Product Variables
• The Core Product
w a product or services that is essentially the same as that of competitors.
• The Tangible Product
w a product or service that is differentiated composition, origin, or tangible features from competing products.
• The Augmented Product
w a product or service which is serviced after the sale and carries a warrantee from the producer, producing a continuing relationship with the seller.
Standardization versus Adaptation
• International market approach alternatives to adaptation.
w Sell the product as it is internationally.
w Modify product for different countries or regions.
w Design new products for foreign markets.
w Incorporate all differences into one product and introduce it globally.
Standardization versus Adaptation
FACTORS ENCOURAGING STANDARDIZATION
• Economies of scale in production
• Economies in product R&D
• Economies in marketing
• “Shrinking” of the world marketplace/economic integration
• Global competitions
FACTORS ENCOURAGING ADAPTATION
• Differing use conditions
• Government and regulatory influences
• Differing consumer behavior patterns
• Local competition
• True to the marketing concept
Strategic Adaptation to Foreign Markets
The Market Environment
• Government Regulations
w Political and social agendas often dictate regulatory requirements.
• Nontariff Barriers
w Product standards, testing, subsidized local products.
• Customer Characteristics, Expectations, and Preferences
w Physical size, local behaviors, tastes, attitudes, and traditions.
w Consumption patterns, psychosocial characteristics, and general cultural criteria.
The Market Environment
• Economic Development
w 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
w Monitoring competing local products is critical in adjusting the product for competitive advantage.
• Climate and geography
w Local climatic conditions and can make products vulnerable to damage.
Product Characteristics
• Product Constituents
• Branding
• Packaging
• Appearance
• Method of Operation or Usage
• Quality
• Service
• Country-of-Origin Effects
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 important role in how a consumer perceives a product.
Method of Operation or Usage
• The product that is operable 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.
Quality and Service
• Quality is essential to marketing products internationally
• ISO compliance may be required by buyers.
• Servicing products in international markets requires producers to develop local repair staffs.
Country-of-Origin Effects
• The origin of a product may have a strong effect on consumer perceptions and biases about foreign products.
Company Considerations
• Organizational capabilities?
• Is it worth it?
• Can we afford not to do it?
• Can a specific return-on-investment (ROI) be attained?
• What about quality, price, and user perceptions?
• Warranties?
• Managerial talent?