With the current import crisis and increase in prices, along with the Egyptian government’s tendency to encourage local industrialization, there are now many opportunities for manufacturers, suppliers and R&D institutions to rely on the manufacturing capabilities of the local market. But how can they move through a successful industrial localization strategy for their products or services?
Through our previous article, we have tackled what localization is and its power on local manufacturers. Today, we’d like to explore the key approaches that industrial and manufacturing companies can use to achieve successful localization of their offerings:
1- Making Use of High Local Demand
One of the critical aspects of localization is to understand the demand in the local target market through assessment and technical and marketing studies.
This enables companies to better understand the specific areas that need adaptation, ensuring that their products or services will appeal to local customers.
Moreover, catering to high local demand through industrial localization can result in several benefits. It can lead to increased market share, customer loyalty, and profitability. By delivering products or services that appeal to local customers, companies can gain a competitive advantage over competitors who may not have localized their manufacturing processes.
2- Providing High Value:
A critical key to replace imported products with local ones is utilizing the findings of the previous step to provide high-value services. This involves changes to the design and development of products by depending on R&D expertise to innovate products that precede the currently preferred ones; urging users to pick a product that has a high margin.
A high margin is important for several reasons:
First, high margins directly contribute to profitability and financial sustainability for businesses. When the profit margin on a product or service is high, it means that a significant portion of the revenue generated exceeds the associated costs, resulting in a larger profit for each unit sold. This allows businesses to cover their expenses, invest in growth opportunities, and remain competitive in the market.
Moreover, high-margin products or services often signify value or uniqueness in the eyes of consumers. Customers are often willing to pay a premium for items that are perceived as high quality, exclusive, or differentiated from competitors. This enables businesses to position themselves as premium brands and capture a niche market segment that appreciates and is willing to pay for the added value.
Furthermore, having high-margin products or services allows businesses to allocate more resources towards research and development, innovation, and customer service. It facilitates the ability to invest in improving existing offerings, developing new products or services, and enhancing the overall customer experience. These investments can lead to long-term growth and a sustainable competitive advantage in the market.
3- Aligning Localization with Business Strategy:
Your industrial localization strategy should align with your company’s overall business goals and competences, including manufacturing capabilities, requirements availability, raw materials, suppliers, and more. By doing so, companies can ensure that their products or services meet the requirements of the local market while still aligning with their business strategy.
Another consideration is the availability of required resources. Localizing production may involve sourcing materials locally to ensure cost-effectiveness and a reliable supply chain. It is important to assess the availability and quality of raw materials and identify potential local suppliers who can meet the company’s standards.
Furthermore, aligning localization with business strategy involves maintaining brand identity and consistency. While adapting products or services to local preferences, it is crucial to ensure that the brand essence remains intact. This involves carefully considering how to incorporate local elements without diluting the brand’s identity and maintaining a consistent customer experience across different markets.
By aligning localization efforts with business strategy, companies can mitigate the risk of failure in the local market. It allows them to leverage their core competencies and expertise while adapting to the specific needs and preferences of the local market.
This significantly reduces the risk of failure in the local market and enables companies to expand their footprint globally.
4- Setting A Competitive Price:
This cost advantage can help companies establish a solid presence in the local market and gain a competitive edge. To set a competitive price, several factors need to be considered.
First, it is crucial to understand the real value of the product or service in the local market. This involves assessing market demand, customer preferences, and the perceived value of similar products or services.
Logistics risk is another important factor to consider. Assessing the costs associated with transportation, import duties, and potential supply chain disruptions can help determine a competitive price point. By localizing manufacturing, companies can reduce logistical complexities and associated costs, which can be reflected in the pricing to offer a more competitive option.
Availability of dollars or the currency exchange rate can also impact pricing decisions. Companies must consider the local currency and its stability to ensure profitability and competitiveness. Fluctuations in exchange rates can affect the cost of materials, production, and overall pricing strategy.
Additionally, understanding the total cost of acquisition is crucial. This involves considering not only the production costs but also other expenses, such as research and development, marketing, overhead costs, and any applicable regulatory compliance costs. By carefully assessing the total cost of acquisition, companies can set a competitive price that covers all expenses while remaining attractive to customers.
5- Meeting Global Demand:
Global demand presents significant opportunities for businesses to expand their reach and tap into new markets. By adopting effective localization practices, companies can successfully enter international markets and capitalize on the demand for their products or services worldwide.
Localization involves adapting products, services, and marketing strategies to meet the specific needs and preferences of the target international market. This process includes using reverse engineering tools and special manufacturing capabilities to gain insights into the market and align the offerings with global customer expectations. By tailoring products or services to local market requirements, businesses can enhance their appeal, establish strong connections with customers, and drive more sales.
Expanding globally not only enables businesses to reach a larger customer base but also provides opportunities for better margins and long-term growth. By entering international markets, companies can leverage their unique value propositions and differentiate themselves from local competitors. This allows better profit margins and increased revenue streams, especially in markets where the products or services offer a competitive advantage.
If you have what it takes to localize your products efficiently, at “Innovation & Design Technologies”, we offer a comprehensive range of services tailored to the needs of industrial and manufacturing companies looking to expand their operations.
Check out a list of comprehensive localization services that can reduce your risks, and ensure your product or service has a competitive edge in the local market.
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