Transcript International Marketing
INTERNATIONAL MARKETING 6e
Chapter 10 Production Adaptation
Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Orlando, Florida 32887-6777.
Product Variables
The Core Product •
a product or services that is essentially the same as that of competitors
The Tangible Product •
a product or service that is differentiated composition, origin, or tangible features from competing products
The Augmented Product •
a product or service which is serviced after the sale and carries a warrantee from the producer, producing a continuing relationship with the seller.
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Product Variables
Augmented Product Installation
Packaging
Delivery and Credit
Brand Name Quality Core Benefit or Service Styling Features
After Sale Service Tangible Product Core Product Warranty Copyright © 2001 by Harcourt, Inc. All rights reserved.
Source: Adapted from Phillip Kotler,
Marketing Management
, 10th edition, 2000 p. 395. Reprinted by permission of Prentice Hall, Inc., Englewood Cliffs, New Jersey.
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Standardization versus Adaptation
The fundamental international product decision after the decision to internationalize.
International market approach alternatives to adaptation •
Sell the product as it is internationally.
• • •
Modify product for different countries or regions.
Design new products for foreign markets.
Incorporate all differences into one product and introduce it globally.
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Factors Encouraging Standardization
Economies of scale in production Economies in product R&D Economies in marketing “Shrinking” of the world marketplace and increasing economic integration Global competition Copyright © 2001 by Harcourt, Inc. All rights reserved.
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Factors Encouraging Adaptation
Differing use conditions Government and regulatory influences Differing consumer behavior patterns Local competition True to the marketing concept Copyright © 2001 by Harcourt, Inc. All rights reserved.
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Strategic Adaptation to Foreign Markets
High Degree of Cultural Grounding Need for Adaptation Low Industrial/ Technology Intensive Nature of Product
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Consumer
Source: Adapted from W. Chan Kim and R. A. Mauborgne, “Cross-Cultural Strategies,”
The Journal of Business Strategy
7 (Spring 1987): 31; and John A. Quelch and Edward J. Hoff, “Customizing Global Marketing,”
Harvard Business Review
64 (May-June 1986): 92-101.
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Factors Affecting Adaptation
Regional, Country, or Local Characteristics Product Characteristics Company Considerations Decision to Alter the Domestic Product
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Source: Adapted from V. Yorio,
Adapting Products for Export
(New York: Conference Board, 1983), 7. Reprinted with permission.
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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
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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.
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Product Characteristics
Product Constituents Branding Packaging Appearance Method of Operation or Usage Quality Service Country-of-Origin Effects Copyright © 2001 by Harcourt, Inc. All rights reserved.
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Product Constituents and Branding
Product ingredients must not violate local legal regulations and social or religious customs Care must be taken that the brand in name. term, symbol, sign, or design does not offend the local customer. Trademarks are especially vulnerable to counterfeiters.
Selecting the global brand name • •
Translation Transliteration
•
Transparency
•
Transculture
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Packaging and Appearance
Packaging serves three major functions: •
Protection
–
Improper handling and pilferage
•
Promotion
–
Language and symbols
•
User convenience
–
Packaging aesthetics- color and shape, overall size, and purchase quantity
Adaptations in styling, color, size, and other appearance features play an importance role in how a consumer perceives a product.
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Method of Operation or Usage
The product that is operable in in the domestic market may not be operable in the foreign market.
Electrical voltages and connectors vary around the world. English and metric standards are not comparable.
Software may have to be translated into the local language.
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Quality and Service
Quality is essential to marketing products internationally, especially in markets where price is an important competitive factor.
ISO compliance may be required by buyers.
Servicing products in international markets requires producers to develop local repair staffs.
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Country-of-Origin Effects
The origin of a product may have a strong effect on consumer perceptions and biases about foreign products.
Swiss
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France “Mad Cow”
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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?
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Product Counterfeiting
Costs U.S. firms over $60 billion a year In 1999, losses to software piracy were more than 11 billion dollars.
Counterfeiting is estimated at 2% to 5% of total world trade annually.
The largest number of counterfeit goods come from: • • • •
Brazil Taiwan Korea India
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