How to Drive International Expansion Without Escalating Complexity

Customise or standardise? This is the question! Maybe THE most important one whenever a brand starts its international expansion!

Depending on who you ask, you will get 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 – well the answer will be quite the opposite!

They will come up with a long list of issues that need to be addressed before you can successfully launch into an international expansion and you know what? They are all RIGHT!

The bad news is that there is no easy 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 you to make the brand, your processes and organisation stronger! Not only for international expansion but for your home market as well!

Do the Maths!

You all know well enough by now that each market needs to be explored – just like you did when starting the brand in your home market (which might be a long time ago!). My friend Isabell Guidastri recently published a very helpful post about structure and methodology of market entry studies. I highly recommend reading it if you’re thinking about international expansion.

Converse Shanghai (Photo: Heike Blank)

Converse Shanghai (Photo: Heike Blank)

Surprisingly, there are still more brands out there than not, who think their business model, brand positioning and UVP work just as well in international markets as they do in their home market! In my experience the pure standardization 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, then let’s look into the areas that may or may not need adjustment when conquering a new market:

  1. Brand positioning and UVP (unique value proposition)
  2. Products/assortment
  3. Distribution – channel mix and distribution model
  4. Store format/customer specification
  5. Supply chain performance
  6. Logistics
  7. KPI expectations and evaluation

In today’s post we will have a closer look into brand positioning and UVP and its transition through international expansion. In the coming weeks, stay tuned and the remaining points 2 to 7 will also be explored in further posts.

Brand Positioning and UVP Example 1: 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 which did last for some time. Gap’s basic assortment however – an essential element of its USP – 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 had to close all German stores by the end of 2005 and disappeared from the German market for almost 10 years.

Critically reviewing their USP and brand positioning in a price conscious, highly competitive market like Germany would have been helpful. It would not only have saved the company a lot of money wasted in this German adventure. It would also have helped them in their home market where they faced similar problems a few years later.

Gap store in Orlando (Photo: Heike Blank)

Gap store in Orlando (Photo: Heike Blank)

Brand Positioning and UVP Example 2: Silver Agers Fitting Expert

If your UVP is to provide the best fits for female silver agers – chances are high that you will fail in India or other Asian markets due to 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 Germany is 46.8, India 27.6, China 37.1. Thus, the share of silver agers in the total population is relatively low.
  • Asian people are generally smaller than Europeans. Indians are the tallest in Asia but Indian women are still 9 cm smaller than German women. Going to China this increases to 11 cm.
  • Body proportions are generally different to Europeans (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. For more details on body types see the graphic below and see here.
  • And not to forget that body proportions change significantly when people grow older – everywhere!
Body Types (Graphic: Stephanie Grupe)

Body Types (Graphic: Stephanie Grupe)

To cut a long story short, your UVP simply does not work the same way in a market dominated by young Asian females! I could go on with numerous examples about different consumer specifics, preferences, behaviours and taste in different countries. The big question though is will those differences have an effect on your brand positioning and UVP when starting international expansion and if so, to what extent?

How to Find Out What’s Relevant For Your Brand?

  • Again, do the maths, review the structure and methodology – as described by Isabell in her recent post.
  • Verify your brand positioning and UVP in your home market first! I know this sounds easy, but in 9 out of 10 cases, top management has either significantly different or no answers 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. (The best way of doing this is via focus groups).
  • Find out how this differs from your main competitors and from a ‘hypothetical ideal’ store.
  • Analyse how different these attributes are from your intended brand image, UVP and positioning.
  • 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 – i.e. those in which you most likely will be successful!
  • 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. You might add some red accents in your store look, your window decoration, your assortment or your advertising in China as Red is the color for luck and wealth there. 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 consumer relationship management.
  • 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 do BEFORE starting international expansion.

Marc O'Polo window Shanghai (Photo: Heike Blank)

Marc O’Polo window Shanghai (Photo: Heike Blank)

What Are the Next Steps in International Expansion?

Test! Learn! Adjust!

I know we all would like to be a mentalist when it comes to international expansion. But unfortunately, you will not really know until 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 roll-it-out afterwards! Most international adventures fail because of roll outs that are too aggressive and made too early! I know this is tough as international partners very often are accustomed to higher expansion speed and they often push for a faster rollout. But if you negotiate this upfront and effectively manage expectations, in the end it will pay off for both of you!


About the Author 

Heike Blank has worked for big organisations such as VF Europe and s.Oliver but also for niche brands such as Ecko Unltd. and Zoo York in top executive positions. Opening and managing own retail, partner stores, concessions and shop-in-shops in 23 countries in Europe, Middle East and Asia gave her a deep understanding about the importance of a brand-specific balance between customizing and standardizing the business model when conquering a new market. Please feel free to email her for further discussion on these topics. Or for more about her see here.

 

 

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