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
Straight Product Product
Extension Adaptation Innovation
The firm adopts The company caters The firm designs a
the same policy to the needs and wants product from scratch
used in its home of its foreign customers. for foreign customers.
market.
Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives,
Journal of Marketing, 33, 1969, pp.58-62
These Three Basic Strategies Can Be
Further Broken Down Into 5 Options
International Product Consumer Need Product Strategy Communication Strategy
Product Strategy Example Satisfied
Strategy 1
Product and Gillette Disposable, easy to use Extension Extension
Communication Razor product
Extension
Strategy 2
Product Extension Wrigley USA: Substitute for Extension Adaptation
Communication Chewing Gum Smoking
Adaptation Europe: Dental benefits
Strategy 3
Product Adaptation McDonalds Fast-Food Adaptation: Extension:
Communication Adding local products to Using global campaign
Extension range
Strategy 4
Product and Slim Fast Identical: Adaptation: Adaptation:
Communication Lose Weight Consumer preferences Celebrity in Germany,
Adaptation for different flavors Teacher in UK
Strategy 5
Product Invention Buckler Beer Non-alcoholic beer Invention Develop new
communication
Source: W.J. Keegan
Reasons for Product
Standardization
• Economies of scale : Production,
R&D, Marketing
• Common Consumer
needs :
Drinking patterns, car sizes Reasons for Product
• Consumer Mobility : Customer
Adaptation
retention & Loyalty • Climate: air conditioning
equipment, tyres…
McDonald´s, Hilton ... • Skill level of users : Computers
• Home Country Image : Italian Pizza, in Africa
French Perfumes,...
• National consumer habits :
• Impact of technology : B to B - front-loading/top-loading
Markets, mobile phone, cameras,
PCs… 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 Optional Product Adaptation
• Government regulations • Physical distribution
• Electrical current standards • Local use conditions
• Climatic conditions
• Measurement systems • Space constraint
• Operating systems • 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
Regional,
Product Company
Country, or Local
Characteristics Considerations
Characteristics
Decision to Alter the Domestic Product
Source: Adapted from V. Yorio, Adapting Products for Export (New
York: Conference Board, 1983), 7. Reprinted with permission.
Considerations in adapting products
Macro- Government
Target Market Competition
environment Regulations
Who buys Geography Tariffs Price
the product? Climate Labeling Performance
Who uses Economic Patents/ Design or
the product? Socio- trademarks style
How is it cultural Taxes Patent
used? Political/ Other protection
Where/ why/ legal Brand name
when is it Package
bought?
Services
12
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 • Packaging:
Reglementation : – Ecological Stand-up tubes
– Triclosan forbidden in in Germany
Germany – Failure in France
– High fluor content in local (Carrefour)
water (UK) • Distribution:
– Obligation to sell high fluor – Role of pharmacy in Italy
content toothpaste in and Spain
pahrmacy (France) – Role of drugstore in UK
– Stringent clinical tests in • Communication:
France – 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
[Link]
Family Brand
Volkswagen
USA Europe Mexico
"Rabbit" "Golf" "Caribe"
-> lightness -> prestige -> avoid negative
connotation
[Link]
Product Packaging and Labeling
Protection
Climate
Transport & Handling
Buyer's slow usage rate
Lack of storage facilites
Promotion Legal Constraints
Merchandising ( income level, shopping habits) Recycling of Packaging
Minimum breakage / theft (Duales System, Eco-Emballage)
Ease of handling Regulations on consumer info.
Multilingual Labels to Convey an International (Origin, weight, ingredients)
Image (Zara, Hollywood Chewing Gum)
compare
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
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
• [Link]/International%20Product%[Link]
• [Link]/~pjj/PJJNotes/MGM4273(PemasaranAntara
bangsa)/im_ch_10.ppt
• [Link]-
[Link]/studybuddy/Presentations/Global/Product%20Decision.
ppt
