Brand image has always played a major role in establishing expectations and thresholds in home market success.  As corporations rely on international revenues to meet sales targets there is a temptation to push strong-performing domestic products in to each new market as quickly as possible.  While this practice is consistent across industry verticals it has a wide variance of success. Why is that?

What sets successful global organizations apart from those companies who struggle to gain an international foothold?

Quite simply, the successful organizations manage their product portfolio strategically by understanding where each product fits in the context of both local and global brand. Global companies know that active management of brand on both global and local levels simultaneously allow them to know what products fit into which markets. There are three key factors to your brand successfully in any global market:

• Understanding how your brand is currently positioned in current markets
• Understanding how your competition is currently positioned in those same markets
• Understanding the specific, local needs of consumers in those markets

While each of these factors plays a major role in determining success, each is dependent on proper execution of the others to be pivotal. The three are intertwined and perfect execution of any one will be for nothing if the others are not executed well. Poor execution here will lead to potentially expensive and irreversible damage to your company’s brand across global markets.

Understand how your brand is positioned

Understanding you current position in global markets, versus how you are seen in your home market is the vital first step. This is harder than it sounds for small to medium sized companies because they think and act like a domestic company because their ‘brain-trust’ is largely held in a small number of domestic head offices and therefore thinks like a domestic organization.

For organizations looking to move in to a new market, thorough examination of performance in similar markets will be important.  If you plan on growing organically, you will need to investigate the brand recognition in the new market, using that feedback to determine your strategy.  Some companies expand in to new markets through M&A, using the existing foothold as to mitigate entry costs. You have to be cautious here, and make sure that you understand how the current market views the company you are looking to merge with.  Is it similar to your goals in the new market, or is the image different from you entry plan.  For example, a mid-level provider from the United States purchasing a low-cost provider in a foreign market needs to understand how this company is viewed.  If the acquired company is seen as the “low-cost alternative” then it will be difficult to maintain, let alone grow business if prices are raised.

This step is not intended to derail an organization from moving in to a global market, but it is important that your company truly understand how you will fit in to the new market. This allows realistic expectations for initial gains and long-term maturity to be established.

Understand how your competitors are positioned

It is equally important that a company understands who their competition is in the new market, and how those organizations are viewed.  You will find, if proper research is done, that the successful global organizations have similar brand image and recognition in each market they occupy.  Conversely, those organizations struggling to gain a foothold in the international marketplace are often viewed in completely different ways, depending on where you are when you ask.  This gives your company insight on how to strategize against your competition, both in the short-term and long term. 

Two examples of successful understanding of both their position, as well as the position of their competitors would by Hyundai (organic growth) and Tata Motors (M&A). Hyundai’s entrance to the US market was done with both short and long-term goals established well before the first car entered the market. 

Hyundai’s first offerings were seen as “low-cost, fuel-efficient commuter cars” for families in need of a second vehicle, but who could not afford to manage two typical car payments.  While the entry point was low, Hyundai continued to set realistic sales and service goals.  Over time, they introduced SUVs and premium vehicle lines into the US market.  The intention was never to control the market, but to take a piece of the market from their competitors who were fighting for the lion’s share. The culmination of these efforts in the long-term was the introduction of Hyundai’s first V8 automobile, the Genesis.  Competing in the premium/luxury category, it won Car & Driver’s 2009 North American Car of the Year.  No small accomplishment when you are competing against established luxury brands like Cadillac, BMW, Mercedes and Lexus.

For Tata Motors, the growth in the global auto markets has come through acquisition.  The Indian giant released the first mass-produced car in its home market earlier this year, the sub-compact Nano. Estimated to sell 25,000,000 over the next decade, this can be considered a domestic coup.  However, the Nano would be hard-pressed to find success in other markets, especially in the USwhere the safety regulations require several major components absent from the Nano production line. 

In response, Tata Motors purchased to well-established luxury vehicle lines in Jaguar and Land Rover. Sold by Ford Motor Company, these two vehicle lines carried to key strengths that Tata was looking for in an acquisition. First, they have strong quality backgrounds and second, they have passionate, dedicated customer bases.  In essence, these two brands were “move-in ready” for Tata. Further success was found for Tata with the successful launch of the Jaguar XF sedan, which re-established the brand’s performance credentials. Oddly enough, the XF was developed by Ford Motor Company, but the release almost immediately after the acquisition was completed.

Understand the specific needs of the local market

Both of these examples lead me to the third factor in global brand management, which is understanding the consumer needs in the markets you are trying to enter.  Far too often, organizations look to strong domestic products as a cost-saving way to enter a market.  The logic seems sound, with a strong brand recognition and image being directly linked to product performance, but it is not that simple.

Each market has a different level of need for the same products. A fundamental flaw in most organizations is the belief that a “strong brand image” equals “iconic status.” Very few items in the market today have a status that makes them desirable and a reality for each global market. Once that is understood, your company is on the right track to finding the right product for each market.

The right products for a new market may be in your company’s current arsenal. That said many organization find better success by creating products specifically for the local market, rather than re-badging current product lines. Cellular telephone companies are a good example of this.  

So, what now?

In closing, it is important to understand how your brand is seen around the globe, as well as in your own backyard. This understanding takes time and money, but the up-front costs will undoubtedly improve your organization’s chances for long-term growth and stability in the global marketplace.  

This due diligence can seemingly fly in the face of “timely entry” as international organizations grasp the “cost per day” of missing out on a burgeoning market.  However, successful companies realize that the initial delay mitigates to risks of unmanageable expenses and expectations down the line because understanding the market’s image of your brand helps you maximize the growth.