Localization Is the Key to Unlocking Relevance and Driving Growth

Lost in Translation

In today’s economy, nothing matters more than a “customer first” mindset. But even the most customer-obsessed companies falter when they fail to translate their global purpose into localized efforts. Take, for example, Marks & Spencer, who announced earlier this year that they would halt online sales in China – just 2 years after also closing down their brick and mortar stores in the market – due to disappointing sales because they failed to adapt to the tastes of Chinese consumers.

The importance of localization seems so evident that it’s hard to explain why so many companies undervalue it. To some extent, the tendency to value globalization over localization stems from the historical emphasis brands have placed on centralization and consistency. But, while a certain degree of consistency is critical for all brands and does bring substantial business efficiencies, brands that tend to be most successful are those that manage to balance the desire for global standards with the need for local flexibility. Brands that are dynamic and ‘living’ versus static and confined.

It’s a strategy that is becoming increasingly important for global companies. “Localization of your brand proposition is ever more important in today’s digitalized world, where consumers expect to be able to cherry-pick and create their personalized value ecosystem,” says Akira Mitsumasu, VP of products, planning and services at Japan Airlines. “Having local knowledge and understanding of how to fit into that value ecosystem is essential to stay relevant.”

How localization fuels relevance

At Prophet, we have identified this obsessive focus on customers and their needs as one of the key pillars of building brand relevance and driving growth. Our research shows that the strongest brands around the world are those that manage to be relentlessly relevant. Everything these brands invest in, create and bring to market is designed to meet important needs in people’s lives. That’s what makes them indispensable.

When we look at companies that perform well on our Brand Relevance Index, including Nike, Amazon and Samsung, we can see how they use localization as a strategic opportunity for brands. Done right, it provides a potential lever for growth in an era of escalating disruption. It creates more relevance to more people in more markets.

“If you want to be customer-centric, you have to localize,” Li Run, Senior brand director at TCL, recently told us. “Only by understanding consumer needs and providing products and services that meet their local needs and values, can a brand achieve the deepest level of connection – getting beyond acceptance and towards being loved by local consumers.”

While localization is a strategic opportunity for brands everywhere, it is particularly critical in Asia. Growth here is expected to continue to drive the global economy for years to come. As multinationals seek growth in Asia’s diverse economies, localizing their brand and marketing is emerging as a core strategic component.

But it isn’t easy. “Very often when a company comes to Asia with growth plans, it first needs to develop an authentic narrative for the Chinese market,” says Charles Ferguson, Group Chief Commercial Officer at Tricor. “But the mindset and behavior of the Chinese can be very different.”

“Only by understanding consumer needs and providing products and services that meet their local needs and values, can a brand achieve the deepest level of connection – getting beyond acceptance and towards being loved by local consumers.”

Multinationals aren’t the only ones wrestling to find the best approach. More Asian brands are looking beyond their domestic markets for the next wave of growth, and localization will be vital if they are to replicate success at home in other regions.

This is a significant challenge in a part of the world where brand-building is still in its relative infancy. In the consumer electronics industry in China, for example, Oppo and Vivo have been successful with their strategy of investing colossal sums in celebrity endorsements and product placement. But that is unlikely to be sustainable as they expand into new markets. As a result, One Plus (in which Oppo is an investor) have taken a new approach for the Indian smartphone market, using guerilla retail and messaging around ‘the speed you need’ which resonates with Indian consumers desire for technical excellence. This has helped them capture share in the premium tier.

Unlock the power of localization

While localization has the potential to increase brand relevance and accelerate growth, the best approach will look different for every company and every market. Here are the four essential questions senior management and marketers need to ask:

Do I need to localize my brand?

Very often the culture, value system or competitive landscape mean that the benefits you want to stand for are not relevant or even have different meaning. For example, investment company T. Rowe Price uses the tagline “Invest with Confidence” around the world. But the meaning of confidence varies: In Japan, people feel confident when reassured everything is as it should be, while in Hong Kong, confidence comes from access to exclusive information. So how the company communicates and delivers on the same brand promise is tailored in these markets.

Who should I localize for?

In an ideal world, companies might localize certain aspects in all markets, but that’s often not practical. Prioritizing which specific markets, and which consumer segments within those markets, warrant a localized approach is vital. But, are you clear on who you are targeting in different regions? Do you fully understand the attitudinal differences across markets and the implications for your brand? Developing a robust fact-base about the consumer to identify any potential differences is critical.

Budweiser is one example of a global brand that has managed to use a similar brand positioning but targeting a different audience in a way that fits their lifestyle. Their target in China is younger and more premium, so they have devised fresh retail and digital activations tailored to this audience to draw them into the brand experience beyond the product itself.

To what extent do I localize?

There are so many elements that make up your brand strategy and marketing mix. It is hard for companies to know how much change is right. Should you alter your brand promise, product names and logos, the product itself, distribution channels, or simply modify the messaging or visuals? The key is to identify the levers that most impact relevance in the category and market.

At Marriott, for example, the brand’s foundations – its positioning, promise and values – “must be globally consistent,” says Mike Fulkerson, VP, brand and marketing, Asia Pacific. “Keeping those foundational elements is important to meeting the needs of consumers around the world. We are most focused on localizing how we communicate the brands as well as more specific elements of the guest experience, such as food and beverage.”

How can I deliver?

Finally, it’s important to be realistic about the capabilities you have both in-house and through your network of partners, to bring a localized strategy to life in an authentic way. “Having a management team that understands the value of both cultures is very important,” says John Kim, CEO at Burger King Japan. “Look for people with sensitivity, as well as personal depth and maturity, people who can listen and comprehend the ‘why’ behind what people are saying and to decode the underlying values.”