As much as expanding your business globally is important, you have to make sure you conquer the local market first
Globalization has really transformed how we view our world. Globalization, whether you believe it to be good or bad, has turned the entire world into a single market that people can transact in easily, quickly and cheaply. For many, it's more profitable to run a global business than a national business.
As much as expanding your business globally is important, you have to make sure you conquer the local market first. Global success is not something you just wake up to; it requires strategies, opportunism and a bit of luck too.
[si_guide_block id="105177" title="Download our Free Resource – Essential guide to effective translation" description="the opportunities for improved businesses outcomes from effective translation of their digital assets are compelling, particularly with the significant growth in smartphone use worldwide."/
Reasons why companies venture into global markets
First and foremost, the main reason most companies develop their business to cover global markets is to expand their sales. As much you may want to remain loyal to your original base of operations, venturing into other markets can prove to be highly profitable.
This doesn't mean that a company must have saturated its local market before expanding overseas - although that would be nice! Sometimes a company is struggling in its local market, or it sees an opportunity for quicker or more sustained sales growth in a different region.
Secondly, you may be looking to move into a global market in order to diversify your customer base. Strategically, diversifying your customer base builds resilience against a drop in sales from a particular demographic that you are focused on. A strategy that helps mitigate risk is always a good thing.
With such unstable political and economic times upon us, you need to identify if (and where) your business has an over-dependence on a particular region or demographic. If this is the case, then you are at risk of your business being undermined quickly and irreparably due to an over-reliance on one particular customer type.
Thirdly, globalization will help you reduce your company's dependency on the local market. A company like Coca-Cola is global, which means even if they lose their local market in America, they can still go on with business in the other markets. An extreme example, perhaps, but you get the idea.
But you don't need to be a global brand the size of Coca-Cola to withstand the loss of your local market. Let’s look at the other extreme, if you are a local business with a customer base from your local town then you need to weigh up the pros and cons of remaining focused on this customer base, instead of moving into one that's further afield.
A by-product of expanding your business into a new market or even globally is learning how to compete with other global companies, which in turn will help your business to grow and evolve.
Venturing into global markets is one thing, succeeding is a whole other story. Let's take a look at techniques companies have used in the past that have proven to be successful.
Global markets are not similar. Different cultures greatly affect how markets will treat the businesses that transact within it. The only way to penetrate a new market is to learn about the local culture, use this knowledge to tailer your business to that culture and most importantly, remain consistent. Cultural understanding can be the difference between succeeding and failing in business.
How well does your message translate to the locals of that new market. A brand like Red Bull has become so successful that most people have forgotten its European. They remain consistent wherever they venture.
If you get it wrong, your reputation can be take months, if not years, to rebuild in a positive way before you have even made one sale.
Cultural nuances are critical – but so is the application of common sense and decency. Dolce & Gabana’s recent woes in China are testament to why the local market is the most important thing, not the brand or the need to make an impact.
It is common knowledge that you should never venture blindly into whatever prospect you are undertaking. Before expanding your business globally, you have to be fully aware of what to expect, the risks involved and how best to seize the opportunities in place.
Airbnb laid out a solid plan on how best to penetrate the European market and it paid off. They mainly used social media platforms to attract new customers by enticing them with great location shots and inciting a feeling of wanderlust.
This imagery-led strategy worked well for the brand, especially when it started to make the most of user-generated content.
Adapting to Local Preferences
As much as you'd want your company to remain consistent, you have to adapt to the different preferences people have. Maybe the message you deliver elsewhere is offensive to another market or perhaps it doesn't resonate in the same way.
In these instances, try using the local culture as part of your advertising strategy. Use their local language to your favour by adapting your commercials to make it feel as though you're offering a local product. Knowing your customers in their local markets is key to success.
Nike have sponsorships all over the world, which have profited the company immensely. They have released brands that are based on the local markets they have ventured in, showing that adapting to the local culture can be really beneficial for a business.
Spotlight: How Netflix has successfully expanded their market to Europe and other markets
Netflix is the leading streaming service in the world with a profit of about $6 billion annually. They gained huge profits from the US alone and so they decided to venture into Europe and Africa, which has really paid off.
The language barrier was an issue but after introducing subtitles for all their shows and even producing local content for the countries they are in, this was easily tackled.
However, there is one major problem they are currently facing, which is Virtual Private Networks. VPNs circumvent server networks allowing users to access information they are supposed to pay for. Netflix began a crackdown on commonly-used VPNs around the world. While many popular VPNs are able to circumvent Netflix’s US-only content, others - such as F Secure Freedome - do not allow users to watch Netflix.
Through all this, Netflix has managed to grow its worldwide subscriber list to over a whooping a 100 million.
These are the kind of risks companies can expect when venturing into global markets. But when a business takes a step back, assesses what it will take to enter a new market and balance the risks against the rewards of business growth by doing it well, then the world really is your oyster.