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International Product Strategy

International Product Strategy. Product introduction alternatives Country-of-origin Product components model Diffusion of innovation (newness, characteristics, positioning). Product Introduction Alternatives for International Markets. Standardization vs. Adaptation

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International Product Strategy

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  1. International Product Strategy • Product introduction alternatives • Country-of-origin • Product components model • Diffusion of innovation (newness, characteristics, positioning)

  2. Product Introduction Alternatives for International Markets Standardization vs. Adaptation • Exporting: Sell product “as is” • Localization/Adaptation: two levels: (1) the product needs only minor modification for the foreign market (2) design a new product that is nearly completely modified to suit the needs/characteristics of each country. • Regional standardization: product modification at the regional level • Global standardization: one product designed to cross borders with no modifications • Other: • Acquisition • Private Label

  3. Exporting • Some products, by their nature, need little to no modification to meet foreign country needs • Examples: • Steel Chemicals • Software Luxury products • Some clothing (e.g., Columbia Sportswear)

  4. Localization (minor adaptation: most consumer products) • Some products require only small adjustments to meet government regulations • Examples: • OTC drugs; label differences • Hair color; package • Subway, Pizza Hut, etc.

  5. Localization (greater adaptation) • Some products resist standardization across borders • Examples: Cosmetics Software

  6. Software products

  7. Software: Formats

  8. Partial or Complete Adaptation • Dramatically modifying a product to fit the needs of different markets • Appliances: washing machines Kenya: no electricity; hand powered Europe: top loading Singapore: small & anti-rat Anti-Rat BaseThe bottom of machine is sealed to prevent the damage caused by rats.

  9. Regional Standardization • Some products that can’t be standardized across the entire globe can be standardized for a particular geographic region. • e.g., Asian Wall Street Journal, European Wall Street Journal

  10. Global Standardization • One product, one marketing mix worldwide Paraguay Chile Brazil Thailand

  11. Why standardize? • Increasing homogeneity of needs among global consumers • Increasing travel increases brand familiarity across countries • Economies of scale in production, distribution, advertising, etc. • Other cost efficiencies; e.g., centralized management

  12. Other alternatives • Acquisition – by a local brand and continue or reintroduce; e.g., Thumbs Up • Private Label – sell product to a dealer/retailer who markets the product under its own name; e.g., Japanese Cooperative Union film products are actually made by Kodak

  13. Country-of-origin effect • The mental associations consumers make to the country with which a certain brand or class of products is associated. • Varies by: • Positive or negative effect on marketing activities • Country of manufacture vs. country of headquarters

  14. Product • the sum of the physical and psychological satisfactions provided to the user (real benefits, perceived benefits) • cultural characteristics affect product perceptions • country of origin effects may help or hinder acceptance

  15. Diffusion of Innovation Goal: shorten lag time between introduction and product acceptance . Factors that affect the adoption rate of products in new markets: • degree of perceived newness • characteristics of innovations • product positioning (method of communication)

  16. Product Component Model Physical design, package, quality, functional features Psychological Brand, quality, country of origin, positioning Support warranty, installation, instructions, repair/maintenance, guarantees

  17. Branding Alternatives • Global - one standardized brand worldwide; umbrella (corporate) branding (IBM, Perrier, Siemens, Virgin) • National (Local) - a brand developed for one country, or a region (Pepsi Max - Britain, Bud - Germany). • Private (store brand) - sell a product to a retailer, who resells as its own store brand (Kodak sells to Japanese Cooperative Union’s 2500 retail stores).

  18. Product Positioning The place a product occupies in a consumer’s mind; consumer perception of the product. Goal is to create a perception for the product: • Yoplait USA - “French,” “healthy” • Yoplait Brazil - sweet snack for kids • Yoplait Japan - “100% purity”

  19. Degree of Newness • Continuous innovation - products that are familiar to a country, but with subtle changes (BBQ chips in Canada) • Dynamically continuous innovation - product is familiar to a country, but in a new form (diet soft drinks in Japan, Britain) • Discontinuous innovation - completely new to a country; may meet resistance (yogurt in U.S. 1970’s, ice cream in Korea 1990s)

  20. Characteristics of New Product Introductions (see p. 80, text) • relative advantage compared to existing products • compatibility with norms • product complexity • ease of trialability • benefit observability

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