Product/Communications Extension (Dual Extension)

This method extends the same home-market product and marketing promotion into target
markets. Under certain conditions, it can be the simplest and most profitable strategy. For
example, because of a common language and other cultural similarities, companies based in
English-speaking Canadian provinces can sell the same product with packaging and advertising
in the U.S. market—provided the product is not required by the U.S. government to carry any
special statements or warnings. The Canadian companies contain costs by developing a single
product and one promotional campaign for both markets. Yet it is important for Canadian
companies not to ignore any subtle cultural differences that could cause confusion in interpreting
the promotional message.
As the information age continues to knit the world more tightly together, this dual extension
method will probably grow more popular. Today, consumers in seemingly remote parts of the
world are rapidly becoming aware of the latest worldwide fads and fashions. But this strategy
appears to be better suited for certain groups of buyers, including brand-conscious teenagers,
business executives, and wealthy individuals. The strategy also tends to be better suited for
companies that use a global strategy with their products, such as upscale personal items with
global brand names—examples include Rolex ([Link]) watches, Hermes
([Link]. com) scarves and ties, and Chanel ([Link]) perfumes. It can also be
appropriate for global brands that have mass appeal and that cut across all age groups and social
classes—such as Canon ([Link]), Mars ([Link]), and Samsung
([Link]). The strategy also is useful to companies that are the low-cost leaders in
their industries: One product and one promotional message keep costs down.
Product Extension/Communications Adaption
Under this method, a company extends the same product into target markets but alters its
promotion. Communications require adaptation because the product satisfies a different need,
serves a different function, or appeals to a different type of buyer. Companies can adjust their
marketing communication to inform potential buyers that the product either satisfies their needs
or serves a distinct function. This approach helps companies contain costs because the good itself
requires no alteration. Altering communications can be expensive, however, especially when
cultural differences among target markets are significant. Filming altered ads with local actors
and on location can add significantly to promotional costs.
One company that changes its promotional message for international markets is the Japanese
retailer Muji ([Link]). Muji offers a wide variety of goods, including writing materials,
clothing, and home furnishings inspired by a central theme rooted in centuries of Japanese
culture—the simplicity of everyday life. Muji’s philosophy is one of selling unbranded quality
goods, and reflects the company’s goal of producing functional Japanese minimalist products for
the masses. Its target market in Japan is the average school-aged child and young adult. But
Muji’s European stores use a different promotional message. Muji’s European customers tend to
be older and see themselves as sophisticated and stylish buyers of the company’s products. In
Europe, Muji’s promotional message focuses on the respectability of its brand name—clearly
different from its message in Japan. Also, the company’s European customers are not simply
buying a product (as do its Japanese customers); they are buying into the traditional Japanese
concept of simplicity.
Low economic development can require that communications be adapted to suit local
conditions. In developing countries (such as rural parts of India and China), TV and radio
coverage are limited, and development of the Web is years behind that of developed nations.
Marketers in those countries must use alternative techniques, including door-to-door personal
selling and regional product shows or fairs.
On the other hand, companies in Europe and North America and certain Asian countries can
rely on a modern telecommunications system to reach millions of consumers through TV, radio,
and the World Wide Web. In these markets it is common for companies to adapt their websites to
each national market. To read about how a business can tailor a website to suit local culture, see
this chapter’s Culture Matters feature, titled “Localizing Websites.”
Product Adaptation/Communications Extension
Using this method, a company adapts its product to the requirements of the international market
while retaining the product’s original marketing communication. There are many reasons why
companies need to adapt their products. One might be to meet legal requirements in the local
market. Moreover, governments can require that firms use a certain amount of local materials,
labor, or some other resource in their local production process. If the exact same materials or
components are not available locally, the result can be a modified product.
This method can be costly because appropriately modifying a product to suit the needs of local
buyers often means the company must invest in production facilities in the local market. If each
national market requires its own production facility, cost savings provided by economies of scale
in production can be elusive. Still, a company can implement this strategy successfully if it sells
a differentiated product for which it can charge a higher price to offset the greater production
costs.
Product/Communications Adaption (Dual Adaption)
This method adapts both the product and its marketing communication to suit the target market.
The product itself is adapted to match the needs or preferences of local buyers. The promotional
message is adapted to explain how the product meets those needs and preferences. Because both
production and marketing efforts must be altered, this strategy can be expensive; therefore, it is
not very common. It can be implemented successfully, however, if a sufficiently large and
profitable market segment exists.
Product Invention
This method requires that an entirely new product be developed for the target market. Product
invention is often necessary when many important differences exist between the home and target
markets. One reason for product invention is that local buyers cannot afford a company’s current
product because of low purchasing power. For example, Honda ([Link]) developed a
car called the City for budget-conscious buyers in Southeast Asia and Europe.
Product inventions can also arise because of a lack of adequate infrastructure needed to operate
certain products. One day, London inventor Trevor Baylis was watching a TV documentary on
the difficulty of educating Africans about AIDS because much of the continent did not have the
electricity infrastructure or batteries to operate radios. Baylis set to work and developed the
Freeplay windup radio—30 seconds of cranking keeps it going for 40 minutes. Baylis and
several South African businessmen then formed a company called Bay-Gen Power Corporation
in Cape Town, South Africa. The radio was first sold only to relief agencies working in
developing nations. But due mostly to word of mouth, it is now popular worldwide among
hikers, environmentalists, and even hip shoppers looking for eco-friendly appliances.
Designing Distribution Strategies
Planning, implementing, and controlling the physical flow of a product from its point of origin
to its point of consumption is called distribution. The physical path that a product follows on its
way to customers is called a distribution channel. Companies along this channel that work
together in delivering products to customers are called channel members or intermediaries. Bear
in mind that manufacturers of goods are not the only producers who need distribution channels.
Service providers, such as consulting companies, health-care organizations, and news services,
also need distribution (or delivery) systems to reach their customers. In the business of delivering
news services over the World Wide Web, channel members involved in getting news from the
newsroom to the reader can include, among others, Internet service providers and search engine
suppliers.
Companies develop their international distribution strategies based on two related decisions: (1)
how to get goods into a country and (2) how to distribute goods within a country. We presented
the different ways companies get their products into countries in Chapter 13. Here we focus on
distribution strategies within countries.
Designing Distribution Channels
Managers consider two overriding concerns when establishing channels of distribution: (1) the
amount of market exposure a product needs and (2) the cost of distributing a product. Let’s take
a look at each of these concerns.
Degree Of Exposure
In promoting its product to the greatest number of potential customers, a marketer must
determine the amount of exposure needed. An exclusive channel is one in which a manufacturer
grants the right to sell its product to only one or a limited number of resellers. An exclusive
channel gives producers a great deal of control over the sale of their product by wholesalers and
retailers. It also helps a producer to constrain distributors from selling competing brands. In this
way, an exclusive channel creates a barrier that makes it