Question

What are some of the reasons why a national brand sold in one country might not work if it was introduced in a new, but, unfamiliar foreign market?

What are some of the reasons why a national brand might not work in an unfamiliar market?

Please provide an example and explain why the brand was unsuccessful?

Answer 1

Reasons for national brand not working in unfamiliar market:

• There may be political factors which would pose daunting challenges. There would be an unstable government which makes it difficult for the brand to plan for the future or the government may impose new tax or new regulations. These kinds of factors would create dilemma among the firms to continue with their brand in the international market.
• The next reason would be economic risk which is the potential for another country’s economic conditions & policies, property right protections & also currency exchange rates that can affect the firm’s operations in another market. Also factors like inflation & interest rateswhich makes difficult for the brands to fix the price for the product & also difficult for the consumers to purchase the product.
• The other possible reason for the local brand to suffer in the foreign market is differences in language, customs, norms, tastes & preferences of the customers. At times firms may act in a different culture when compared to the culture of another country which must be taken into account when competing in the international market.

Example of a national brand that failed overseas:

I am taking the example of the big box store that has great appeal to the Americans but they have a struggled a lot to enter the foreign markets. The best buy bungled its efforts in the European markets because of poor marketing efforts & failing to notice that Europeans prefer small shops when compared to large box stores among other factors. It also closed its branches in china & turkey. Hence the reason here for big box is that they did not attribute to the preferences of the local consumer.