PRODUCT

DEVELOPMENT
GROUP 7
 NATURE OF PRODUCTS AND
SERVICES
• Product refers to both physical goods and services
• A product as a bundle of satisfaction.
• Before offering a product, firstly consider the specific characteristics of
services and challenges they pose in international marketing.
• These characteristics are;
Intangibilility
Perishability
Heterogeneity
Inseparability
 THE INTERNATIONAL MARKETING
OF SERVICE
• Four modes of delivery and ways in which
products are exported
• Cross border trade
• Consumption abroad
• Commercial presence
• Movement of natural persons
 THE COMPONENTS OF THE
INTERNATIONAL PRODUCT
OFFER
These contribute to the total product;
i. Core customer benefits
ii. Actual Products
iii. Augmented products

Product must be evaluated in terms of what benefits the consumer might expect to gain and
how consumers will perceive the offer, this is done by answering the following questions
a. Purpose and usage in each country?
b. Distinctive properties?
c. Benefits to the consumer?
d. Position of product and image customers perceive.
e. Consumer segments expected to buy, occasion and purpose?
f. Fitness into the total market?
 FACTORS AFFECTING INTERNATIONAL
PRODUCT
AND SERVICE MANAGEMENT
i. The balance between standardization
ii. Adaptation owing to:
• cultural factors
• usage factors
• legal factors
iii. product acceptability
iv. shortening product life cycles
v. the effect of different market entry methods
vi. changes in marketing management
vii. Ethical and green environmental issues.
 PRODUCT LIFE CYCLE
• Products go through stages in domestic and international markets.
Concept of product life cycle can help to manage portfolio of products in
different countries.
• To say a product has a life cycle is to assert the following things;
1. Products have a limited life.
2. Product sales pass through distinct stages, each posing different
challenges, opportunities, and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing,
and human resource strategies in each life-cycle stage.
 PRODUCT LIFE CYCLE
• 1. Introduction—A period of slow sales
growth as the product is introduced in the
market. Profits are nonexistent because of
the heavy expenses of product introduction.
• 2. Growth—A period of rapid market
acceptance and substantial profit
improvement.
• 3. Maturity—A slowdown in sales growth
because the product has achieved
acceptance by most potential
• buyers. Profits stabilize or decline because of
increased competition.
• 4. Decline—Sales show a downward drift
and profits erode
 PRODUCT PORTFOLIO
ANALYSIS;BCG MATRIX
• Developed by the boston
consulting group.
• designed primarily to clarify the
current strategic position of the
company, its product and those of
the competitors and help the
company to identify future
strategic options.
• Helps a company decide when to
invest, maintain investment or
divest an SBU.
 GENERAL ELECTRIC MATRIX
• One axis represents company
strength, the other represents
industry attractiveness
• Company strength constitutes the
company’s relative market share,
price competitiveness, product
quality, customer and market
knowledge.
• Industry attractiveness constitutes
market size, market growth rate,
industry profit margin, amount of
competition, seasonality
 BRAND IMAGE AND POSITION
• The brand image is the most visible part of a product or service offer.
• The perceived value of the brand is central to positioning products in
various markets.
• The image and reputation of products, companies, and countries can
confer different values to consumers in different countries.
 COUNTRY OF ORIGIN EFFECTS
• Buyers evaluate products based on intrinsic cues (taste, design,
performance, quality) and extrinsic cues (brand names, packaging,
country of origin).
• Consumers’ perceptions are often based on national stereotypes. For
example: Japanese products: high quality, reliable, [Link]
products: big and brash.
• German products: well-engineered, high specification.
• Products from developing countries are often seen as low quality,
unreliable, and inexpensive.
 INTERNATIONAL BRANDING
• Managing international branding is crucial for adding value and differentiating
from competitors. Strong brands can charge higher prices (price premium),
generate higher volumes, reduce costs through economies of scale, and utilize
assets better
TYPES OF BRANDS
i. Attribute Brands
ii. Umbrella brands
iii. Line Brands
iv. Range brands
v. Endorsing Brands
 BRAND PIRACY
• It’s a major challenge for brand management.
• Types include outright piracy, reverse engineering, counterfeiting, passing
off, and questionable overseas registration.
• Pirated brands and copied products are prevalent, especially in
developing countries and Asia.
• Brand piracy costs MNEs vast revenues and is difficult to combat.
 POSITIONING
• Concerned with how a product or service is differentiated from the
competition.
• Success depends on customers’ perceptions
• Important to create unique value propositions and manage the marketing
mix effectively.
• Examples of different perceptions: KFC and McDonald’s are everyday
eating in developed countries but special occasion dining in less
developed countries.
 INNOVATION AND NEW
PRODUCT DEVELOPMENT
• Innovation is important for international marketing strategies, as it deals
with the constant consumer demand for new experiences and
strengthens competitive advantage.
• Fast NPD is important for firms aiming for higher export engagement, and
leading companies include innovation across all marketing activities. This
includes product and service innovation, process improvements, brand
identity, communication, and paradigm shifts.
• International Business Machines transformation from hardware to
business solutions and Nestles venture into medical nutrition illustrate
successful paradigm innovations.
• Service innovation, driven by improved economic conditions and global
knowledge, meets rising customer expectation in healthcare, education
 NEW PRODUCT CATEGORIES
• NPD can be categorized into;
• New to the world
• revision,
• additions to product line
• cost reduction,
• repositioning
• new product line
NEW PRODUCT DEVELOPMENT
LIFECYCLE