Localization vs. Straightforward Import/Export

If you want to expand your product or service line
internationally, be prepared to localize it, to give
it the best possible chance of selling.

IT’S AMAZING TO SEE how uniquely different countries in the world are. People speak different languages, love totally different music and art, wear clothes that are unbelievably different in styles and colors, bring up their children according a huge range of values and beliefs, and cook with the broadest range of tastes, techniques and ingredients you can imagine. So as an entrepreneur, how do you market products or services to people so uniquely different? You have to drill down to the lowest common denominator and start your marketing calculus there (and for the record, this is why even if you are a high-tech, gung-ho business enthusiast, at least one Humanities or Cultural Awareness class won’t kill you).

Basic or niche?

What do all people like? They like to eat. They like to drink. They like to laugh and smile. They like to look and feel good. They like to feel loved. They like to feel smart. They like to feel needed and uplifted or improved. They love their children and want them to be happy and to succeed. When we start listing these traits that people like to have and be, it’s not so hard to think about concepts that appeal to almost all people. If your offering falls into that realm, you’re in luck. You still may have work to do to sell them abroad, but you are closer to fulfilling basic needs and that’s a bonus.

But what if your product or service is extremely niche (say, it’s powder that prevents foot odor, or it’s an adventure travel agency)? Right away you can rule out countries where bare feet or sandals are the standard, or where the local economy will not support your valuable booking service.

So let’s assume you’ve already designed a product or service for one market, and you think it has a chance of succeeding in another market. Now that’s a relevant and realistic problem!

Change for the good

Well, you have two options, which fortunately you can take in two stages. You can import your product as is (or nearly as is) to markets that you believe will easily accept and purchase it. For instance, if you have a US-based children’s rocking horse company and you do well in the United States, you could very likely see a decent amount of success marketing it as is to English-language markets like England, Canada, Australia and New Zealand (though your rocking horses’ names might vary with the market and your marketing and packaging will need Anglicizing). Then, with some new packaging and translation, you could add profits in non-English speaking Western Europe as well. Eventually, however, you’ll likely reach a point where you can’t profitably market your product to other markets as is, due to cultural constraints.

At that point, if your research supports your appetite for risk, you can move into your second option, localization. As we have seen, localization is simply adapting your product or service to appeal to new markets. The adaptation could include adjusting the product or service’s look, positioning, target audience, etc. to attune to language, cultural, political, or legal characteristics. Perhaps if you change the rocking horse to a rocking camel or giraffe, you can open entirely new markets. Or maybe you need to add a little story book to your rocking creature’s package, to explain the notion of rocking critters and engage parents and children in a new tradition. As you go through this process, look for windfall bonuses: Your localization process could very possibly yield products or services that will be uniquely attractive back in your home market. Look for chances to check that out back home, once you have some localized product to test. Those rocking camels and giraffes might become the latest craze.

Cautious optimism and pragmatic realism

Be careful not to assume your dream scenario of sales abroad will play out in reality, localized or not. Chances are, if you produce a perfume made from rattlesnake venom, you will have to make some adjustments to your perfume’s chemical composition before you can market it all over the world. There just isn’t enough venom to go around. Make those adjustments, however, and your perfume can now be marketed elsewhere. Or, as a more practical example, if you have an internet-based business, but your website can only be viewed in Arabic, you’ll want to translate your website for other global languages to attract more business internationally.

Here’s a real-world example: Back in the 1990s, Land Rover imported the Defender sport utility vehicle to the United States. Its rugged design, powerful engine, and unmatched off-road capability naturally (or ironically) appealed to urban-dwelling, predominantly highway-traveling Americans. Bottom line: The Defender’s success was awesome. However, in 1998 the US Department of Transportation changed certain regulations that would have required extensive adjustments to the Defender’s production. After conducting a cost-benefit analysis, Land Rover decided that it simply wasn’t cost-effective to localize and re-tool the Defender to meet the new United States regulations. Sadly, as a result, 1997 was the last model year of the Defender in the United States. The moral of the story is that sometimes, localization just isn’t worth the cost, even though the product might sell reasonably well.

Where to start the localization process

If you want to attract more customers internationally, you will probably eventually have to localize to some degree. The greatest drawback to localization is the cost. It costs money to adapt anything. To rebuild and host a website in another language costs money. To adapt marketing and product packaging in another language costs money. Even if you plan to run the cost-benefit analysis and conduct a regional market test yourself, that takes time, and time costs money! However, there are right and wrong ways to do everything, including localization.

You may recall that in our Starting a Business book, we point out that the safest way to start a new business is to “moonlight”, to start building a new business slowly and inexpensively at night or on the weekends, while you still have your current job. This alleviates much of the risk you would face if you just quit your job, took out loans, and dove right into the deep end of entrepreneurship.

The safest way to initiate a localization plan is very similar to moonlighting. You start the research process yourself and expand into other markets gradually, starting with markets that are most similar to your own. For example, if you own a company that is headquartered in upstate New York that manufactures and installs custom residential vertical blinds, and you decide you want to expand internationally, a logical and seamless first step would obviously be Yemen, due to all the cultural similarities. Just kidding, try Canada. Canada is a common first step for a United States company looking to dip a toe into the international business arena, due to the multitude of cultural similarities Americans share with Canadians. If you are sensitive to the complex issues of English and French markets within Canada, you have an even greater advantage.

Western European entrepreneurs have similar advantages in expanding within Europe, due to the close geographical proximity of many countries, and the high percentage of multi-lingual citizens in them. Additionally, while cultures differ among the European countries, people generally share an awareness and understanding of diverse cultures there. Still, history, language, long-term ties and animosities, stereotypes and a host of other factors make this a fascinating but challenging area in which to go international.

When to stop?

Depending on your offering, by embracing localization, you might be able to eventually market your product or service to the entire world. The real question is: Is it worth it? It’s impressive if you can say that you sell your product on every continent (except Antarctica). But when it boils down to the bottom-line profit, you may find that once you get to a certain level of global expansion, it may not be worth the expense and trouble to adapt a product or service for those remaining, markedly different cultures, or for cultures in which your offering is a non-starter. Don’t take that personally. Let the facts direct your expansion and play to win.

S.G.