How can a multidomestic strategy help businesses achieve success?
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The right strategy is the key to success when companies go global. The chosen strategy affects time and financial spending, the number of human resources needed, deadlines, company awareness, success, and many more. In our blog, we have previously discussed the global standardization strategy that international companies fairly often use. This article focuses on the alternative option - the multidomestic strategy, its components, and, most importantly, the benefits it can bring to your business.
Definition of multidomestic strategy
A multidomestic strategy is the most local-oriented strategy for business globalization. It opposes the standardization approach and is highly oriented to the target market preferences and habits. In terms of management, multidomestic is the most decentralized option, as each of the local representative offices/departments works independently from others regarding marketing campaigns, business processes, etc. As can be apparent from this description, a multidomestic strategy requires much more time and financial spending than others because the target markets should have their own team, strategy, budgets for campaign implementations, etc.
So, why are the companies using it? Because the benefits often outweigh the spending. Take a look at the table below to compare.
| Advantages | Drawbacks |
|---|---|
| High competitiveness. The multidomestic strategy implies high local adaptation, which allows for building a solid local brand using deep knowledge about the market. | High operational costs are caused by businesses having to work with markets differently. That means companies will need separate teams per region, local offices (often), different marketing strategies, budgets, etc. |
| High responsiveness to market changes. The deep dive into the local market allows businesses to react to market changes much faster, which is essential today when information can be shared in seconds between continents. | The lack of global consistency. Businesses with an implemented multidomestic strategy often have different positioning across their markets, as they can offer products or services that vary in advertisement, branding, and quality. |
| High level of customer loyalty. Enhanced customer service is part of a multidomestic approach, which builds strong relationships with local customers and increases loyalty and trust, driving long-term business sustainability. | The lack of fast experience exchange. As multidomestic is a decentralized strategy, communication between the head and regional departments can be less streamlined than in a centralized one. As a result, exchanging experiences and best practices will be slower and more complicated. |
| Asset diversification. A company with a multidomestic strategy approach is independent of specific markets and immune to regional changes. In the worst case, it can rely on the success of other regions. | |
| Comprehensive overview of worldwide trends. A professional marketing approach across multiple regions can provide a comprehensive overview of global trends and events. The multidomestic strategy facilitates deeper insights and enables more confident and accurate predictions of upcoming changes. |
3 main steps for implementing a multidomestic strategy
Efforts for developing and implementing a multidomestic strategy can vary depending on the region. For some, you must build all the processes from scratch, while others can partly use the established best practices. Generally, there can be highlighted the following steps:
Step 1. Assessment and planning
The first step in creating a multidomestic strategy is choosing a new region(s) and planning the budget to enter it (them). The business should have clear goals, budget frames, and selected market(s). This step can be described as a high-level company vision, which is the foundation for further actions.
Step 2. Comprehensive markets research
Here, the researchers and analytics teams have the crucial task of understanding the region as much as possible because the entire success of the multidomestic strategy depends on fitting to the cultural sensitivity and adaptation to market needs. At the end of this process, the business must have a ready-to-implement business expansion strategy with concrete budgeting, KPIs, etc.
The checklist of tasks is long and includes analyzing demographic and economic data, researching competitors, and studying consumer behavior.
Step 3. Formation of a region-related team
With all the information above, businesses can build a dedicated regional team responsible for implementing strategies and enhancing business adaptation. At this stage, it is worth beginning a localization strategy development, such as localizing a pricing policy, building a detailed marketing strategy, positioning, etc.
No less important is the construction of communication between the head office and regional department, viz.:
- Building cross-functional collaboration;
- Organization of communication channels;
- Creating knowledge sharing mechanism;
- Providing feedback instruments.
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Role of localization in a multidomestic strategy
Localization (l11n) is more than just a translation. It is a core process that ensures products, services, communication, marketing, and all company-related materials fully align with the local culture, regulations, and consumer preferences. That's why, after all the preparation stages, it is the #1 priority during multidomestic strategy.
Effective localization will allow businesses to get all the advantages of a local-first approach described in the first paragraph. Let's define the main localization steps and tools that will help adapt the business to the new market:
- Design localization. The design-first approach is recommended for business adaptation, mainly when the market significantly differs. It allows teams to prevent text length issues when the width of words and sentences can destroy layouts, font issues when some characters can be unsupported in another language, cultural blunders when using inappropriate symbols or images, etc.
Lingohub provides a Figma plugin that allows content exchange between Figma and Lingohub for fast translation and text fittings, making design localization easier than ever.
Read details in the blog --> Localization of your Figma design.
- Marketing localization is one of the most responsible and challenging parts of a multidomestic strategy. Its goal is to create a highly targeted and personalized experience for local users that will feel native. In other words, during this stage, the team should clearly understand what to say, to whom, and where. Marketing localization includes various activities, from SEO localization to text translation, transcreation, and rebuilding the company vision, mission, and slogans.
Read more:
- How to build an effective localization strategy?
- How to avoid duplicate content SEO punishment?
- How to localize your app store?
- Content localization. It may wrongly seem like the easiest part of the process - don't rush to conclusions. Content localization has a lot of pitfalls, including:
- Figures localization;
- Dialects and slang translation;
- Technical terminology consistency keeping;
Lingohub provides a list of tools to support translator with their job:
- Term base that provides the team with the correct terms' translation and context.
- Quality checks that warn about errors.
- Machine translation with AI engines under the hood.
Check out our features list and try all of them with a 14-day free trial.
Example of the multidomestic strategy
We talked a lot about multidomestic strategy; let's take a quick look at Nestle, which successfully uses this approach. Nestle is the world's largest producer of grub products, with more than 2000 brands for different countries. Besides product diversification, they offer different tastes, depending on the region, respecting local preferences and culture. For example, they provide unusual flavors in Japan, such as green tea and wasabi for Kit Kat.
Another example is a brand name difference for the same product; here, we overview only one – instant coffee.
| Country | Product | Product’s peculiarity |
|---|---|---|
| Argentina | instant coffee | Dolca |
| Greece | instant coffee | Loumidis |
| South Africa | instant coffee | Ricoffy |
| France | instant coffee | Ricore |
| Sweden | instant coffee | Zoegas |
Using the multidomestic strategy, Nestle cultivates consumer loyalty and engagement and cements its position as a global leader in the food and beverage industry.
To sum up
The first step to going global is to choose a strategy. While the multidomestic approach may seem challenging at first, your customers' loyalty and trust will make it worthwhile. Regardless of your chosen approach, the right tool can simplify the localization process, and Lingohub is a magic wand that can help you. If you want more information, let's schedule a quick demo call with our team to discuss how we can help you achieve your goals.