Tuesday, July 14, 2009

Cost problem, or market advantage?

For a global company, it’s appealing to try to standardize marketing across the world. It makes business sense, right? Streamline everything, be super-efficient, leverage scale, etc. It reduces costs to do something once and use it everywhere. But does it really?

It’s tempting to see local variation as a cost problem, but it is usually a market advantage. Consider McDonald’s. Mickey-D’s sells both:
  • Similar things differently in different markets. (How many ways can you market a 4-ounce beef patty that resembles a Whopper? Well, a lot actually.)
  • Totally different things in different markets. (Ever hear of the McLobster, or the Teriyaki McBurger?)
I assume that back in Oak Brook (McD’s HQ) they don’t consider all these specialties as costs that need to be reduced or eliminated. I don’t know, but I imagine that there are good reasons that they don’t sell Big Macs with beef in India (duh), or the McShawarma in the U.S.

I wonder why we see some businesses now, presumably trying to better manage costs, that appear to see these types of variations as costly deviations instead of market advantages?

It is sometimes hard to distinguish message from form, and it is almost always easier to focus on the form, but that doesn’t mean centrally-managed form is going to get the best results. Make sure the message is on-target centrally (maybe), but then trust people closer to the market to reflect that message in ways that are appropriate and resonate best with the local market. It works for McDonald’s.

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