Companies that experience huge success often run into the question of whether or not they should keep their operations in the United States or expand globally. There are many factors and business aspects to take into account when making this decision. The marketing strategy is one.
If a company decides to expand its operations globally, it must decide whether to use a global marketing strategy or multi-domestic strategy. A multi-domestic strategy has advantages and disadvantages in which a company customizes its marketing in each respective market that it enters.
The right choice generally depends on the type of business and prospective markets.
The main benefit of a multi-domestic strategy is that it allows for more targeted advertising that caters directly to the consumers of a particular market. There are countless cultural differences between different regions of the world, and many of them perceive messages differently, so this is an important factor to keep in mind.
Just because consumers in the United States are receptive to a particular message does not mean that consumers in another region will be. They may have different pain points, different tastes, different distribution channels and language disparities.
Because pain points may vary, consumers in different markets may perceive different benefits from a company's products and services. Multi-domestic marketing allows companies to communicate their competitive advantage to consumers in a way that connects with them.
The success of many multi-domestic products depends on a business' adaption to local preferences and its ability to administer multi-domestic marketing strategies that help with this process.
Let's take Heinz Tomato Ketchup as a multi-country strategy example. While the wildly popular ketchup usually includes garlic and onions in its ingredients, the company offers a version distributed in India that does not include either item. The reason is because many in India do not eat garlic or onions. By being knowledgeable of the local region and marketing their product as one that shows cultural awareness, Heinz has been able to become a staple.
One of the primary disadvantages of multi-domestic marketing is that it can be expensive to execute. It takes time and money to research new markets and gain insight into the local needs and wants of those consumers; and once those have been figured out, it takes money to implement the strategies.
That could range from producing new region-specific marketing materials to producing new products that are adapted to the needs of the region.
If a company decides to expand globally, it will need a different set of senior management personnel to handle operations in the various countries where it has a presence. Because the nature of business can be drastically different in other markets, having the same senior management for both national and international markets is usually not the best option.
A company will want management that has knowledge about the local culture, politics and legal process of the country where it is operating. Someone who only has knowledge about these topics relative to the United States may not be the best candidate.
A multi-domestic marketing strategy may be more efficient in markets where the local culture drives consumer practices and product adaptability. It is also useful when the local market in a particular region has local competitors in the marketplace.
Having the flexibility and adaptability that comes with multi-domestic marketing puts a company in better condition to position its advertisements more effectively.