Advantages and Disadvantages of Adapting a Product to all Markets

Recently someone wanted to know more about the Advantages and Disadvantages of Adapting a Product to all Markets. The search engine, which he used, led him to my following article → International Product Policy – The Basic Product | Der Produktmanager.

Going Global

Good question, I thought, there is someone interested in going global with his products. However on the second view I began to question the propositions, which this person seems to have in mind. Consider for a moment, you were a small company, which plans to sell products abroad. Will you ever be in the position to offer a global product, or will you ever adapt to all markets?

In this situation and in the initial phases of your internationalization strategy you are certainly interested in information about the extend of global-readyness of your products. You further require information about the extend of localization and local adoption, which you need to offer in order to be successful.

However, in this situation, I think the question starts somewhere else, and does not leave you with a choice between advantages, or disadvantages. First of all, you need to understand what your product is, then you need to find out, what the customers in your target markets expect from it. Finally, you need to decide about a product design that supports global features,and local features.

To a large extend, the customer needs define the need for local product adoption. Secondly your product design, and the  openness of your solution define the technical possibilities for this adaption, and your speed.

A further dimension is commercial – For the following reasons, it is normally not possible to start with one product in all markets:

• You do not have the capacity to gather market experiences in „all“ markets
• You do not have the capacity to create a sales force and sales awareness in „all“ markets at the same time

To sort all of these questions out, and to define your way forward for your company, you normally need to understand the process of going global as a step-by-step approach. You start in few countries, and then enter other markets. In the beginning, you simply do not have sufficient information to decide about the advantages/disadvantages for your particular product. But how do local and global products differ?

Product Adaptation Strategy

Although many products seem to be global nowadays, experiences show that almost all countries have local cultural and regulatory requirements, and in fact even products that seem to be global often have a local dimension. Therefore would say that a truly global product does not exist.

For example might Facebook’s look like being globally unique software, in fact it is probably not, if you consider how much the privacy regulations in Europe and the US differ.

Therefore the question about advantages or disadvantages of the one or the other strategy can be answered by looking at what product adaption as a strategy is.

Seen technically, such a strategy means that you modify your existing products in a way that they are suitable for different customers and markets. For some products this is simple, as the offerings are already tailored to local requirements. For other products, this decision is more complex.

Often the adaptation is essential for the market success at all. The other side of the coin typically relates to factors such as „costs“. While a 100% adaptation to local needs might be of advantage in terms of sales, it would mean that the global company would need to support much more products. This, in turn will certainly also affect costs.

Assuming you were a small one product company in one country, who is looking to expand into other markets, you will normally need to find a balance between both sides of the coin. Typical the top factors that you need to consider in terms of an adaptation strategy are culture, market maturity, competition and legislation/ local business rules.

There are a variety of strategies available that you can used for effective product development, and adaptation.

Information Gathering

As all countries and markets are different, it will certainly not be sufficient to simply extrapolate your knowledge about the home market into the target markets, in order to define how your product needs to be designed in order to be successful.

However, this means that you need at least methodical know how, local access, and money to elaborate your strategy.

Customer Research

Without knowing what (local) customers want you will typically not be in the position to develop a successful product. Therefore your own product adaptation strategy will evidently start with research into customer needs.

Assuming that you collect requirements in the home and the target markets you can then compare, were they differ; and that is where you need to adapt your offerings. In order to control costs, you will certainly try to distinguish similar areas from local areas, and will try to define a kind of common platform that supports local adaptations.

According to my experience one trap in this stage of the research process is that you compare similar markets (i.e. Germany and Austria), and neglect fully different markets (i.e. Japan). If your platform is then technically designed in a way that it is not flexible enough, this focus might cause unwanted efforts later on.

For example, if you write your UIs for the German and the English language, you will probably experience troubles once you start to translate this UI into Japanese, as this language requires much more space.

Typical sources for initial information gathering for this research are:

• Comments in the internet (Product review sites, trade platforms, etc, social platforms).
• Feedback from sales and support.
• Studies and information from trade promotion agencies (i.e. VDMA in Germany).
• Local Research.

Legal Regulations and Export Rules

The adaptation of your products to foreign markets can be an important part of your growth strategy, but it can also be a source for potential trouble.

Therefore, in order to be successful you also need to study local and international legislation. These areas might deliver you go-no-go insights or at least localization requirements.

To see this, for example consider that it is not permitted to export all goods into all countries („sanctions“), or consider that other countries typically have local rules and laws, just like you in your country.

Typical sources are again trade promotion agencies or the export organizations of your country, local experts (lawyers), or literature.

Competition

A product adaptation strategy is important for entering new markets, but it is helpful a well, in order to outperform the offerings of competitors.

Therefore a competitive analysis could also be a source for information about adaptation needs. By analyzing the product specifications of your (local) competitors, you can identify areas for improvement for your own products.

In this sense a product adaptation strategy might also be a general improvement strategy, and therefore a decision to not adapt can have a negative effect to your business in the long term view.

For example the US software industry has a lot of knowledge in the area of Artificial Intelligence, and therefore it might bring your entire product forward, when you choose to adapt to the local conditions in order to be able to compete there.

Brand Extension

When going global you need to offer a product that it desired in your target market. However, as you are typically not entering a blank canvas, you need to make sure that the local customers trust you. This is where the brand comes into the game. Often a brand extension strategy is used in which a commonly known brand name is used to either introduce another similar, but different product, or where the same product is introduced in different markets. Therefore adaptation might strengthen your brand overall.

Packaging

Packaging plays an important part in the product experience and is therefore an element for a product adaptation strategy as well. Not to adapt might mean that customers in other markets might not find your products desirable.

Some markets are more demanding than others. Adaptations to demanding markets might help you to improve your packaging everywhere.

Priorities

If you plan to go global you need to find a balance between costs and markets/ adaptions need, and therefore you need to define priorities. In face of limitations and priorities, furthermore your development speed is relevant. A product adaptation strategy might therefore require that you organize around agile processes, and this in term might set you into the position to everywhere in the world to respond more quickly to changing customer needs.

Economic Climate

The economic climate in the different markets is typically not synchronized. It is typically not in your reach that you change the local economic climate. Therefore product adaptation might mean that you need to find cheaper production methods, materials, processes, etc. This optimization in turn might help you everywhere, and not just locally.

Recommendation

I hope these arguments make clear that it is typically a highly strategic question to select the right level of local adaption. To find out what matches to your company, I recommend the following stepwise approach:

• Define your target-markets carefully,
• Gather sufficient customer insight,
• Start by developing a product, which focusses on these markets/needs
• Choose an open product architecture, to be able to extend your product later on (and don’t forget the testing).
• Take care to install stable Rollin processes into local markets, which allow you to gather information globally.

Weiterführende Informationen

Das Original dieses Artikels ist auf →Der Produktmanager erschienen (©Andreas Rudolph). Regelmäßige Artikel gibt es über die (→Mailingliste), oder indem Sie →mir auf Twitter folgen. In der Online Version finden Sie hier die versprochenen weiterführenden Links:

This entry was posted on Montag, Dezember 28th, 2009 at 8:50 pm. It is filed under PM-Themen, Thema des Tages and tagged with Beispiele, English Content, Globalisierung, Globalization, Internationalisierung, L10N-I18N-G11N, Marktdaten, Strategie. You can follow any responses to this entry through the RSS 2.0 feed.