Product in international market Standardisation Vs Adaptation • In international markets, success depends on satisfying the market demands. The product or service must be suitable and acceptable for its purpose. • According to Doole & Lowe (1999, p.296), “The main issue for a company about to commence marketing internationally, is to assess the suitability of the existing products for international markets.” • Product policy abroad: firm must decide which aspects of a product need to be adapted and which can be standardised. Standardardisation Vs Adaptation • Standardisation policy: offering a uniform version of a product in all of its foreign markets. • Adaptation policy: offering a product to targeted foreign consumers altered to specific tastes, preferences and needs. Adaptation can concern all the characteristics of the product. • Decision between standardisation and adaptation is not mutually exclusive rather it is a matter of degree • A certain degree of adaptation of a product is required in international markets. International Product Strategies These Three Basic Strategies Can Be Further Broken Down Into 5 Options Reasons for Product Standardization • Economies of scale : Production, R&D, Marketing • Common Consumer needs : Drinking patterns, car sizes • Consumer Mobility : Customer retention & Loyalty American Express, Kodak, ... • Home Country Image : US jeans, French Perfumes,... • Impact of technology : B to B Markets Reasons for Product Adaptation • Climate: US Air-conditioning equipment • Skill level of users : Computers in Africa • National consumer habits : - front-loading/top-loading washing machines - car models : four-door (F) - two-door (Germ.) • Government regulations on products, packaging, and labels. • Company history and operations (subsidiaries) Adaptation Mandatory Product Adaptation • Government regulations • Electrical current standards • Measurement systems • Operating systems Optional Product Adaptation • Physical distribution • Local use conditions • Climatic conditions • Space constraint • Consumer demographics as related to physical appearance • User's habits • Environmental characteristics • Price • Limiting product movement across national borders (gray marketing) • Historical preference or local customs and culture International Product Strategies • Standardized Product - Domestic product introduced internationally, with minor or no modification • Localized Product - Domestic product adapted for foreign markets - Product designed specifically for foreign markets • Global Product - Product designed with international (not national) markets in mind - Product having universal features - Product being adaptation-ready, when necessary Degree of Standardization – Modular Approach – Core-Product (Common Platform) Approach • Balancing standardization & adaptation • Over standardization vs. over customization • High tech or high touch – Cameras vs. cosmetics – Washing machines vs. desserts Country-of-Origin Effects • Impact of where the product is manufactured – perceived quality? – patriotism/nationalism? • Country-of-origin versus country-of-manufacture • Interaction of country-of-origin and brand name effects • Hybrid products (e.g., components manufactured in multiple countries; products via strategic alliances) • “…any influence that the country of manufacture, assembly, or design has on a consumers positive or negative perception of a product” (Cateora & Graham, 2002, p.369) • Stereotypes – positive or negative • Significant influence on product positioning • Adapt positioning from country to country Factors Affecting Adaptation Considerations in adapting products The Market Environment • Government Regulations – Political and social agendas often dictate regulatory requirements • Nontariff Barriers – Product standards, testing, subsidized local products • Customer Characteristics, Expectations, and Preferences – Physical size, local behaviors, tastes, attitudes, and traditions – Consumption patterns, psychosocial characteristics, and general cultural criteria The Market Environment • Economic Development – The stage of economic development affects the market size and demand characteristics. Backward innovation of the product may be required to meet local requirements. • Competitive offerings – Monitoring competing local products is critical in adjusting the product for competitive advantage. • Climate and geography – Local climatic conditions and terrain features can make products vulnerable to damage. What should be the product’s… • Physical attributes? – Size, design, materials, weight, color, etc. • Package attributes? – Protection, color, design, brand, etc. • Service attributes? – Use instructions, installation, warranties, repair/maintenance, spare parts, etc. • Expected profit contribution of each adaptation? Convergence of Car Sizes Drivers of Product Adaptation Example COLGATE Toothpaste • Differences in National Reglementation : – Triclosan forbidden in Germany – High fluor content in local water (UK) – Obligation to sell high fluor content toothpaste in pahrmacy (France) – Stringent clinical tests in France • Packaging: – Ecological Stand-up tubes in Germany – Failure in France (Carrefour) • Distribution: – Role of pharmacy in Italy and Spain – Role of drugstore in UK • Communication: – Medical in Italy and Spain (recommended by dentist) – Non-medical in UK Product Characteristics • Product Constituents • Branding • Packaging • Appearance • Method of Operation or Usage • Quality • Service • Country-of-Origin Effects International branding and Nestle’s Branding Tree Protecting International Brand Names and Trademarks • The firm must evaluate each market / brand whether to seek protection. (Blue Bell Inc. - trademark Wrangler registered in 135 countries) • Global brands versus national brands : Priority in Use <-> Priority in Registration (Ford Mustang in Germany renamed Taunus) • Brand piracy : local imitation or deliberate registration Family Brands Product Packaging and Labeling compare • http://www.pg.com/es_ES/ • http://www.fr.pg.com/ • http://www.pg.com.tr/procter/index.htm • http://www.pg.com/pl_PL/index.shtml • http://www.procter-gamble.cz/kdo-jsme.php • http://www.mcdonalds.bg/new_md/display.php?p=menu&pp=deserti • http://www.mcdonalds.cz/ • http://www.mcdonalds.se/ • http://www.mcdonalds.it/prodotti/coffee.asp • http://www.imlovinit.at/html.php • http://www.mcdonalds.fr/#/vcve-2/ • http://www.mcdonalds.hu/ • http://www.mcdonalds.pl/ • http://www.mcdonalds.es/#/home/ • http://www.mcdonalds.com.tr/ International packaging and European Packaging Trends • Transportation Concerns • Climate Concerns • Economic Concerns • Cultural Factors • Promotional Considerations • Market Retailing Structure • Labelling Company Considerations • Organizational capabilities? • Is it worth it? • Can we afford not to do it? • Can a specific return-on-investment (ROI) be attained? • Quality, price, and user perceptions? • Warranties? • Managerial talent? sources • globe.miis.edu/International%20Product%20Policy.ppt • www.econ.upm.edu.my/~pjj/PJJNotes/MGM4273(PemasaranAntarabangsa)/im_ch_10.ppt • www.kai-mahnert.de/studybuddy/Presentations/Global/Product%20Decision.ppt