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International Marketing MKT630

Lesson # 39

INTERNATIONAL MARKETING MIX - PRODUCT POLICY

International Product Strategies

In international markets managers need to decide the level of standardization and adaptation they have

to achieve in terms of their products and related communication.

Standardization of product strategies:

Standardization means offering a uniform product on regional or worldwide base may be with minor

changes.

- Customization leverages cross-border differences in needs & wants of the firm's target customers.

- Forces that favor a globalized product strategy are:

Common customer needs & buying behavior

Economies of scale in production, R&D, marketing and cost savings

Lesser time required in introducing into new markets

Global consumers & consumer mobility

Home country image

Similar technical specs for industrial & consumer products

Operating via exports of uniform products

Better marketing performance

Consistency in product design & selling techniques

Establishes a common image

Success in one market can be duplicated in other markets

Standardization may lead to substantial opportunity lost

Adaptation of product strategies:

Obligatory adaptation due to laws and regulations of foreign countries

Discretionary adaptation (on the choice of the marketer)

to better suit varying customer needs

differing use conditions

due to different market factors

company's resources / product objectives

product life-cycle stage

International product and communication strategies:

International marketers may choose on of the flowing five product and communication strategies in the

international markets:

1. Product & Communication Extension:

Dual Extension

- Early entrants often opt for this strategy.

- Small companies with few resources typically prefer this option.

- Also works for the company which targets a

"global" customer with similar

needs.

- Offers substantial savings coming from economics of scale.

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International Marketing MKT630

The downside is that it might alienate foreign customers who may switch to

another competing brand that is more tuned with their needs.

2. Product Extension Communication Adaptation

takes care of difference across countries in the cultural or competitive

environment.

retains scale economics on manufacturing side, the firm sacrifices potential

savings on the

advertising front.

3. Product Adaptation Communication Extension

local market circumstances often favor or require case of product adaptation (may

be due to Govt. regulations)

Many companies add to their product portfolio via acquisition of local companies

adding

new brands as an expansion strategy

While product may differ, cultural similarities that stretch to consumers using the

product present an opportunity for a harmonized communication.

Within such control, clever marketing ideas can be transferred from one country to

another,

despite the product-related differences.

4. Product & Communication Adaptation Dual Adaptation

Differences in both cultural & physical environment across

countries call for a

dual adaptation strategy.

Many be due to different Govt. regulations regarding products as well as

communication.

5. Product Invention

Develop new products from scratch from common need & opportunities around

the world instead for simply adapting existing products or services to the local

market conditions.

- Produce products of global scope.

Today managers focus on degree of Globalization rather than striving for standardized or localized

products. What elements of a product should be tailored to local market needs & which ones to leave

unchanged?

Two approaches that are being commonly used in international product design are;

Modular Approach:

This approach consists of developing a range of product parts that can be used worldwide.

Scale economics flow from the mass-production of more or less standard product

components at a few sites.

Popular in automotive industry

Core-Product Approach:

Design of mostly uniform core-product

Attachments are added to core-product to match local market needs

Balancing act between Standardization and adaptation is very tricky.

Too much standardization (over standardization) stifles initiative &

experimentation at the

local subsidiary level

Too much customization may lose the foreigness appeal of imported brands hence

becoming me-too brands.

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