As emerging markets continue to grow at exponential levels, it is expected that over half the global growth by 2025 will be derived from new markets in developing countries. The emerging economies, which have historically been seen as low-cost production bases, have now become the sought-after customers. With most of the world’s population living in developing economies, it has become imperative for firms to get a foothold in these markets to ensure consistent growth and profit.
Building customer and supplier bases in emerging economies does not work with the one-size-fits-all strategy that was used in the past. Every individual market presents new challenges and opportunities based on the microeconomic and macroeconomic scenarios, logistics, and demographic realities. In order to be successful, firms should start paying close attention to emerging markets and build their strategies around these specific countries.
Emerging Markets and Localization
For decades, large organizations have put emphasis on standardization of services, rather than localizing their services. Companies have applied the same tried and trusted formulas, merchandise mixes, and marketing and operating processes, and have implemented these formulas internationally. They demand consistency from the suppliers, and they push the standardization techniques deep into the mindset of the consumer market.
But standardization is slowly seeing its end. Consumers are growing more and more diverse, whether in values, lifestyle, wealth, or ethnicity. There are many regions that have been flooded with chain outlets, and slowly consumers are developing a preference for the unique characteristics of local products, against the standardized products offered to them. Emerging markets are challenging the one-size-fits-all theory, and in response, organizations are localizing their products and services to customize them according to each local market. In essence, companies are moving toward localization, and away from the age-old practice of standardization.
The biggest benefit of going from standardization to localization is strategic. Standardization restricts experimentation and is easy to copy. Localization, on the other hand, makes it difficult for competition to track the changes, let alone copy them. If done well, localization offers lasting competitive advantage for manufacturers and retailers alike, and so you should choose the services of a translation company that is based in the region you want to operate in.
Reinventing Your Firm
Though standardization has been effective in the past, it is losing its attractiveness now. As customers become more diverse, their lifestyles have changed as well, and these changes have been followed by new demands.
Diversity is not the only factor affecting standardization. As more and more commercial chains come up, natural space restrictions and other requirements have also increased. The prime locations now are fiercely guarded against international firms that do not have localized operations. Building more branches of the same organization as a market strategy has become an exhausted practice.
Finally, standardization can harm brand images by forcing practices and products into a mold. The resulting homogenization undermines innovation, even throughout supply chains. The managers at these firms stamp out any exception, when trying to meet targets. This leads to an environment where there is no room for innovation, and therefore to new processes, services, or products. Standardization ultimately leads toward commoditization, and low profitability and growth.
Technological advances over the years have made it possible for manufacturers to delve deep into buying behaviors and local preferences of consumers. Any mismatch between demand and supply can be located immediately. New information is making it possible to localize service, products, and even stores with high precision.
Even though emerging markets share a lot of similar characteristics, each region is distinct and should be approached accordingly. Microeconomic and macroeconomic, operational, cultural, and strategic challenges have to be overcome to sell your offering effectively in any emerging market. Hiring a translation company in emerging markets can be a huge asset for any business in the long run.