As previously inaccessible audiences become more reachable, and the internet penetrates all corners of the globe, many more brands and businesses are developing and implementing global strategies to reach new markets.
In 2018, Ernest and Young (EY) surveyed 863 middle-market executives in eight European countries, and their findings were striking. Nearly two-thirds (62%) of the respondents expected growth between 6-10 percent—representing a year-on-year increase of 38 percentage points. A further 24 percent were targeting double-digit growth of 11–15 percent in the coming 12 months, equalling a 16-percentage point yearly rise. According to EY, “International expansion is the driving force behind this confidence, as 25 percent of European middle-market leaders identified it as their top growth priority.”
In China, the relative failure of Western digital media expansions has been extensively researched and unpacked by Professor Feng Li FBAM FAcSS, whose article in August 2018 Harvard Review tells us this: “Despite the differences between the inside view and the outside view, failure has converged in three clusters: poor understanding of the business environment, ineffective strategy making and communication, and underperformance in operation and execution.”
These three clusters can be roughly applied to numerous expansion successes and failures. Successful examples are Nike, Kentucky Fried Chicken, McDonalds, Zara and Coca Cola. Failures include Walmart, one of the United States’ most ubiquitous brands, that has thrown in the towel in Russia, Germany, the United Kingdom, France, Spain, Italy and Brazil. Tesco, the popular UK grocery chain, that did badly in the U.S., and the two biggest giants in tech, Google and Amazon, that are both currently rethinking their strategies in China.
So what do the successful brands do differently? On a very generic level, they all demonstrate an understanding of the local context in which they are operating – whilst still providing the brand service and message that is their cornerstone. In South Africa, an example is Kentucky Fried Chicken. It’s known as “KFC” and the “secret herbs and spices” are an integral part of their narrative. But they primarily succeed because they are densely located in areas that have high youth and family populations. They are found in every town and city and they offer easy-to-understand, packaged, special deals that appeal to a cash-strapped nation. They also thrive because chicken in South Africa is a highly popular meal and KFC can be relied upon to provide any time as they keep unusually long opening hours.
So whilst the above example is an illustration on the surface level and does not unpack the business initiatives underlying the success, it is fair to say that a proportion of success can be attributed to an understanding of the language and cultural diversity of the geographical location that they are operating in.
According to an article in the Insurance Journal on 10 March 2019, “Emerging markets will remain the growth engine of the global economy and insurance industry during the next decade, reflecting a continuing shift of economic power from west to east, according to Swiss Re Institute’s latest sigma report.
Summarizing macroeconomic trends, the report notes that emerging market growth has moderated in recent years as economies mature and are more exposed to external cyclical factors. Nevertheless, projections still indicate that emerging economies together will account for 60 percent of global growth in 10-years’ time.
According to Luis Gonzalez, President of the International Public Relations Network: “Commercial, industrial and intellectual globalization is an obvious result of development, communication and technology. As the Fourth Industrial Revolution leads to new business models, new mindsets and new skills, it has also led to collaborative agency models that prior to the last decade would have been unthinkable. The concept of ideation moving into implementation across multiple independent PR talent agencies practicing the same skill-sets is one that has only recently been perpetrated on such a big level as a competitive alternative to multinationals.”
Ensuring that your brand, your key message, your narrative and your positioning works within target audiences has become all the more complex. Those brands that succeed in a global space are those brands that work with specialists “on-the-ground” to understand the local culture and dynamics; specialists who understand localised markets within a global context.
Globalization is a challenge and an opportunity. It’s completely up to us communication specialists as to how we grasp it. Either we can remain fiercely competitive and siloed or we can drive for more interagency collaboration with multidisciplinary teams that profit of adding intelligence diversity available for client return on investment. As an entrepreneur – the preferred version is the collaborative strength that a globalised communications network could bring to an economic world that needs it.
By Nicole Capper, Managing Director of the South member agency – MANGO-OMC (Pty) Ltd.