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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
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