Various strategies for localization should be employed when a company wants to go global. But the question is, which is the better marketing strategy for business when they want to go global? Is it localization or standardization? Both have their own individual merits, but what would be the most effective? Looking for a balance between the two could be a dilemma for many companies that want to enter the global market and their global marketing strategy plays a big role in arriving at an effective decision.
In the economic perspective, it seems that standardization is the answer when you take a look at the cost/efficiency factors. Here are some of the reasons:
- Cost becomes minimal since the same service and product configuration can be used globally.
- Standardization could lead to one corporate identity and the development of one unified brand that could help in global brand recognition thus bringing a distinct advantage over competitors.
- The core product line could be streamlined, minimizing the production of several localized brands. Therefore the company could have consistent marketing and allocate their resources better, which leads to higher efficiencies and profits.
With standardization, the company could have its global marketing program centralized thereby minimizing the control, management and coordination of local subsidiaries or branches for their local marketing strategy.
But according to business experiences and research done by companies, it seems that standardization strategy is not the most effective method to meet the demands of the international market. This is due largely to the diversity of the international market where economic development, conditions for product usage, the cultures, legal and political systems as well as the physical environments are all different.
Localization, which is also called adaptation strategy, takes into consideration the integral diversity that the international markets possess and treats each one a unique cultural being whose behaviors and values are molded by their distinct culture. The strategy for localization is based on understanding the specific requirement and consumer preferences of the local consumers. From there, the company formulates the business strategies and marketing mix that will best serve the needs of the target consumers.
Long before the advent of market globalization, there have been numerous international companies that previously subscribed to standardized marketing communications and products that have caused indignation in foreign markets. They suffered because their messages, which were not localized, were misinterpreted in several countries.
The need for localization
Localization, when done properly can actually save millions for a company because insensitive marketing messages fielded in foreign markets could be very costly. Just imagine how much potential market earnings would be lost if local consumers boycott your brand because your marketing message offended them. Brand repositioning requires plenty of money. But what will happen if the product boycott becomes permanent?
But it is also crucial to localize brand names without brand identity being compromised. In the Chinese market for example, Coca-Cola, in local phonetics is translated as ko-kä-kö-la. However, the actual meaning of this in Chinese is “bite a wax tadpole.” Coca-Cola had to change their product name to something that is more consumer-friendly for the Chinese market, rebranding it by using Chinese characters to localize their logo, which translates to “delicious, able to enjoy.” Glade, was changed to Gleid for the Brazilian market so that the brand name will still be pronounced in the same way. This was because Portuguese is spoken in Brazil and they pronounce the brand name as “glad.”