symbols or made from certain types of leather – automatically tailoring the product catalogue to each franchisee. As well as ensuring inappropriate items are not sold, it also reduces delays at customs. Pricing is automatically converted into the relevant local currency, while customs documentation is automatically created, further removing an overhead for both franchisor and franchisee.
Lenny Letwin, Implementation Manager at Momentis, says that by using a centralised portalbased solution, suppliers, franchisees and the brand owner can work collaboratively while keeping track of costs and increasing efficiency over working practices which are based on emails and spreadsheets in different time zones.
Clothing brand Cherokee Group, which sells directly to retailers in more than 40 countries, believes that it has let local managers have too much leeway in answering the question of how to demonstrate value in local markets. In his first year with the company, CEO Henry Stupp visited 30 countries. “Every country had its own idea of what the brand meant,” he says, and that included the quality of product being accepted from suppliers.
This led to the Cherokee Group reinforcing its brand message with its licensees and reorganising the supply chain. The best clothing manufacturers now supply multiple countries and customers get the best pricing and quality wherever they are in the world. “Factories build product but it is emotional attachment that builds a brand,” he adds.
The same is true for partners, employees and consumers. Andrew Marshall, Managing Director EMEI at Costa Coffee, advises retailers to spend a long time getting to know potential partners before setting up with them. To make sure that they truly understand the brand and its DNA, he says: “We spend two years courting a new partner. Then get married, as divorce is very long and painful.”
The coffee company operates in 29 countries and plans to open in two new markets a year by following its focus on “global insight, local relevance”. It believes in global consistency through its coffee, its people, its symbols and the personality of the brand. “Take the DNA, impart it, then entrust it to people locally,” says Marshall. And entrusting people locally includes the customers. He advises retailers to “listen, learn, innovate”, and explains how loyalty cards are one of the many methods it uses to gain insights from customers. These insights are then used to “drive innovation [such as new product releases] and how we localise”.
International expansion is all about “people and organisation” according to Marc Bolland, CEO of Marks & Spencer, speaking at the World Retail Congress. He explained how the retailer plans to open new stores in Paris and India over the next 18 months along with seven in Shanghai and have online stores in ten more countries “two of which we expect to fail in”. He added: “The company needs to be 30-40% UK independent, but you can’t do it by bricks and mortar and people alone.”
BRANDS IN A DIGITAL WORLD
When it looked at how to keep control of its marketing assets across the world, drinks company Diageo follows an ethos of overall global control using locally hired expertise. The firm is based around five regional hubs – North America, Africa, Latin America, Iberia and Asia – which are split into a further 21 regions.
It used to give its brand managers free reign to devise and run their own digital promotions and experiment with digital technologies. But Diageo’s decentralised approach soon became fractured. Valuable creative assets were being produced all over the world, but few were shared or reused, so marketing programmes were often developed from scratch. Taking a local campaign international ended up becoming time-intensive and frustrating.
The company decided that it needed a system to manage its digital assets and customer data. It then spent six months debating whether to centralise (economies of scale) or decentralise (local culture and time), as well as looking at governance issues, such as what customer data can be held in which country. Jerry McClay, VP and Head of IS Marketing at Diageo, gives an example of just one of the issues they faced. He says: “In Thailand, we are not allowed to contact customers direct while in Australia we can sell Thunderbird Rum direct to consumers.”
It decided to roll out a centralised digital marketing platform built, hosted and managed by Infosys. It now supports more than 300 websites, 110 creative agencies and 3.4 million consumer records worldwide. Along with a 25-30% reduction in digital marketing development spend, Diageo also benefits from:
- The ability to collaborate and reuse marketing assets worldwide;
- A reduced time to market, as campaigns can now be produced in hours rather than weeks;
- Improved customer insight, with centralised and detailed data delivering profit-generating insights into consumer behaviour;
- Greater creativity, with the freedom to build digital assets on multiple technologies;
- A robust, available and secure platform to protect its reputation against hackers.
When it comes to building brands in a digital world, Peter Williams, founder of Jack Wills, believes that the conventional advertising model is flawed, since it does not allow for two-way relationships. He says retailers today need to make the consumer believe they are the brand, and that is exactly what his firm has done with its Sessionaires, a bunch of customers who were given cameras and blogged for the summer on the brand’s behalf. “The idea that I’d hand my brand to a 21-year-old in Nantucket is scary but it validates the brand,” comments Williams. He explains that this has led to shoppers having an emotional relationship with the brand; instead of a t-shirt being just a t-shirt it’s a reminder of a ski trip or summer on the beach. “If relationships are two-way, why do brands think they are different?” he asks.
In the way that a child listens before they learn to speak, retailers are having to listen and learn before they can grow, innovate and enter the hearts of customers in new markets. Yes, be determined, but not so much that it tends to inflexibility. In the words of Nelson Mandela: “If you speak to a man in a language he understands, you speak to his head. If you speak to a man in his own language, you speak to his heart.”
