By Mary Logan
As Globalization continues to break down borders is there a chance that brands will become synonymous the world over? For instance, a number of celebrities and musicians have a global reach, portraying a consistent image across the globe – a case in point being the omnipresent Kim Kardashian and the singer Taylor Swift.
Could brands be facing a similar future?
The recent and swift exit of Target stores from Canada is a prime example that this is not the case and simply implanting a brand into a different country without truly understanding the local market place, can have huge financial consequence, as well as potentially a longer term impact on the brand itself.
However, the increasing pressure on marketing budgets, the rise of online shopping and social media has meant that some companies are underplaying or simply ignoring the important role that ‘on the ground’ research can play in highlighting the needs and habits of local consumers, which ultimately drives the success or failure of a brand.
Take for instance Canada, a young and growing country with its residents enjoying a high standard of living (average household income ranked 7th based on the OECD Better Life Index 2014). This country therefore offers great opportunity for International brands looking to increase sales by entering new markets. However, the more successful and sustainable brands have got it right by understanding the needs of this Canadian consumer.
A perfect example is Patak’s, the leading curry sauce cuisine in the UK. The company understood the importance of conducting local research when developing a growth strategy for the Canadian market.
Up until a few years ago, Indian food was a relatively unknown cuisine for the majority of Canadians. Patak’s needed to better understand this new consumer and to this end, conducted a U & A study to determine opportunities and potential barriers for the brand. The findings illustrated that for many this cuisine is intimidating, consisting of complex recipes which are difficult to prepare at home. Most also assumed the dishes were too hot and spicy for their palette. This is vastly different to the UK market where Indian food is deep seated into the local cuisine, Chicken Tikka Masala surpassing Fish & Chips to become Britain’s favourite dish.
Adopting a similar marketing approach to the UK would have therefore been disastrous for Patak’s and instead, the company took the findings from the U&A to implement local in-market support activities.
Compare this consumer driven marketing to the U.S. centric approach adopted by Target in Canada. 6 months into their launch when sales were falling short of expectations, the President made the announcement they were still trying to understand how Canadians shop and that Executives at Target will spend next year trying to reshape the habits of Canadian shoppers. This suggests the company did not do their homework before entering this new market place. His additional comment: “Canadians still haven’t fully embraced the “one-stop shopping” concept that’s so popular in the United States,” did little to assuage the situation.
However, in the ongoing uncertain economic climate, many companies continue to face challenging times and consolidating marketing and research departments across borders (as we are typically seeing in North America) is becoming more prevalent. However, it is important that in the quest to save money, companies do not ignore the cultural and attitudinal differences across countries which shape consumers behaviour and brand perceptions.
For instance, differences in environmental values led to varying reactions to a new product idea for Boil-in-Bag pasta within Canada and the US. While this idea registered interest among Americans (ultimately leading to in-market launch), reactions were very different in Canada. Here environmental and health concerns associated with boiling plastic and excess use of packaging resulted in the idea being rejected by Canadians.
While the internet and digital media continue to break down borders it is not the case that one size fits all. Cultural differences continue to play a strong role in how consumers interpret and interact with brands.
Conducting ‘on the ground’ research will therefore continue to play a very important and relevant role. Ignoring this could have huge implications for any organization, as Target found to their detriment, with losses of around $1 billion in the first year of their launch and swift exit from Canada.
Mary Logan is President at Research & Incite, a Toronto based strategic research consultancy.
Many non-North Americans consider Canadians and Americans to be almost identical, and although there are similarities, both are unique cultures. Aspects such as language can be a vital element to get right in a research study. Here Annie Pettit talks us through some of the crucial differences when conducting research in Canada.
Melissa Verreynne and Francois Conradie
What growing consumption demand in africa means for business
Explosive growth in Africans’ disposable income will result in a surge in consumer demand over the next few decades.
It is a given that Africa’s economic growth over the next few years will be rapid – continued commodity-fuelled growth combined with rents from new energy discoveries and Africa’s role in growing food for an expanding global population will ensure healthy increases in economic output for decades to come. It is obvious that these revenues will boost per capita incomes and consumption demand, but wholesalers, retailers and marketers would do well to begin thinking with greater precision about what, specifically, these increasing incomes will be spent on. The best clue as to what Africans will spend their higher incomes on may be obtained by asking what Indians and Chinese spent their increasing incomes on when those countries saw per capita gross domestic product (GDP) rise quickly in the 1990s and 2000s.
First, some detail about the characteristics of the African consumer market story may be useful. The main reason for the current growth in consumption demand on the continent is demographic. Africa’s population is growing, and fast. According to United Nations (UN) projections, Africa’s population will exceed India’s by 2023 and China’s by 2025. The continent is forecast to be home to close to two billion people by 2041, double the current figure. Thus, looking solely at the size of the consumer market, the potential of the African market is immense.
At the same time, this population is becoming richer. This trend results mainly from the change which is underway in the population’s age structure. Changes in public health policy and culture are pushing fertility rates down, especially in North Africa, so the shape of the population pyramid is changing. The base – the proportion of children in the population – is narrowing, and the proportion of people in the older cohorts is growing. As a result, the dependency ratio – the ratio of people in the economically active period of their lives to the young and the old whom those workers must support – is improving. This means that working Africans are supporting fewer dependents than ever before, and they are spending the extra disposable income that results from that situation on several categories of consumer goods.
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Victoria Zagorsky, Editor-in-Chief of Insight Middle East and Africa, is our newest regular commentator and will be covering the Middle Eastern region for us. Here she talks about the Gulf states, the characteristics that affect marketing and research and the changes afoot for the industry in that region.