The F-150 pickup truck, the best-selling vehicle in the United States, travels the roads in Mexico by another name: the Ford Lobo, the Spanish word for wolf. The mid-size sedan known worldwide as the Ford Mondeo (referencing the Latin word mundus for world) is known as the Ford Fusion in North America. And Mercedes-Benz vehicles are decidedly not marketed in China as “benzi”—which means “rush to die” in Chinese.
Adaptation of a product or service is nothing new for internationally focused businesses—and often a new name is just the beginning.
Take the automotive industry, for example. Companies must adapt vehicle designs and features. Do regional driving conditions, like narrower roads, require retractable side mirrors? What about national safety and environmental mandates? EU rules, for instance, call for higher hoods to reduce the risk of head trauma if a pedestrian is struck.
Then products must adapt to what customers want (such as crossovers and SUVs in China),what they can afford (given fuel prices, taxes and other costs of ownership), and what’s appropriate within the culture. Is there a tradition of car ownership in the market? What is an automobile’s role as a status symbol?
Digital transformation adds to this list of considerations. Today, products beyond computers and phones connect to the internet and collect data. New business models have spurred new product uses, by new customer bases. Expectations of the user experience can differ vastly across markets. Meanwhile evolving regulations, network infrastructure and cultural norms heighten demand for some products and make others unwelcome or obsolete.
Examples follow of how how digital transformation is impacting product adaptation in the auto industry, with questions companies in any sector can ask when evaluating their own strategies.
Accommodating new features and expectations
Just as phones have transformed into smartphones and thermostats into Nests, a car is no longer just a transportation device on four wheels. “The automobile of the future is an intelligent spatial mobility terminal with a high degree of online-offline integration,” said An Conghui, president of Zhejiang Geely Holding Group and president and CEO of the growing global conglomerate Geely Auto Group.
This Internet of Things (IoT) complicates product and service adaptation, from what customers expect to what you’ll be able to deliver.
Say you’re selling cars and a big selling point is Sirius XM satellite radio or a navigation and remote diagnostics service like GM’s OnStar. Sirius XM is currently only available in the U.S. and Canada. OnStar is currently only available in North America, Latin America, EU or China.
Or say you’re the owner of a U.S.-based network of dealerships expanding into a market like Japan. The Japanese dealership experience is a lifelong rather than transactional relationship, with state-of-the-art showrooms and a single, highly personal contact for insurance, maintenance and more. New facilities in this market will have different networking and data needs than a U.S. dealership.
- What kind of digital experience are customers accustomed to?
- Do the resources (infrastructure, content) exist to deliver it, and if not, what modifications or partnerships will you need to undertake?
- What regulations govern data storage, usage and content licensing?
Responding to new business models
Companies must also look at any new business models catalyzed by digital transformation. How will app-enabled services or other digital disruptors impact a product’s features and functions in a new market?
Take for example shared mobility in the automotive sector. Where previously automakers tailored their products for the car owner and individual use, now they must consider the customers who will be using this vehicle like a taxi, as a means of business. For the latter market, fuel efficiency and real-time navigation might be more important, as might features like connected tablets in the backseat to keep passengers entertained during their rides. Ultimately, autonomous vehicles (AV) may become more appealing if shared mobility companies aim to trim costs by taking human drivers out of the equation.
- How are new business models impacting preferences and demand among your customers?
- Will these new business models spur a need for product modifications?
Contemplating new innovations
Finally, digital transformation sometimes demands a comprehensive product overhaul. How much should you incorporate innovative technologies into your product adaptation for a particular market? The answer varies based on customer opinion and supporting infrastructure.
Take, for example, AV technology in the automotive industry. India, with its heavy traffic congestion, and Japan, with its aging population, possess higher degrees of AV “readiness.” On the other hand, New Zealand, with low traffic congestion and patchy mobile networks, exhibits less demand for mainstream AV vehicles.
Similar questions arise when debating fossil fuel vs. electric power: Is the regulatory climate prohibitive or accommodating? Is the supporting infrastructure—electric vehicle charging stations for our AV vehicle example—present?
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Whatever industry you’re in, specialized consultants and advisors can help you develop a product adaptation strategy that responds to digital transformation in your global markets. For more information, contact us.