Glocalization

One of the biggest implications of globalization for companies seeking to expand to foreign shores is the task of balancing standardization with customization. From a branding perspective, this issue assumes even more significance. When some of the world's biggest brands expand beyond their home markets, they are tempted to repeat their tried and tested formula in the new market as well. In fact this has been the path followed by many brands. The assumption in such a case is that customers would be too eager to consume the great brand because of its authenticity, heritage and associations. But this tendency is gradually changing as global companies are learning about the unique needs of the customers in different market along with the pressures of lifestyle, economic and cultural conditions.

A case in point is the success of global brands in the Indian market. One of the booming economies in Asia, India offers tremendous opportunities to global companies. A brief look at the Indian landscape would prove why - an estimated 1.2 million affluent households that is expanding at 20% a year, 40 million middle income households (earnings of US$20,000 to US$45,000 adjusted for PPP) growing at 10% a year, more than 110 million households with earnings of US$7,500 to US$20,000 (adjusted for PPP) and more than 70% of the population below the age of 36. It is no wonder then, that global brands are making a bee line to the Indian market to grab a share of the growing pie.

This alluring face of the Indian business landscape has another facet to it and that is the presence of highly discerning and demanding customers. In spite of the booming economy and the increasing disposable income, Indian consumers are very cautious and clear in their priorities. Consumers are still not ready to splurge on branded goods at premium prices. Added to this is a growing number of Indian brands that offer superior quality at affordable prices. In such a scenario, global brands can win only if they attune themselves to the local conditions.

Unilever is a classic example of a global brand which has pioneered serving the locals with products that address the local sensitivities. Unilever's Indian subsidiary Hindustan Level Limited (HLL) has been the leader in recognizing the tremendous opportunity lying at the bottom of the pyramid - customer base that aspires to consume products but in smaller quantities and at lesser prices. HLL literally invented the shampoo sachets - small plastic packets of shampoo for as less as INR 1 (USD0.022). This became such a rage among the rural consumers that many other brands started offering products such as detergent, coffee and tea powder, coconut oil and tooth paste in sachets. Even though the unit price was higher, rural consumers were able to afford to purchase the smaller quantity at their convenience.

Another example is of global mobile brand Nokia. Nokia also recognized the growing importance of rural customers in the Indian mobile telephone market which grew from a mere 300,000 subscribers in 1996 to a whopping 55 million subscribers in 2004. Nokia introduced its dust-resistant keypad, antislip grip and an inbuilt flash light. These features, albeit small, appealed to a specific target of truck drivers initially and then to a broader segment of rural consumers. These features endeared Nokia to the Indian consumer as Nokia displayed a genuine commitment in responding to local customer needs.

These examples clearly endorse the glocalization route to winning customers in diverse markets. Glocalization - maintaining the brand logo, the key message and the underlying philosophy and localizing the brand elements to offer customers an authentic local feel - is increasingly becoming the preferred business model for global brands. By extending the unique brand experience through customized channels and offerings, global brands seem to have found a middle path where they can maintain the global brand aura and still appeal to the customers in the authentic local way!