When companies start to extend their branches outward to reach new markets, the first thing they are challenged with is evaluating the degree to which their business functions should change. Approaching new markets by blindly applying the same true-and-tested domestic strategies is not always plausible as too many variables in the product-market fit are altered. Changes in the legal, political, and economic environment, and the differences in consumer behavior, cultural norms, and competitive landscape all have meaningful influences on the decisions that a company should make when expanding globally.

As the interface between organizations and consumers, marketing is at the forefront of it all and it’s where local expertise is needed the most, from the market selection process to go to market strategy and beyond.

Many functions of a global business such as research and development, manufacturing, and finance can be centrally coordinated to a great extent as their parameters are easier to measure and control. However, marketing is much more nuanced and difficult to quantify. Each element of the marketing mix may need to adapt to the local market to some degree to adjust the company’s value proposition to the host market’s needs and wants so that the new product-market fit can be achieved. 

Product

At the center of the internationalization process lies the product itself. The strategy that the company adopts with regard to the product may vary depending on a range of factors such as the industry of operation, customer buying habits, levels of disposable income, cultural and religious background, and so on. 

Some industries by nature are less culture-bound wherein cross-cultural marketing is a much smoother experience and product alterations are limited to and based on more traditional principles of market segmentation such as demographics and consumer buying power. The technology sector generally falls into this category as tech products are primarily marketed for their technical features which rarely have varying meaning across different cultural contexts. 

Some industries, on the other end of the spectrum, are closely bound to the cultural roots of society and may need to significantly adapt to meet the requirements of the host market. The food industry is a prime example of this as cuisines and tastes vastly differ around the world and many regions have religious dietary restrictions that may force companies to amend their products accordingly.

Promotion

Promotion is the component that binds the whole marketing mix together and it’s where the most care must be given when entering a new market. All the marketing communication and promotional activities in various formats and channels define and frame the positioning of the product and the company, therefore it’s what the customer base notices the most.

Although the proliferation of the internet over the last two decades has served as a cultural melting pot that has increasingly removed the language and cultural barriers, it’s not safe to assume that differences don’t exist. On the contrary, businesses should assume cultural complexity and do their due diligence to become relevant in a new market. Cultures have different aspirations, senses of humor, expectations, values, perceptions, ethical systems, behaviors, and trends. Falling into the traps of stereotypes and other misconceptions can be gravely costly. 

Including trusted local experts and keeping in touch with developments in each region is the safest and most effective approach to global marketing. The thought of the potential costs and complications may deter some businesses from acquiring local expertise but in today’s global business environment, it’s a necessity. And if you choose carefully, you can have it both ways. This top Orange County, CA marketing agency, for example, has multiple locations around the world and can help coordinate your international marketing efforts.

Based on a number of factors, companies may opt to (1) offer the same standardized product and promotion, (2) offer the same product but adapt promotion to local needs, (3) change the product in line with local requirements and market conditions, (4) change both the product and promotion to meet the customer wants and needs in the host market, or (5) develop a new product from the ground up for the target market.

Pricing

There are so many variables that impact the pricing strategy and making decisions based on detailed and accurate information is crucial for the success of the market entry. Cost of transport, currency exchange rate, taxation, tariffs, and financing sources are all variables that companies need to take into account. 

Moreover, pricing is also greatly influenced by the company’s brand equity in the market. A well-established, highly-regarded brand in one market may be new and irrelevant in another. The difference in the perceived value of the same brand in different markets often can lead to wide price variations. 

Competitive pressures also play an important role. The competitive advantages that have helped a company dominate its home market may lose their potency in the new ones. Advantages with regards to human resources, supply chain and logistics, cost competitiveness, and differentiation are all may take a blow as the competitive environment shifts.