Product – International Marketing

Abha Rishi

Product Characteristics

Product Variables Constituents & Branding Packaging & Appearance Method of Operation or Usage Quality Service Country-of-Origin Effects Product Counterfeiting

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.

Product Variables Consumer & Industrial products Durable, nondurable and disposable Convenience, preference & specialty

Geographical Local International Global

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

( also known as product homologation) Design new products for foreign markets. 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 competition

FACTORS ENCOURAGING ADAPTATION

Differing use(r) conditions Government and regulatory

influences Differing consumer behavior

patterns Local competition

Strategic Adaptation to Foreign Markets

Low

High

Industrial/ Technology Intensive Consumer

Need for Adaptation

Degree of Cultural Grounding

Nature of Product

Source: Adapted from W. Chan Kim and R. A. Mauborgne, “Cross-Cultural Strategies,” 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.

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.

The Market Environment Government Regulations

Political and social agendas often dictate regulatory requirements.

Non-tariff 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.

Strategic Adaptation to Foreign Markets

Factors Affecting Adaptation

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, symbol, sign, or design does not offend the local customer. Trademarks are especially vulnerable to counterfeiters.

Selecting the global brand name Translation Transliteration Transparency Trans-culture

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.

Country-of-Origin Effects

• The origin of a product may have a strong effect on consumer perceptions and biases about foreign products.

Swiss Swiss

New Product Ideas

Continuous Innovations Dynamically Radical Innovations

(kaikaku) Disruptive Innovationshttp://

www.claytonchristensen.com/disruptive_innovation.html

Product Counterfeiting Since 1982, the global trade in illegitimate goods has

increased from $5.5 billion to approximately $600 billion annually.

Approximately 5%-7% of the world trade is in counterfeit goods. The World Customs Organization estimates, product counterfeiting caused $512-600 billion in lost sales.

In 2010, losses to software piracy were more than 67 billion dollars.

The largest number of counterfeit goods come from: China Brazil Taiwan Korea India

Product Counterfeiting FIGHTING PRODUCT COUNTERFEITING

Secure valuable intellectual property rights patent applications registration of trademarks mask works

Act to enforce legislative action bilateral and multilateral negotiations joint private sector action individual company measures

Counterfeiting In India15%-20% of fake medicines in India

masquerade as real. Loss to music industry due to piracy annually

is Rs 600 Crores. Film industry loses Rs 2000 crores a year due

to piracy 1 in 3 automotive parts are duplicates 10% of the FMCG market is accounted for by

fake products 10% of major soft drinks sold are spurious 10% - 30% cosmetics & toiletries and

packaged foods are counterfeits. The estimated trade loss due to piracy in

India in 2006 stood at US$ 1208 million.

References http://www.iacc.org/about-

counterfeiting/the-truth-about-counterfeiting.php

http://www.ficci.com/sector/5/Add_docs/factsnfigures.pdf

http://www.thehindubusinessline.in/2005/11/15/stories/2005111502750800.htm

http://www.gacg.org/