By: Yael Lidor Levy & Benny Fluman Program Managers of GLOBAL MARKETING, specialists in guiding companies breaking into international markets
International market expansion represents a strategic step that can yield significant profits and increase market share, but it also involves considerable challenges. This article examines common mistakes in international expansion and offers practical tips on how to avoid them to maximize success in foreign markets.
1. Lack of Adaptation to Local Culture and Customs
The Challenge: Different cultures reflect diverse values and habits that can affect brand success in a foreign country. Without cultural adaptations, the brand may be perceived as irrelevant or even disrespectful to locals.
Examples and Practical Tips:
Language and Terminology: An American fashion brand entering the French market failed to connect with customers due to English-only messaging. The solution: employ native copywriters to translate not just words but ideas to resonate culturally.
Humor and Slang: Coca-Cola’s initial campaign in China translated their brand name to mean "bite the wax tadpole." After consulting with local linguists, they changed it to "kēkǐ kě lē" (可可乐乐), meaning "happiness in the mouth."
Israeli Success Story: Check Point adapted its cybersecurity messaging for Asian markets by emphasizing local priorities like data privacy regulations and government compliance while maintaining its reputation for Israeli innovation.
2. Ignoring Local Customer Needs and Consumption Habits
The Challenge: Many companies assume customer needs in a foreign country are similar to their home market, but preferences often differ significantly. Understanding local needs is crucial to prevent the product from being perceived as irrelevant.
Examples and Practical Tips:
Delivery Expectations: In Japan, companies like Rakuten set the bar for rapid delivery—often within the same day. A U.S. retailer entering Japan had to overhaul its logistics to meet local standards.
Local Competition: In India, international food chains like Domino’s succeeded by offering paneer-topped pizzas catering to local tastes.
Monday.com Example: The company’s adaptation for Germany included emphasizing GDPR compliance while tailoring features for industries like manufacturing.
3. Poor Management of Regulatory and Licensing Processes
The Challenge: Local regulations can be a significant barrier to entry in foreign markets, especially for products in food, pharmaceuticals, and cosmetics. Non-compliance with laws can lead to delays or product sale prohibition.
Examples and Practical Tips:
Patent Registration: A cosmetics company entering the EU faced delays because their packaging didn’t comply with labeling laws. Early engagement with local regulatory consultants could have mitigated the issue.
Safety Standards: IKEA encountered challenges in Japan due to stringent earthquake-resistant standards for furniture. Adjustments ensured compliance while preserving the brand’s design ethos.
Israeli MedTech Success: MedTech companies like ReWalk Robotics efficiently navigate CE and FDA certification processes, ensuring smooth market entry for their exoskeleton devices.
4. Overreliance on the Original Business Model
The Challenge: Each market has different economic dynamics, competition levels, and unique consumer preferences. Relying on the original business model may hinder success in the foreign market.
Examples and Practical Tips:
Adapted Store Concepts: Luxury brands like Louis Vuitton invest in flagship stores in Asia with bespoke designs to reflect local opulence and traditions.
Pricing Adjustments: Netflix’s tiered pricing strategy in India, offering mobile-only plans, catered to a price-sensitive audience while driving subscription growth.
Wix Example: Tailored pricing models and a localized user interface ensured accessibility across diverse markets like Brazil and Germany.
5. Poor Planning of Distribution Channels
The Challenge: Distribution channels can affect customer experience, company costs, and delivery speed. Without thorough examination of distribution channels, there’s a risk the company won’t provide optimal service.
Examples and Practical Tips:
Local E-commerce Platforms: When expanding into Indonesia, a beauty brand partnered with Shopee to leverage its vast customer base.
Local Warehousing: Amazon’s entry into India included establishing extensive warehouse networks to meet local delivery expectations.
Israeli E-commerce Innovation: Companies like Global-e help brands integrate seamlessly into international markets by handling localization, tax compliance, and optimized logistics.
6. Lack of Awareness of Economic and Political Risks
The Challenge: Unstable economies or political volatility can pose significant risks to market entry success. Factors like currency stability, geopolitical conditions, and local economic environments are as important as other business considerations.
Examples and Practical Tips:
Currency Management: Turkish Lira’s volatility prompted international brands to hedge agreements or price in USD/EUR.
Political Risk Insurance: Companies entering Venezuela invested in insurance to protect against asset losses due to government instability.
Israeli Expertise: Teva Pharmaceuticals incorporates geopolitical risk assessments when planning expansions into politically sensitive regions.
7. Lack of Investment in Local Customer Support
The Challenge: Customers in different countries expect varying service levels, and support not adapted to the target market can negatively affect customer loyalty.
Examples and Practical Tips:
Native Language Support: Apple’s regional customer service in Japan ensures linguistic and cultural alignment.
Automation and AI: Israeli startups like Glassbox employ advanced AI to streamline multilingual support while offering personalized experiences.
Returns Policies: Companies like Zappos adjust return policies for markets like the U.S., prioritizing seamless and customer-friendly processes.
8. Lack of Brand Differentiation and Defined Target Audience Focus
The Challenge: A new market is usually competitive, and without clear brand differentiation, the company may lose its place among many competitors. Focused differentiation helps highlight brand values and create customer loyalty.
Examples and Practical Tips:
Targeted Marketing: Dove’s “Real Beauty” campaign resonated globally by adapting to local beauty standards while retaining its core message of inclusivity.
Sustainability Differentiation: SodaStream’s global branding emphasizes environmental impact, appealing to eco-conscious consumers.
Israeli Brand Success: Ahava’s use of Dead Sea minerals creates a unique selling proposition that resonates worldwide.
Summary
International expansion requires deep understanding and adaptation to the local culture, needs, and unique conditions of each target market. Smart planning, proper preparation, and avoiding the described mistakes can prevent many obstacles and help ensure success in foreign markets.
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