Moving into a new territory is a minefield for brands. There are so many things that could go wrong and cost the company a lot of money. Here’s just a few examples of when that’s happened…
Companies might not think that their packaging needs adapting when they move into new territories. In fact, to maintain brand awareness they might want to keep it the same. But this backfired for Gerber, a Nestle owned baby food brand.
When they started selling their baby food in Africa, they used the same label that they used on their American packaging, with the cute baby on it. But they later learnt that in Africa labels tend to feature images of what is inside the package as most people cannot read.
There are many things that brands can fall foul of when it comes to cultural differences. What’s acceptable in one country, can be highly offensive in another. Take Procter & Gamble, for example. They used a television advert in Japan that had been popular in Europe. It showed a woman bathing, her husband entering the bathroom and touching her. While in Europe this had been accepted, in Japan it was considered an invasion of privacy, inappropriate behaviour, and in very poor taste.
They’re not the only ones to slip up when it comes to cultural differences, however. Pepsi Cola lost its dominant market share in South East Asia when they changed the colour of their vending machines and coolers from deep royal blue to light ice blue. This is because in this area, light blue is often associated with death and mourning.
There are many traps that companies can fall into when translating existing branding into a different language for a new territory - Schweppes Tonic Water famously translating into Italian as Schweppes Toilet Water, KFC’s slogan “finger-lickin’ good” became “eat your fingers off” in China, and Japanese company Panasonic introduced a touchscreen computer named “Touch Woody”, not realising the connotations that would have in America.
Unsurprisingly, IKEA’s Scandinavian product names have had the potential to cause a few issues in different territories. “Redalen”, a town in Norway that they named a bed after sounds similar to a sex act in Thailand and “jattebra”, which IKEA uses as the name of a plant pot, sounds like a crude Thai term for sex. Fortunately, the furniture company had the sense to hire locals to scrutinise produce names to see how they sounded in Thai before translating them and in some cases they changed a sound in the word to prevent unfortunate misunderstandings.
Before moving into a new territory, companies need to do a whole lot of competition - especially around who they’re going up against. While it’s not impossible to take on a big company (just ask Richard Branson!), it’s also not an easy task and if the company isn’t offering anything different it will be very hard to tempt customers away.
Take Starbucks’ move into Australia as an example. The coffee giant opened their first Australian store in 2000 and quickly grew to have 84 stores across the country. But, within eight years they had to close 60 of those stores with losses of more than $140million.
One of the main reasons Starbucks failed Down Under is because they failed to properly analyse their local competition. Both McDonald’s and Gloria Jeans were already established in the country and offered better prices than Starbucks - and they were better adapted to consumer’s coffee preferences.