Executive Briefings

There's Not Much Local in 'Glocalized' Products That West Makes for Developing World

Typically, multinational companies create stripped-down versions of products developed for Western consumers. They then offer these products in the developing world at a reduced price. To do this requires removing certain premium features or bells and whistles, and perhaps substituting lower-cost materials. Even so, the prices such products command are often unaffordable by all but a small percentage of people at the top of the local markets' income pyramid.

This strategy is called "glocalization", and the wisdom of it is in question. While the word "local" is embedded in the name, in truth there is very little locally relevant insight reflected in the design of glocalized products. Thus, after an initial flurry of sales made largely on the cachet of the multinational's global brand, the approach fizzles. As one Indian executive put it: "Emerging nations used to aspire to have rich-world products. Now they want rich-world quality in their own products."

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Typically, multinational companies create stripped-down versions of products developed for Western consumers. They then offer these products in the developing world at a reduced price. To do this requires removing certain premium features or bells and whistles, and perhaps substituting lower-cost materials. Even so, the prices such products command are often unaffordable by all but a small percentage of people at the top of the local markets' income pyramid.

This strategy is called "glocalization", and the wisdom of it is in question. While the word "local" is embedded in the name, in truth there is very little locally relevant insight reflected in the design of glocalized products. Thus, after an initial flurry of sales made largely on the cachet of the multinational's global brand, the approach fizzles. As one Indian executive put it: "Emerging nations used to aspire to have rich-world products. Now they want rich-world quality in their own products."

Read Full Article