E.g., 11/14/2019
E.g., 11/14/2019

How can you differentiate your company in a competitive market? (Part 2 of 3)

By: Gordon Husbands (Wordbank) - Wordbank Limited


08 December 2010

Why would anyone buy from your company over the next localization service provider? In the second part of this series on LSP differentiation, we look at ways to analyze your market position and where your company stands amongst the competition.

In the first installment of this series, I discussed how to identify your market offer on the product lifecycle curve and how it can be used to improve strategic planning.  In Part Two, we’ll look at two other tools – PESTEL and SWOT – that facilitate disciplined scrutiny and help you figure out your market position… as well as how to make your company stand out from the legion of other language service providers.


 Figure 1:  Just because an economist – skinny or otherwise – says it is over, does not mean that everyone’s problems are solved and the glory days are back!

To kick off Part Two of this three-part series, let me begin by asking ask you two questions:

“Why have the global recession and the perilous state of the world economy been foremost in our thoughts over recent months?”

“Why do we worry about the valuation of the Chinese Yuan or the strength of the Euro against the US dollar?”

Your answer to these two straightforward questions is probably along the lines that both the global economy and exchange rates have a direct impact on the demand for our services and our ability to make a reasonable profit.  And you’re right – all business entrepreneurs, managers and marketers should keep a watchful eye on market forces.  External forces over which we have no control can have a daily impact on what both we and our potential clients do.

The PESTEL Forces

As you might expect, marketers have a helpful acronym to categorize the forces that can have an impact on any market.  PESTEL stands for:

  • Political:  how various governments intervene to control or regulate a market.  For exampe, consider the governmental barriers to entry that await any company considering doing business in China.
  • Economic:  currency, interest rates, market growth etc.
  • Social:  all the cultural and demographic characteristics and trends of the target market.
  • Technological:  the effect of technology.  This factor’s impact on localization and business in general has been phenomenal and highly visible over the last two decades.
  • Environmental:  how climate, weather and modern environmental concerns can affect demand; buying a carbon offset when booking a flight is a good example of a new market opportunity created by environmental concern.  
  • Legal:  factors such as employment and discrimination law, licensing, copyright etc.

In general, consumer brands will be particularly interested in economic and demographic factors when targeting new product opportunities while the issue of governmental regulation will figure high up on the list of financial services companies concerns.

Translation and localization market forces

While the translation and localization industry is a relatively small one, we have to adopt a wider view than most industries, as ours is an industry which is highly dependent on the global economy and globalization in general.  The forces that motivate and encourage multinational companies to enter foreign markets and invest in localization can certainly be impacted by PESTEL forces which in turn have a trickle-down effect on companies in our industry.

There is no time or space here to go through a detailed analysis of all the forces that act on our market.  For me, the key has always been to take a wide view and then focus on those forces that represent the biggest potential impact.  Some will be short term issues like interest rates; others will be longer term such as how to respond to the growing significance of the BRIC economies.  You need to consider what is relevant to your individual target market(s) and what you hope to achieve.

As a representative of GALA, I recently gave a presentation to the ATC’s London conference on some of the key market forces at play, which I have summarized below.  There are many others to choose from, such as “Crowd or Community sourcing” and workflow technology, but here are the four which I feel will have wide-reaching impact on our market.

  1. Firstly, the much discussed Statistical MT which, when combined with post-editing, is destined to become the baseline replacement for ‘standard’ human translation.  I am not forecasting the demise of the human translator here.  Far from it.  But where volumes are high and the target audience is not quality sensitive, the economics of MT will be very seductive for large corporations, despite the potentially heavy initial investment.

    By its very nature this will have a trickle-down, depreciating effect on the ‘street price’ of translation and the general perception of the speed and ease with which content can be translated.
     

  2. Another force which is accelerating the perception that translation should be quick and easy is Google Translate.  It is becoming the first port of call for the web visitor wanting on-demand translation of a web page, email, instant message or chunk of text.  It works, it’s quick, and it’s usually sufficient for the user’s needs.  (It’s also often wrong, sometimes very wrong, and also very funny when it’s completely wrong – providing, of course, it’s not your own website!)

    Given Google’s present market dominance in the US and many western countries, I think it’s fair to say that in the short-term, it is only going to become more popular and more pervasive.  It will provide its users with access to content that would most likely never be translated otherwise.  However, because it remains free, it reinforces the view that translation should be either completely free or very cheap.  Not good news if you are highly dependent on general translation and have a fixed cost of sale.

    In the background, there is always the nagging concern that Google owns and controls a huge ‘translation corpus.’ This is fine, providing it remains both free and readily accessible.
     

  3. Over recent years we have seen an influx of new entrants to the market from India and China – both of whose economies are booming and whose costs still remain very low, despite some wage inflation.  They are now rapidly moving up the translation supply chain, tend to work on very slim margins, face little domestic regulation on working conditions and, as a result, are much better placed than western companies to compete on price.

4. Online Media. Finally, on the upside, there is the huge growth and penetration of internet-based media and communications across the globe:  online advertising, search marketing, social media, mobile apps, etc.  This is changing consumer behavior, creating new content formats, and rapidly decreasing time-to-market and consumer expectation of response times.

Corporations are waking up to the fact that carefully crafted brand-positioning can quickly be shot-to-hell in global Cyberspace.  Just ask BP.  Effective execution of international search marketing and managing global brand perception within social media will require both new types of translation service and also the reengineering of some established translation best-practices.

There is surely plenty enough here to consider, especially when combined with the effects of the global economy, interest rates and the ever-present competition.  Do your own analysis and figure out what forces are impacting your corner of the market.  You may be surprised.

