The end of standardization has been realized for many years now, and it is even more apparent today as companies compete to break into international markets. We are seeing this with ecommerce companies, sharing services, fashion houses, pharmaceutical companies and a host of other businesses. Achieving international market growth is not easy and involves constant development of product, brand and distribution strategy as well as awareness of the government’s role in the country and the country’s policies and plans.
By evaluating McDonald’s we can learn effective strategies on how to “think global, act local”. Over the years, McDonald’s has continued to innovate its menu and adapt its go-to market system, allowing it to maintain its leading global presence, retain its customers and uphold its reputation as the “Golden Arches”. Many companies are able to break into a new country or environment quickly but fail to tailor their products and services to the needs and demands of its local customers. Localization must be applied at every level of the business to achieve successful international market growth.
A comparison of the different McDonald’s website by country shows us the importance of brand consistency, language, design and variation of product offerings to accommodate local market conditions.
Most noticeable is the use of color to develop brand recognition and connect with local customers. The golden arches are displayed in the upper left corner of each of its websites and yellow is a commonly used color across all the sites. However, notice the McDonald’s French and German websites have replaced the iconic red background with green. This color change in 2009 was intended to aggressively communicate a more eco-friendly image to help the company connect with a pro “green” customer base in Europe. In this instance, color was a driver to reflect shared values between the business and its customers, suggesting that the original red and yellow logo colors were not well received in Europe and some separation from the U.S. home company image was necessary.
At a NYC Hacker Growth Event I attended last November, a former LinkedIn employee shared his experiences with launching LinkedIn abroad and how they came across the language factor. They found that using the local language (initially launched in English) on the website for that country led to increased engagement. Yes, this sounds obvious but many companies have failed to do this and just think how challenging it will be for young companies with blogs to accurately translate their posts across their different websites (God forbid a grammatically incorrect and Babblefish translation!).
Language is the medium of culture, allowing a group of individuals to share their knowledge, beliefs, values, attitudes, politics and religion. And because culture is largely tied to identity and influences our interactions (human-human and human-product interaction), decision-making and interests, language is key when building brand equity abroad. As my best friend Erica Baba beautifully summarized:
“If we look at culture on an individual basis, we can see the impact of one’s cultural ideologies and values on the way one lives and carries himself or herself. Everywhere we go, we bring with us our culture. You see, there are things we all choose to do or ways we choose to be because of the cultures we identify with and what they mean to us.”
Allowing an individual to visit a website in his or her own language gives the individual a sense of ownership of the site (most basic form of personalization), allows the individual to easily navigate the pages and explore features, and adds content to the products offered. As a result, the individual is more likely to return and a community is more easily formed, which is crucial for marketplaces as they expand abroad.
Beyond cross-cultural design and language, and equally as important, are localized products, services and payment options. Product adaptation and innovation enhance a company’s product offerings because it is tailored to local preferences and culture. For example, McDonald’s in India does not have beef or pork on its menu (a friend of mine found this out when trying to order a beef burger there…). And did you know that once a year in China, McDonald’s offers the Prosperity Burger in celebration of Chinese New Year? McDonald’s has also recently launched a new “rice based” menu in China this past year and The McCamembert, a burger with the French Camembert cheese, in France. The geographic variations to its menus demonstrate McDonald’s sensitivity and adaptability to local cultures and preferences.
Check out a few more menu options outside the U.S. here.
Product inventions aren’t always successes (Some of the stuff Taco Bell has introduced is total crap!) but more often than not they resonate with the local consumer. Product variations should also account for demographics, infrastructure and local trends (e.g. the international car market is particularly sensitive to age group, lifestyle and roads when designing and selling cars to a region).
In addition to menu innovation, McDonald’s has also continued to reinvent its space. The McCafe was introduced in Europe to adopt the European café lifestyle, capitalize on the growing coffee trend at the time and offer customers a new breakfast option. And just this past November, Starbucks introduced a new store concept in its Beijing store that was inspired by China’s one-child policy atmosphere and aimed to create a hub for the number of young people near the location.
From the product and service to the product packaging to the company website, the brand is continuously being built and communicated. The consumers’ knowledge, impression and experience with the product or service will determine the viability and sustainability of the business.
Localized payment methods can best be examined with Flipkart, India’s first billion-dollar internet startup, and Amazon. Both Flipkart and Amazon offer Cash on Delivery (COD)—the individual pays for the good upon delivery in cash. According to an article from May 2013, there are less than 20 million credit cards in circulation in India, representing a penetration rate of about 1.7% among the country’s 1.2 billion population. Additionally, approximately 70% of Flipkart’s transactions are currently completed using COD. This phenomenon is largely tied to Indian culture, which maintains a leery attitude towards non-cash transactions because of its intangible nature (the physical exchange of cash or gold is symbolic in Indian culture) and perceived lack of security and transparency. I believe the following excerpt from a research paper titled “Facilitating Global E-Commerce: A Comparison of Consumers’ Willingness to Disclose Personal Information Online in the U.S. and in India” also helps explain some of the resistance to credit adoption:
“In India, because of its collectivistic culture, consumers may be more willing to extend and preserve their relationship with an organization because it is seen as part of an extended community… Consequently, their desire to maintain the relationship is realized through sharing of personal information.”
Flipkart achieved fast adoption and significant growth in India because it offered services and payment methods that revolved around India’s transaction preferences. In one year, the company increased its customer base by more than ten times from 0.2 million to 2.08 million as well as increased its website visits from 40 million to 102 million. Amazon was quick to observe this and prepared to tap the attractive Indian ecommerce market, and since launching Amazon.in, it is also offering COD (although COD is currently only available for Amazon fulfilled products). Despite COD being the more expensive payment method for the company, Amazon is offering this payment option because it realizes user acquisition would not be possible without adapting to local methods of transaction in India.
Finally, awareness of the local government and legal regulations is extremely necessary as a company looks to expand beyond its domestic borders. There is significant operating risk from a government that is unsupportive of foreign businesses and that highly regulates marketing activities and distribution channels. Such is the case in India and China, in which the government becomes a priority customer to the firm.
Of course, this is easier said than done and it will take time. Localization will require not only an immense amount of research and capital at entry, but also throughout the existence of the business abroad as trends, values, beliefs, attitudes, politics, etc. in a country are ever-evolving. Remember, quick growth is not always good growth.