Adaptation vs standardization in international marketing ppt

Reflection And Application Report (Chapter 9)

Purpose: The objective of this exercise is to help you internalize the knowledge you learned and apply to your career. In this process, you develop your critical thinking skills.

Note: To complete this assignment, you will need to:

1. Submit one ppt file – the Reflection and Application Report (including a business news example)

2. Submit one word file – three quiz questions (multiple choices)

3. Respond to at least one peer classmate’s post (Reflection Report)

CHAPTER 9
International Product Policy

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Chapter Goals

Delineate the influences that lead a company to standardize or adapt its products.

Discuss the product attributes that are considered, in addition to the basic product itself, in formulating international product policy.

Discuss the various strategies companies use in new product development for international markets.

Discuss how companies manage their new product development.

Show examples of international product development to highlight best practices, including customer involvement and cooperation in product development.

Discuss global research and development activities and associated key issues, including the location of research and development (R&D) activities and coordination techniques.

International Product Policy

International marketing involves satisfying consumers’ needs in foreign markets

International product policy should be the cornerstone around which other aspects of the global marketing mix are designed and integrated

Two main questions should be addressed:

Existing products: Should existing products be adapted or standardized to best meet global buyer needs?

New products: How can new products be developed for global markets?

Product Strategy in a Competitive Market

Samsung Foldable (4/26, 2019)

Huawei Pro 30 (4/09, 2019)

Apple XR (10, 2018)

What to Sell Abroad?
- Product Policy for Intl. Markets

The largest watch manufacturer in the world.

Inexpensive and mass-production in Switzerland

To enter a segment where Swiss companies had zero MS

Product concept:

striking, low-cost, high-quality watch
designed to appeal to low-end segment of the market
selling an ‘emotional’ product
allow the wearer to convey an image, a fashion statement
What to Sell Abroad?
- Product Policy for Intl. Markets

Product positioning:

- allow the wearer to convey an image, a fashion statement

Design team:

- 20 designers form Europe, US, Japan, Australia

- present their designs to a mgmt committee

- selects the items for each season’s line

 new release collection items every year

Inexpensive enough that an individual can own several

International Product Policy

New Swatch collections are launched each year

2013 White Swatch Watch

Saint Valentine

2013

The Legend of White Snake

2013

Random Ghost

2013

Rio 2016 Olympic Games Collection

Adaptation vs. Standardization

Examples of standardized products in global markets

Standardization is appropriate when __________?

Examples of product adaptation in global markets

Adaptation is appropriate when _________ ?

Product Adaptation

Product Standardization

Factors Encouraging Standardization

High Costs of Adaptation

- Includes R&D, manufacturing, and training costs

Industrial Products

- Tend to be more standardized than consumer goods

Convergence and Similar Tastes in Diverse Country Markets

- Convergence leads to greater standardization

Predominant Use in Urban Environments

- Urban markets may be standardized across country markets

Marketing to Predominantly Similar Countries

- Choosing similar countries may limit adaptation required

Factors Encouraging Standardization

Centralized Management and Direct Exporting

- Exporting typically results in fairly standard products

Country of Origin Effects

- Strong links to the home country may encourage standardization

Economies of Scale in Production

- Standardization allows for production economies

Economies of Scale in Research & Development Costs

- Standardization allows for higher returns to R&D costs

Economies of Scale in Marketing

Promotion material are likely also similar for standardized products
Factors Encouraging Adaptation

Differences in Technical Standards

- Health, safety, and technical standards vary by market

Consumer and Personal Use Products

- The more “personal” the product, the more likely that use will vary

Variation in Consumer Needs and Differing Use Conditions

- Use varies by skill, economic and climate conditions, etc.

Variations in Ability to Buy – Different Income Levels

- Ability to buy limits price point of products

Market’s Level of Economic Development

- Economic development is linked to technological advancement

The Influence of Governments

- Government regulations (e.g., local content, taxation) vary

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EX: Adaptation vs. Standardization

Using your term project as an example, what’s your product strategy?

