Prepare to “flip” your business model.

Filed under: Global Business — April 17, 2008 @ 4:55 pm

It’s true there are markets waiting for American products and services around the globe. But the main success factors for market entry have not always been money, market power or advertising. Successful market entry is often a function of flexibility and creativity.

We’ve all seen examples:

Market failures
We’ve all heard stories of Chevrolet Nova being sold in South America where the name Nova translates to “it doesn’t go.” We’ve also heard that Pepsi’s “come alive with Pepsi” was translated into Mandarin as “your ancestors will come out of the grave with Pepsi.”

But translation is only part of the story

In Taiwan, Whirlpool came into the market with large, American style refrigerators. The Chinese in Taiwan prefer a smaller fridge (their kitchens and homes are much smaller, and they prefer to purchase groceries more regularly that busy Americans). So Whirlpool failed. A “Lowe Taiwan” or “Taiwan hand” could have helped Whirlpool prevent the losses and embarrassment. Whirlpool also might have been advised to pick a name that Chinese could actually pronounce!

During the Viet Nam war, US troops distributed toothbrushes to the South Vietnamese army (who thought there were rifle cleaners). The toothbrush company that donated these for eventual market share therefore got no benefit.

Many European food processing companies opted to break into China’s market in the 80’s, with China becoming on of the world’s largest consumers of Chicken. However, the neatly wrapped cellophane chicken sections did not sell; Chinese prefer to pick out live chickens at a market, and have them slaughtered and prepared at purchase.

And who could ever forget the doomed Presidential trade mission of 1992, where American Auto icons demanded that Japanese purchase more US autos. The Japanese simply replied: “the steering wheel is on the wrong side.”

Market surprises

The Sony Walkman was an enormous hit in Japan in the 1970’s. It was launched with the main benefit that using it “would not disturb others.” Walkman entered Los Angeles in the late 1970’s as its entry point to greater America. It was immediately adopted by the cool, California beach scene. However, when consumers were polled, they said they bought the Walkman “so they wouldn’t be disturbed BY others.”
A great American export success is Tabasco sauce. It could be found throughout Japan. It has nothing to do with Louisiana food, Cajun food, or even hot food! Tabasco appears for a macho approach to spice up the rather delicate Japanese cuisine. But nothing else on the table may be spicy at all!

Market adaptations

McDonalds prides itself on inexpensive, quick food. The dining experience should be convenient. The food comes out within seconds of ordering it, and the restaurant itself is brightly lit with hard plastic furniture, so that customers don’t really want to linger very long. The drive-through made perfect sense to rushed Americans who want to power down a burger while driving on a highway.

Asian McDonalds are “sit and chat” places. Because many of the items are imported, they are more expensive. It’s possible for Chinese families to spend an hour or two in a McDonalds. In Europe, many McDonald’s serve beer, redefining the “family restaurant” theme. Additionally, McDonalds is a quick service or casual dining restaurant outside the USA (where it is classified as fast food).

Budweiser
Budweiser is a high volume, low margin, inexpensive beer. In Japan, Budweiser is a premium beer, selling at some restaurants for 8-10$ per can. Japanese have been known to instruct the waiter at a restaurant to leave the empty BUD can on the table, and have glasses refilled with less expensive local beers, as BUD is a status symbol.

Heineken
The same holds true for Heineken, which could be called the “Budweiser of The Netherlands.” In the USA, however, it is a premium product.

Levis
The Americans get their revenge with Levis though. Levis are a workingman’s blue jean. But in Holland prices can be 3-5 times what Americans spend at home, and the Dutch wear Levis to cafes and clubs.

Market Flips

Bottled water

In a bottled water deal I was once with, we surveyed the landscape of bottled waters in Europe and realized we would never compete as a water drink. We would therefore compete as a club drink. We found a sexy fashion magazine to put their name on our water, and we sold “Scena” (the scene) water through fashion magazines and nightclubs. Our quantities were less than if we were in supermarkets, but our margins were enormous.

Media
In bringing media companies to Asia we found that the content (the movies, the radio show, even home shopping) was less important than the English that was being spoken. We were able to sell American TV as a means for Asians to practice their English.

So the lessons?

Get a Lowe Taiwan. Walk into a few kitchens. (Or just go where the customers are) Be flexible. And be on the lookout for market surprises and market adaptations. And when you can’t find those surprises, “flip.”

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