Localize Your Product to Succeed in a Foreign Market
David Sehyeon Baek is a columnist -- Ed.
In Korea, KFC is not doing too well these days. There was a time when KFC was hugely popular. Now in the list of the best 10 chicken brands, KFC is not included at all. People say the total number of chicken restaurants in Korea exceeds the total number of McDonald’s in the world. Korea has chicken companies that enjoy strong popularity nationwide. Then what if these successful Korean chicken companies enter foreign markets? No doubt that they will surely succeed. But will they always? It really depends on local tastes and eating habits, actually. They might be successful with their original Korean chicken taste, but some localization might be a must, depending on each market.
One famous Korean chicken company entered the Indonesian market. One of its restaurants is located in a hot spot in Jakarta. While all the other restaurants in the area are crowded with customers, this Korean chicken restaurant somehow doesn’t have many customers. Muslims account for 87 percent of the total population in Indonesia. Since they cannot eat pork, they eat chicken, beef and fish a lot. Then why is this Korean chicken company failing? It’s because they failed to fully understand local tastes and flavors. Localization means you need to have a good understanding of the subtle differences of local tastes and their eating habits. When I landed in Jakarta, I couldn’t eat fried chicken with rice.
It reminded me of mango sticky rice in Bangkok. Mango is a fruit and I have never eaten mango with any sort of rice. It just didn’t make sense. So even though I saw mango with sticky rice in the menu at Thai restaurants many times, it never occurred to me that I should give it a try. And one day, while having dinner with a high-profile Thai guest, he insisted that I taste mango sticky rice, and so I took one bite only out of courtesy. As soon as I took one bite, it tasted indescribably good. Since then, I have been a big fan of mango sticky rice. Whoever made it, I want to call him or her genius.
In Indonesia, people eat fried chicken with rice at KFC. KFC targets the general population, not the premium customers. Average Indonesians who earn around US$300 per month can easily eat fried chicken at KFC. They don’t put too much sauce on the chicken itself so that customers can put sauce according to their taste. They use sambal, a traditional Indonesian chili sauce or paste made from chili peppers combined with ingredients such as garlic, ginger, shrimp paste, etc. Indonesian customers seem to like spicy food, and so for the same reason, a Korean “buldak” spicy chicken ramen has been a big hit here.
Takin a cue from the success of this Korean buldak spicy chicken ramen, if you think you can make a big success overnight with spicy fried chicken, you are sadly mistaken. Somehow it doesn’t work that way. Indonesian customers seem to like to put their own sauce on chicken, instead of the restaurants putting spicy sauce. Maybe it is because they are used to putting their own sambals into their food. They also tend to eat only two pieces of fried chicken. On the other hand, Koreans tend to eat one whole chicken in one sitting. Local people always ask me how Koreans can eat so much in one sitting.
I guess KFC understands the local market really well. They sell one or two pieces of fried chicken at an affordable price for the general population. So it is very common to see a long line of customers waiting at the counter of KFC shops during the lunch and dinner time.
The Korean chicken company sells friend chicken with a lot of sauce at a high price. It is because that particular sauced chicken has been selling really well in Korea. It seems that the company believes its successful recipe will do wonders in the Indonesian market. Who can ever resist this magical taste of the Korean sauced chicken? Actually, many customers can. They put some really spicy sauce on it also, only to fail. They didn’t even bother to change their menu names locally. Who would change the famous brand name, right? Some Korean companies are mistaken to believe that there is one Southeast Asian market, which leads them to believe that their success in Singapore or Malaysia, which are located in Southeast Asia, will be replicated in Indonesia, which is also located in Southeast Asia.
This Korean chicken company is failing to differentiate itself from other chicken companies in Indonesia. Targeting high-end customers is one thing; in Indonesia, chicken is for the general population, not a high-end food, unless they can make a great premium kind. Its positioning in the market is not really good at all.
“Ojju” is a good example of how Korean food can be successful in the Indonesian market. It sells not only chicken, but also other Korean food heavily localized. As a Korean, when I ate the Korean food at Ojju, the taste was not exactly the Korean one. I would say it is well localized. Every evening, for dinner, so many people wait in line. Many local youtubers also uploaded the Korean food at Ojju and got millions of views.
Even if you have a great local partner company and yet you don’t understand the market yourself, you might not be successful. Regardless of the size of the business, if you fail to understand local needs local variables for your business correctly, you are bound to fail. Go back to basics and do your homework before you enter any foreign market.