Time to SWOT (Strengths, Weaknesses, Opportunities, Threats)

It may look a bit dated and dog-eared but the good old SWOT analysis is a good way to help understand your market position, identify market threats and opportunities and hence help define how to evolve your business strategy to remain competitive.

A SWOT requires you to take a look at your business and market from two different perspectives:

a) Internal: looking at your company and the set of products or services you offer to the market and,
b) External: looking at the characteristics of the market that you are either active in or are considering targeting.

The following diagram is an illustration of the sort of questions to consider.
 

  STRENGTHS WEAKNESSES
INTERNAL
  • What do you do well? (e.g. voiceovers or gaming is our specialty)
  • What unique or special resources do you have? (e.g. we have lots of cash or dedicated testing centers)
  • Why do customers buy from you? (e.g. understand their business or provide 8 hour turnaround)
  • What do you need to do better? (e.g. we don’t collect our debts fast enough, our PMs do not have the right skills)
  • Where are you lacking in resources? (e.g. lack of sales resources or no marketing activity)
  • Why or when do you lose business? (e.g. when we do big/small projects or software localization)
  OPPORTUNITIES
Positive market trends
THREATS
Negative market trends
EXTERNAL
  • Increasing demand in specific market sector (e.g. medical)
  • Need for new services (e.g. transcription or telephone interpretation)
  • Competitor in trouble or weak — buy or attack?
  • Moving into MT to better attract high volume/ low cost market
  • How active are your competitors?
  • What effect does the economic situation have?
  • How will currency fluctuations affect you?
  • What impact will changing government regulations have on you? (e.g. new EU VAT rules)

 

Simply put, we need to scrutinize and analyze our company strengths and weaknesses against a specific market opportunity while taking into account the forces acting on the market – for example, the economy, government regulation and competitive activity (PESTEL).

In terms of approaching this sort of analysis I would also recommend the following:

  • When completing the SWOT, consider a specific market and the performance of your service offered or to be offered to that market sector.
  • To be of true value to you and your company, this self-scrutiny and market analysis needs to be harsh, penetrating and as comprehensive as possible.
  • Take a wide view from customers, partners and employees.

Here are two practical air travel examples that I used when speaking on this topic at the GALA 2010 Prague conference.  Obviously they are not exhaustive and are rather general, but then I don’t yet run an airline. 

United

STRENGTHS WEAKNESSES
  • Have good/frequent US domestic connections
  • Generally offer good gate positions
  • Well-established brand in US
  • Reasonably competitive pricing
  • Good frequent flyer program
  • Poor customer service in-flight
  • On-time/cancellation record not good
  • Not perceived as good value by customers
  • In-flight entertainment poor
  • Aging fleet/staff, contract legacy
OPPORTUNITIES
Positive market trends
THREATS
Negative market trends
  • Expanding into BRICs
  • Exploit low-cost opportunity
  • Re-fleeting as aging cabin crew and pilots retire
  • Leasing more cost-effective airplanes on key routes
  • Develop premium economy market
  • Low cost domestic competitors
  • BA/AA/Iberia merger
  • Volatility of fuel prices and currencies
  • Climate change pressure groups supporting additional green-taxes
  • Pension and benefits burden
  • Virgin America expanding and providing better service

Virgin

STRENGTHS WEAKNESSES
  • Superb in-flight customer service
  • Market leading in-flight entertainment
  • Global brand awareness very high
  • Private company and very innovative
  • Modern fleet
  • Cabin and flight crew very service savvy
  • US coverage limited
  • Reliant on partners for domestic connections
  • Small compared to big hitters
  • Heavily dependent on Atlantic and Australasian traffic
OPPORTUNITIES
Positive market trends
THREATS
Negative market trends
  • Expanding into BRICs
  • Developing Virgin America to attack poorly served US Domestic market
  • Attacking aging US carriers routes – United etc.
  • Riding the eco-airline wave
  • Expand Virgin Holidays
  • Develop Space tourism market
  • Exploit ongoing BA industrial unrest
  • BA/AA/Iberia merger
  • Volatility of fuel prices and main currencies
  • Climate change lobby
  • EMIRATES and ETIHAD on Australasian routes

Post SWOT: What’s next?

So let’s assume that you have carried out an exhaustive and detailed SWOT on your software localization services in the high-tech market of North America, for example. I expect that you will have identified some of the following:

  • What direction this market is going in, whether it is profitable for you and for how long, and who the main competitors are.
  • Why customers are buying from you and why and where you are losing to competitors.
  • Where your main weaknesses are relative to the market and hence what you need to do to address them.

If you have done this properly, I guarantee that you will be both pleasantly surprised and scared witless in equal measure. To paraphrase Gordon Gecko of Wall Street fame, “Paranoia (in marketing) is good!”

In preparation for Part Three of the series, try doing a SWOT analysis for the three competitors you come up against all the time and for the one that has just recently appeared. If you don’t know who your competitors are, try Googling your equivalent of “software localization high-tech North America” and see what search results you get.

In the next and final installment we will be looking at differentiators and sustainable competitive advantage. You can only do this if you have a good handle on your target customer’s needs, the competition and your own strengths and weaknesses.

Remember: paranoia is good!  

Gordon is an Anglo-Scot, living in London and Spain. He has more than 27 years of experience in successful international sales and marketing, consulting and business management, having worked for corporations such as BAe, EMI, GEC and Digital Equipment in Europe and the US. Gordon has been actively involved in the communications localization business since 1995 and regularly publishes papers on international marketing and global communication. He is an active member of GALA and was closely involved in driving the development of a marketing and marcom plan for GALA. He is presently a partner, board member and Vice-president of Sales and Marketing at communications and advertising localization specialist Wordbank, based in London and Denver.