Posted by Hilka Klinkenberg on Wed, Nov 04, 2009 @ 08:15 PM
The dollar is down, and it may continue to decline even further…by how much depends any number of different models from the Organization for Economic Cooperation and Development (OECD), the Bank of Intercontinental Settlements (BIS), The International Monetary Fund (IMF), or the IntercontinentalExchange dollar index, among others. While that may be bad news for importers into the USA, it should present a golden opportunity for American exporters.
Unfortunately, that is not always the case. Over the years, I delivered many speeches on cultural issues to trade groups, and the response was always the same: “We don’t have the time or the money for that. We have to put all our 
resources into our marketing and advertising.” But how can you create a marketing plan if you don’t know your market? You can’t do what you always did and expect the same results you always got once you enter another culture.
Before you even consider going into new markets, there are any number of issues to consider:
- Is there actually a market for your product? Price alone is not the determinant. Cultural values and tastes can be the deciding factor in whether your product…and your marketing/advertising campaign…will be successful.
- Once you have determined that your product or service is a good fit, are there any changes that need to be made, for example in sizing for the Asian market or packaging and labeling for the Canadian market? Canadian labeling laws have deterred many American companies from entering the French-Canadian market.
- What are the barriers to entry in that market…tariffs, government regulations, infrastructure and transportation, climate, political or economic issues?
- Do you need a local ‘partner’ or a local representative? If so, what is involved in finding the right contact, making the connections and developing a profitable relationship?
- How will you be paid and how can you protect yourself from further fluctuations in the exchange rate?
Some of these points are obvious; some may be handled by your lawyer or accountant…or even the Department of Commerce. It is most often the little things, the cultural things, though, that derail what should be a lucrative export venture. Jack Brown’s article on the little mistakes major advertisers have made in new markets is a beginning. Watch for future whitepapers on some of the more challenging cultural risk issues exporters confront in their marketing and advertising plans.
Posted by Sue Perlmutter on Sun, Aug 30, 2009 @ 05:33 PM
In his posting on the many cultural challenges of global marketing teams, as well as international organizations in general, Jack Brown discusses Wal-Mart's rocky path to worldwide success. He attributes this in large part to the careful attention it is now paying to local markets on a deep level after years of what he rightfully terms 'missteps.' Companies are increasingly finding that a superficial nod to local practices and preferences is not nearly enough. Rather, understanding the most fundamental cultural tenets, ethics and principles of one's customers is what will bring success for the long term, avoiding costly gaffes and errors along the way. In its rush to bulldoze into emerging markets, Wal-Mart certainly learned this the hard -- and some would argue the American -- way.
Now, it seems that Carrefour, second in command in the retail market, is also having to pull back and consider culture as it re-examines its image and business model. This time, though, it is not the buying habits and idiosyncrasies of foreign cultures but rather its own French terrain under scrutiny. With 43% of Carrefour's market on domestic soil*, and nearly a million customers in Carrefour hypermarkets daily*, this seems imperative in light of the company's marked drop in earnings and gloomy forecast ahead. Its perception as a premium retailer is now being re-examined, along with the image and function of French hypermarkets themselves. Its new CEO (not French but Swedish, interesting in itself) is said to be focusing much more on discounted prices, in-store and outside promotions, private label products and loyalty cards, in very much the same way as Tesco, its longtime rival, has done with considerable success.
This re-examination of 'premiumization' is not limited to the hypermarket sector alone. L'Oréal and Diageo have both been in the news lately with reports of disappointing earnings and resulting strategies to, like Carrefour, manage the fallout from the current economic downturn through new price point considerations and possible re-branding. Similarly, on a national level, Japan has, in response to economic hard times, been experiencing a seismic shift in consumer habits, away from its legendary emphasis on quality with more focus now on price and value. This surely poses a major threat to brand loyalty, if not to global business overall. Wal-Mart has, to its credit and following countless blunders, continued to rise to the challenges of today's uncertain economy. Whether Carrefour and other global giants will be able to do the same remains a formidable question.
*Wall Street Journal, August 29 - 30, 2009: "Carrefour Posts Loss on Discounting"
*http://www.ft.com/cms/s/0/6390eb24-9432-11de- 9c57-00144feabdc0.html