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International Marketing

International Product Policy

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Adaptation vs standardization

S tandardization AdaptationCentralized management Fragmented with

independentEntry mode-Export national subsidiaries

S trong country origin image S trong culture differenceaffecting purchase

S cale of economies in prod, Local environmentmarketing and R&D induced adaptation

Diff raw material available

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Adaptation vs standardizationS

tandardization AdaptationMarketing predominantly Variation in ability to buyIn similar countries

Predominant use in urban Variations in

environment conditions of use

Uniform technical standard Difference in Technical std

Predominantly Technical Consumer & personal

products use product

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F actors encouraging Adaptation

Diff technical standard: eg.agri prod to US level of chemical additives specified . B.P. USP standardsfor drugs

Consumer and personal use products - foodclothing , entertainment

Variation in consumer need & diff use ± ( productbased on climate )

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F actors encouraging Adaptation

Variation in ability to buy ± Diff income levels( bicycle in U S )

Fragmented independent national subsidiaries ±

prod to suit local need

Impact of cultural diff . ± unknown food, veg ,nonveg preferences

Influence of Govt. ± Forbid import of certain prod.( Alcohol, caffeine )

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Product attributes in international market

Product policy goes beyond product itself ± AttributesBrandTrademarkCountry of origin

Packaging & labelingWarranty & service policies

Perspective of BrandingNo brand ( generic)Advantages DisadvantagesLow production,legal & severe price competitionmarket cost lack of market identity

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Product attributes in international market

Advantages Disadvantages

BrandingBetter identification / Loyalty High production, legal &Premium pricing marketing cost

Private BrandBetter margin for dealers severe price competitionLarge Mkt share Lack of market identity

Multiple BrandCater to various segmnt High inventory, mkting costMore retail space,create loss of economies of scalecompetitive spirit

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International Product Policy

Building Global brandsInherent in using a standardized product

S uccess depends on growing convergence of consumer taste & coordinated advt & promotion

Economies of scale and uniform image

Eg. Reebok ± life style, athletes & sportsAdvts during summer Olympics, IPL etc.

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International Product Policy

BrandingBrands once developed & recognized have long lifeEg. Gillette, Lipton, Coco Cola ( popular for 70 years )Depends on the advertising which rests on

quality,innovation,superior service, customer service &value for money (eg.Gillette sensor, Mach 3- closer shave)

Brand ExtensionEstablish new product with additional benefitseg. Havell ± wires to switch to home appliancesBarbie doll ( collectors item )

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International Product Policy

Branding Protection ( when & where ? )Register them in countries of interest with appropriateauthority ( Nepal DD A, SL MOH )

Different countries have diff regulations on what canbe protected ,extend of protection and the period of protection

Lack of protection lead to loss of sales lost to imitators ,

piracy , & counterfeiting.

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International Product Policy

Private branding:Manufacturer supplies goods but retailer sellsgoods under its own brand name ( iron ,toaster)

Country of origin effect:Consumers evaluate brand not only on its physicalappearance and characteristics but where it isproduced ( F rench perfume)

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International Product Policy

Product policy and international competitionProduct development and launch campaign aimed atcapturing M. S in the long run from market leader

Eg. Glaxo ± anti ulcerant Zentac against market leader Tagamet( S KF) Market campaign over 6 years allowedGlaxo to get 50% M.s. Identified Tagamet customers for aswitch

Customer satisfaction & Loyalty:S atisfied customers are loyal customers eg. Frequent flyer,Holiday package ( customer satisfaction story)

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International Product Policy

Mode of entry and new product successDirectly or indirectly - through overseas manufacturer,licensee or distributor (eg. Market entry of P&G in Chinamade it largest consumer prod through advertising head &

shoulder and other productsHow ?S pend more on TV advertisementsBrought 100 U S managers for training local managers

Coverage- detailed map of 230 Chinese citiesFree samples to distributorsAcquired 3 Chinese major detergent mfg co. and 2 Chinesebrands

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International Product Policy

Packaging & labelingProtective packaging to withstand climate, transitbreakages, varying sizes for affordability, consumer friendly packs, certain standardization for identity ± Kodak

Yellow

Biodegradable materials ± environment savvy (U S )

Labeling:Multiple language, product info, direction for use, safety,warning etc

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International Product Policy

Product development and product line policies

Customer need Stating point for new product

development

Eg. Yamaha piano ± getting dust in the living room

Revived dead business by creating value addedproduct in response to consumer need

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International Product PolicyProduct developmentInterface between customer need and company¶sknowledge base. Every company has relationship withexisting customers. Comp also possess knowledge ,

skills ,resources and competencies

Company wanting to create new product and servicesmust ask how their customers perceive their value And competencies

Core competencies ± product platforms are built and

product families marketed to customers

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International Product PolicyS ensory segmentation:Product development based on Customer response tosensory characters ( packaging,smell,feel,look etc.)

Allows limited range of products with product line to

satisfy large number of product needs ( Himalaya range )

Technical Upheavals:Company can¶t ignore changing technology due to growing

competition, manage new technology in product develmnt

Vision in product line:eg. S andoz & Nutrition- after merger with Ciba. Combined

nutrition with pharma- supplies to US

nursing Homes

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International Product PolicyS tepwise approach to product development :

Idea generation: pilot finding for a project generated byBusiness Development, R&D scientists

Feasibility study: Prod specification, mkt potential and ROI

Product Development: components used,packaging,fitnesstests stability, cost estimates,forecast,documentation,Quality assurance, regulatory,final design

Marketing is called to develop product, promo & advt

Product Launch: Handed over to operations division

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International Product Policy

Global sourcing:

If low cost , timely development , high quality are

desired then global sourcing is necessary

Transportation cost ,lower cost from localsources ,tariffs are variable affecting sourcingdecisions

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International Product PolicyLocation of product development for Global Market:

Product development may be centered in oneCountry - H.Q

Important to receive info from key markets aroundthe world

Involving foreign subsidiaries at early stage of production development - crucial for product success

Adaptation of common design globally (Kodak yellow)

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International Product Policy

Benefits of decentralized prod development:Companies with foreign subsidiaries encounter demand for increased local autonomy

Internal R&D

Acquisition of firms with new products ( Sandoz , Ciba)JV with firms with having complimentary productsLicensing a new product from that developed itwhere the firm is not representedDecentralization to cater to local market needs(Concor AM)

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International Product PolicyS trategic fit:Acquisition that would fit into company¶s present portfolio

Eg. Merck & J&J to develop OTC version of a Rx drug viz.Pepcid ( unti ulcerant) Acquired OTC drug business of ICI(British MNC) & sell OTC Mylanta till approval for Pepcid isReceived

Acquisition and divestment:When market attractiveness is lost or firms havedifferent interest, it divests the portfolio. Companyacquire such products & reformulate in the strategic fit

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International Product PolicyOther local market consideration :Bi directional approach: Local mkt & H.Q issues andpersonnel help shape new product development

H.Q influence Local Market influenceRecognition by H.Q mkt unit suggestion by local Mgr for need for a new,mod prod new modified product

Initiation at H.Q suggestion for preliminarymkt analysis

Contact H.Q for permission todevelop modified/adapted

Test Mkt in local mkt Test mkt to decide to go aheadlocal mkt prod launch Approval for new prod launch