When to Use Localization Strategy to Enter An International Market?

When to Use Localization Strategy to Enter An International Market?

Recently, some users of China’s social media platform 小红书 (Xiao Hong Su) were buzzed by the newly open dessert house where its logo catches everyone’s attention. The logo is nonother than KFC’s grandpa wearing traditional Chinese clothing with a cup of tea in his hand. Yes! KFC is opening up a new dessert shop in Suzhou, China. Using the name “爷爷自在茶” or “Grandpa’s comfy tea house”, KFC set up a cozy Jiangnan-style dessert shop that targeted a more health-conscious generation of customers.

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Previously, KFC has sold milk teas and other sorts of tea drinks in their stores, but the growing appetite for a new style of tea drinks market in China as well as the effort to rejuvenize and refresh its brand’s recognition1 has forced KFC to come up with a strategy to appeal to the market. What Yum! China is trying to do with this newly opened teahouse store is using  "localization strategy" to appeal more to Chinese consumers. 

Looking at the industry pressure for global integration and local responsiveness, Daniels et al. categorize 4 strategies to enter a new international market: international, global, transnational, and localization strategy.

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The international strategy directly transfers the business to a foreign market without much adaptation. This strategy can only be deployed if there is low pressure for local responsiveness and the business usually face few rivals with a similar competitive product. Apple products are the perfect example of this strategy. No matter where you are in this world you will find the same iPhone with the same quality and features. There is little to no adaptation to the local habits and culture of its products. 

The global strategy was employed if there is a strong need to have a cost advantage because the market is keenly sensitive to the economics of efficiency. This strategy applies to most commodities products because it serves universal needs. From gasoline, sugar, and memory chips to aspirin, all these commodities products have similar to identical consumer preferences, making price the biggest consideration when purchasing.

On the other hand, the transnational strategy targets the efficiency of global integration as well as the effectiveness of local. Not only does a company needs to be creative with the lowest possible cost strategy, but they also have to think out of the box to localize the products or service to appeal to the market. Fashion retailers like Zara, Target, Shein most cross-border e-commerce companies are some companies faced with this challenge. Businesses like this would have a central head office in one country that coordinates its local subsidiaries in the international market. Sometimes they work with local marketing agencies to help localize their marketing activities.

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The last strategy is the localization strategy. This strategy was implemented in a low need of global integration but the pressure to localize the brand from the market is high. Companies like KFC that I elaborate on at the beginning of this article are a good example of how multinational enterprises use localization strategies to appeal to the market and gain market shares. 

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Also, Netflix, which successfully expanded to 190 countries (and counting), is another good example of a localization strategy. To be able to achieve growth, Netflix works with local partners o gain more cultural context thus producing more localized content to appeal to a local market while still providing international content. 

Choosing the right strategy to use to enter a new international market requires a lot of research on the product itself as well as the market you are entering. Find out how we help brands localized into Southeast Asia's market here. 

Hi, I'm Tiffani, Sales Manager of Nanyang Bridge Media. We are specialized in Influencer Marketing and Content Production for cross-border e-commerce companies. If you'd like to discuss your marketing campaign in Southeast Asia, we'd be happy to help. Just drop me a short message at tiffani.yulita@nanyangbridge.com. Talk to you soon!

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