Customise or standardise? That’s perhaps the most important question a brand at the beginning of its international expansion has to answer.
Depending on who you ask, you will get very different answers. If you ask your brand and marketing management, they will vote for as much standardisation as possible. If you ask your sales force, the answer will be quite the opposite.
And both will come up with a long list of issues that need to be addressed before you can successfully launch your international expansion.
The bad news is that there is no one-size-fits-all approach! The good news, however, is that when you find the appropriate answer, specific to your individual business model, it will help strengthen your brand, your processes and your organisation – not only for international expansion but for your home market as well.
Do the Maths!
Each market needs to be explored, just like you did when starting the brand in your home market. To that effect, I recommend this still very useful article about the structure and methodology of market entry studies.
Surprisingly, there are still brands out there that think their business model, brand positioning and UVP will work just as well in international markets as they do in their home market. In my experience, the pure standardisation approach does not work for international expansion unless:
- You are a brand with a truly innovative product,
- You have sufficient financial power to create your own market (e.g. Starbucks or Nespresso),
- You face a relatively low risk of getting copied.
If none of the above apply to you, the following areas may need some adjustment when conquering a new market:
- Brand positioning and UVP (unique value proposition)
- Products and assortment
- Distribution – channel mix and distribution model
- Store format and customer specification
- Supply chain performance
- KPI expectations and evaluation
This article takes a closer look into the first of these areas. How does a brand’s positioning and UVP transition through an international expansion?
Brand Positioning and UVP Example 1: The Gap
In the 90s, Gap was dominating America’s apparel trends with its American casual look. Gap’s chinos and logo sweats became a uniform for Gen X. The idea of ‘Casual Friday’ was inspired by the Gap look. Gaps USP was clearly to dress Gen X with a casual look that was American, new, comfortable and hip.
Gap’s German adventure from the late 90s until 2004 was less fortunate. For German consumers, the American casual look was a fashion trend that lasted for some time. Gap’s basic assortment, an essential element of its USP, however, was just too basic for German consumers.
Gap faced a level of competition in Europe that was a lot more diverse, faster and more affordable than in the US. Basic white tees, logo sweats, chinos and basic denim were part of the assortment of almost any fashion brand offering casual wear. As a result, Gap disappeared from German high streets by the end of 2005.
Critically reviewing their USP and brand positioning in a price conscious, highly competitive market like Germany would have been crucial. It would not only have saved the company a lot of money wasted in this international expansion adventure. It would also have helped them in their home market where they began to face similar problems a few years later.
Brand Positioning and UVP Example 2: Silver Agers Fitting Expert
If your UVP is to provide the best fits for women beyond their 50ies, chances are high that you will fail in India and other Asian markets for a few simple reasons:
- Nearly all Asian markets are very young compared to western European markets. Japan, Hong Kong, Singapore and South Korea are the few exceptions. The median age in India is 28, and in China 37. Thus, the share of silver aged women consumers is relatively low.
- Asian people are generally smaller than Europeans. Indians are the tallest in Asia but on average, Indian women are still 9 cm smaller than for example German women. For China, this difference increases to 11 cm.
- Body proportions are different than in Europe (waist-hip ratio, torso-leg length ratio, arm length-torso ratio and breast-back ratio).
- Body types between countries differ enormously. In Germany, UK and Belgium A, O and H body types are dominant, while the majority of Asian women have H, A or X body types.
To cut a long story short, a UVP offering the best possible clothing fit for silver agers simply will not work the same way in a market dominated by young Asian women compared to a western European market.
I could go on with numerous examples about different consumer specifics, preferences, behaviours and tastes in different countries. The big question is how and to what extent those differences will affect your brand positioning and UVP when embarking on international expansion.
How to Assess What’s Relevant For Your Brand?
- Verify your brand positioning and UVP in your home market first. I know this sounds obvious, but in 9 out of 10 cases, each board member has either significantly different or no clear answer when asked about the UVP of their brand.
- Identify the core attributes your home market consumers use to describe your brand and their experience when shopping the brand.
- Analyse how these attributes differ from your intended brand image, UVP and positioning.
- Identify the products that contribute to this brand image and get a clear understanding why they do so.
- Review your brand development strategy and decide whether to adapt your target positioning and UVP – not only for starting your international expansion but also for your home market.
- Verify the other elements of your business model and make sure they support the targeted brand positioning and UVP.
- Identify the markets in which demographics, culture, competition, consumer behaviours and preferences are closest to your home market. That is, the markets in which you are most likely to succeed in your international expansion.
- Define your individual room for manoeuvrability for each individual market without jeopardizing your brand image and UVP! In India this might involve a more premium store look and feel to meet the price positioning and consumer expectations. In Russia this might mean a higher share of decorated items and a more feminine look and feel. In the Emirates it might involve much better service and a more personal and intense costumer relationship management. In China you might add some red accents to your store look and feel or your advertising as red represents luck and wealth.
- Find local experts who know the market and who are able to assess how local market differences will affect your brand positioning and UVP.
That’s all you can realistically do before starting your international expansion.
What Are the Next Steps in International Expansion?
Test! Learn! Adjust! I know we all wish we had psychic abilities when it comes to planning for international expansion. But unfortunately, you will only really know what works when you have tested it. Run a test and give yourself, your partner and your organisation time to learn. Fine tune and adjust your business model and gradually roll it out afterwards.
Most international adventures fail because of roll outs that are too aggressive and too early. This is tricky, as international partners are often accustomed to higher expansion speed and push for a fast rollout. But if you negotiate this upfront and effectively manage expectations, it will pay off for both of you in the end!
As mentioned earlier – there is no one-size-fits-all answer when it comes to international expansion. But what might be true for each and every brand is: “As little customisation as needed, as much standardisation as possible”!
About the Author:
Heike Blank has worked for big organizations such as VF Europe and s.Oliver but also for niche brands such as Ecko Unltd. and Zoo York in top executive positions. Her extensive experience with opening and managing own retail, partner stores, concessions and shop-in-shops in 23 countries in Europe, the Middle East and Asia make her an expert in expansion. Read more of her work here and connect with her on LinkedIn.