Companies assume that the success of their products in their home country would translate to other countries, but many have failed to launch their products abroad. Starbucks experienced a financial setback of US$105 million in Australia, Walmart faced a substantial loss of US$4 billion in Germany, and Uber encountered a significant financial downturn of US$6 billion in Southeast Asia. Coors incurred a loss of US$50 million in Spain, while Target struggled with a financial setback of US$2 billion in Canada, and Tesco faced a loss of US$2 billion in the United States after launching their products in these respective countries.
Sasin Visiting Professor Eliane Karsaklian, Clinical Professor of Marketing at the University of Illinois, recently delivered a talk on “International and Multicultural Marketing-Collaboration and Integration at Sasin Research Seminar. She began the seminar by addressing the differences between multicultural marketing and international marketing. “Multicultural marketing targets different cultural communities living in the domestic market, while international marketing targets different cultural populations abroad,” said Professor Karsaklian, adding that multicultural marketing represents the marketing efforts to address culturally different consumers within the same country.
Professor Karsaklian revealed that by identifying relevant cultural differences among consumers in their home market, marketers can unveil the need for standardization or adaptation and assume that existing differences can be extrapolated to the international markets.
“Companies fail abroad because they think that we live in a globalized world, so basically they don’t try to understand the local culture. They just will come here as they operate back home but here is not back home, here is something different,” said Professor Karsaklian. She added, “It’s amazing that in 2023, with all the international companies that we have, companies are still failing abroad because they decide to ignore cultural differences.”
Professor Karsaklian outlined three factors that cause the failure of companies launching their product internationally including the lack of planning, lack of adaptability, and lack of cultural and linguistic assimilation. In Spain, when Coors Brewing Company launched its slogan, “Turn it loose” in Spanish, it translated as “Suffer from Diarrhea,” which certainly didn’t get the effect it wanted. Therefore, Professor Karsaklian warned businesses that exporting domestic operations to the foreign market far away from the headquarters, taking exactly the same marketing strategy in the home country to other countries cannot work.
“You never have a second chance of making a second impression,” said Professor Karsaklian, who added, “When consumers are disappointed in your brand, there is not much you can do there anymore.”
To illustrate the point, Professor Karsaklian presented her comprehensive research study for Lazy Food, a Chicago-based company specializing in plant-based products. The study involved 102 participants from diverse cultural backgrounds, comprising 37 Chinese, 25 Japanese, and 40 Mexicans. The participants were provided with product samples and subsequently interviewed to assess their preferences.
The primary objective of the research was to discern features that could be standardized and those requiring adaptation. This encompassed aspects such as product positioning, packaging, pricing, placement, and promotion. Professor Karsaklian noted that participants expressed confusion about the product’s concept, particularly regarding its alignment with vegetarian and vegan dietary preferences.
Cultural differences in taste preferences were evident among the participants. Chinese participants favored a spicy and soy-based profile, while Japanese participants preferred a non-spicy option with the flexibility to add separate spices. Mexican participants leaned towards a very spicy taste, emphasizing the importance of allowing the personalization of flavors. The packaging strategy also reflected cultural nuances, with bilingual packaging for both Chinese and Mexican markets, but solely in the local language for the Japanese market.
Interestingly, Lazy Food identified distinctions in the promotion strategy. The research underscored that cultural adaptation in the food market extends beyond taste preferences. Professor Karsaklian said that the language used in marketing communication and packaging emerged as a critical factor, aligning with findings from studies such as Zhang, Laroche, and Richard (2017). From the research, Lazy Food recognized that consumers in different countries perceive the same product differently.
Professor Karsaklian presented that in the case of Lazy Food, Japanese consumers focused on the health benefits of the plant-based product, while Chinese participants found it to be a fun product. Mexican consumers highlighted the product’s ease of preparation for family meals, emphasizing its broad appeal.
This research by Lazy Food highlights the significance of cultural adaptation for successful market expansion. The company acknowledges the need to tailor its approach to diverse consumer preferences, not only in taste but also in communication and presentation. As Lazy Food contemplates international markets, this study provides valuable insights into the nuanced considerations required for effective cross-cultural marketing in the food industry.
Key Strategies for Success in International and Multicultural Markets
Professor Karsaklian stressed the importance for companies to conduct market pre-testing before launching a product to ensure success in international markets. Moreover, she addressed that companies should avoid making assumptions that consumers are the same globally. Diversity exists in all countries, encompassing factors such as age, sex, gender, culture, and race. Failure to recognize and respect these differences can lead to market failures. She added that lack of planning and a strategic action plan is another contributing factor to companies failing abroad. “It takes time to do market research and develop an effective plan of action,” said Professor Karsaklian.
How to Succeed in Multicultural Markets: Tips from Professor Eliane Karsaklian
- Avoid Monolithic Thinking: Recognize that people are different, and a one-size-fits-all approach does not work.
- Speak the Consumer’s Language: Decode cultural codes and tailor marketing efforts to resonate with diverse audiences.
- Understand Ethnic Diversity: Acknowledge cultural differences. Avoid basic assumptions and appreciate the nuances of each ethnic group.
- Understand Potential and Future Consumers: Consider factors such as age, sex, gender, and culture when identifying potential consumer groups.
- Tell Culturally Relevant Stories: Craft narratives that resonate with each cultural community, acknowledging their unique preferences and values.