Discuss with your group on the followings:

Factors contribute to your decision

Benchmark the status of substitute products/competitive products in the market

Estimate the cost of your product decision to the company

Think about the possible reactions from the marketplace (e.g., your customers, your rivals…etc.)

EX: Cultural Differences and
Product Design Adaptation

Identify a product adaptation example in the global market:

What’s the product?

How is it designed (and used) differently in the global market?

Compare at least two national markets

What factors lead to this product adaptation?

Turn in a one-page write up

Attach the photos of the products and the citation

File name format: EX-Prod Design Adaptation – your name.doc

Factors Encouraging Adaptation
- Consumer and personal use products

Coca-Cola losing market share in Japan

Local competitors sell a variety of new soft drinks

sugarless blended

Asian teas

fermented milk drinks

fruit-flavored noncarbonated

drinks w less sugar

Factors Encouraging Adaptation
- Consumer and personal use products

Coca-Cola began imitating its Japanese competitors

Launched its own version of Asian tea under Sokenbicha brand

Fermented tea – Lactia brand

Coca-Cola’s newer drinks outsold traditional cola drinks by a 3:2 margin

Keys to be able to push its late-entry competing drinks

- uses its advertising and marketing clout to win back younger customers

- controls over 40% of Japan’s vending machines

- could by pass Japan’s inefficient and tightly controlled hierarchical distribution system

Coca-Cola Brands in Japan

AMBASA: Ambasa, launched in 1981, is a noncarbonated lactic soft drink with a familiar smooth taste for everyday use.

CALO: Calo is the new functional soft drink that helps build healthy bones. It combines a refreshing cocoa taste with multiple nutrients such as calcium, vitamin D and protein. Calo debuted on September 15, 1997.

GEORGIA: Georgia, launched in 1975, offers authentic, real coffees in a variety of flavors and aromas sourced from around the world. It appeals to all coffee drinkers, who enjoy the rejuvenation genuine coffee products bring.

http://www.angelfire.com/ca3/ETclanSETH114/brands2.html

Coca-Cola Brands in Japan

KO CHA KA DEN: Introduced in 1992, Kochakaden has become a well-known specially brewed line of perfectly blended teas. The product is available as Royal Milk, Fine Aroma Straight and Garden Lemon teas.

LACTIA: This lactic, noncarbonated soft drink combines ingredients and nutrients that promote healthy digestion and quick refreshment. Lactia was introduced nationwide in Japan in 1996.

PERFECT WATER: This mineral-balanced water was launched nationally in April 1997. Its appeal lies in its refreshing ability to help restore "balance" to daily life.

Coca-Cola Brands in Japan

REAL GOLD: This carbonated herb-mix-flavored drink provides quick energy, combining a refreshing rich taste with a variety of vitamins and nutrients. Real Gold debuted in 1981.

SARYUSAISAI: For all non-sugar Oolong tea drinkers, Saryusaisai provides refreshment because it is made from high quality natural ingredients. It was introduced in 1993.

SARYUSAISAI SOKENBICHA: This brand's national launch came in February of 1994. For all consumers, Saryusaisai Sokenbicha is the special brewed tea made from a specially balanced blend of natural ingredients.

Coca-Cola Brands in Japan

SEIRYUSABO: In May 1994, this brand of Green and Barley teas was introduced nationally. Each flavor offers a variety of traditional and familiar tea tastes with assured quality, because it is brewed from selected quality leaves and pure water.

SHPLA: This "functional" citrus flavored soft drink was launched in October 1996. It helps overcome mental stress and dullness because it provides a unique refreshing sensation with a tangy, cool aftertaste and multiple nutrients such as vitamins A, C and E and calcium.

VEGITABETA: VegitaBeta helps maintain a healthy balance by combining a refreshing fruity taste with multiple nutrients which are often insufficient in daily diets. The peach-flavored soft drink was introduced in October 1991.

Think Globally and Act Locally

The flatter hierarchy of the brand means a better division of tasks between the local and global level.

The global level is responsible for:

- brand vision

- strategies like visual identity and product innovation

The local level is responsible for:

- adapting the brand and products to local needs

- to implement the innovation into it

- the biggest brand in Uniliver profile

- sauces, seasoning, bouillons and soups.

- annual sales over 3 billion euro

Think Globally and Act Locally

Local adaptation:

- packaging

- advertising

- actual product

 launching products varieties based on local recipes or tastes from the specific countries.

Think Globally and Act Locally

Centralized decisions:

- To improve scale economy, some control was shifted back to higher level

- In Europe there were 17 different kind of package designs used for Knorr bouillon, this was reduced to one

Both domestic and global companies need a strong new product development strategy to remain competitive.
Global companies must take into account the global business environment, market characteristics, and varying consumer needs.
A firm’s NPD strategy centers on two major tasks:
- understanding consumer needs, conditions of use, and their ability to buy the products;

- leveraging the firm’s R&D expertise, experience, and intellectual property to develop products that can satisfy consumer needs in different countries.

NPD is also dependent on the mode of entry
New Product Development (NPD) Strategy

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Export: has the freedom to choose as many or as few products as it wants in each market.

Licensing: offers less freedom in product selection.

Appropriate licensees may not be available for all products
Licensees may not have satisfactory technology
The licensee’s product line can limit the licensor’s product line
Joint-venture: also restricts a firm’s product line

When the national partner has complementary products, the product-line possibilities of the international partner are confined.
FDI: offers the greatest flexibility

A firm can produce products in its foreign plants suited to local market needs, use conditions, competitive situation, and purchasing power.
NPD and Foreign Market Entry

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Product Line vs. Brand Extension

Product Line vs. Brand Extension

Product Line Extension

When a company introduces additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, package sizes

Brand Extension

When a company introduces a new product, in a different product category with the same branding of their core product

Product Line Extension

Product Line Extension

Assumption:

Consumers like Campbell’s Chicken Noodles Sop are likely to try Creamy Chicken Noodle Soup.

Even with minimal impact from advertisement and promotions.

Product Line Extension

Benefits:

Offer consumers more variety  opportunity to sell more to each customer

Gain more potential customers

Greater marketing efficiency

Greater product efficiency

Lower promotional cost

Increase profit

Product Line Extension

Threats:

Potential for failure, which may damage products within the brand

Could cannibalize demand from other items in the product line

 Line extension products must be different enough that they will not compete with one another as much as they will rival other companies' brands.

Could overwhelm consumers

 when presented with too many choices consumers tend to shut down.

Affect brand loyalty

Perceived as not innovative

Sensory segmentation divides customers according to their responses to sensory product characteristics
Allows for the development of a limited range of products within a product line to satisfy a large number of product needs across countries
For example, a soda manufacturer might characterize sensory perceptions as:
Flavor type, flavor level, color, use of a sweetener, acidity, and cloud
These variables can be altered during manufacturing and testing
Customers may ultimately be grouped into low, medium, and high impact seekers depending on the sweetness and color of the soda
NPD Using Sensory Segment

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NPD Using Sensory Segmentation

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Effective product development has distinct layers
The “bedrock” layer is the firm’s core competencies
Product platforms are built on the firm’s core competencies and product families are marketed to customers
Next-generation products should be developed out of existing core competencies and the product platforms and families that are built on these competencies
To stay competitive with new product development, firms need to innovate and strengthen core competencies
Core Competencies & Product Platforms

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They focus on product architecture (rather than process) as the basis for defining and creating their platforms.
They resort to platform approaches to gain:
Increased flexibility in product design
Greater efficiency in product development
Improved effectiveness in market positioning & comm.
Core Competencies and Prod. Platforms

ASMI: a leading supplier of semiconductor mfg tools

Skil: a manufacturer of power tools

Stork Digital Imaging: a supplier of digital print for textile market