International Marketing (Project plan-Entry plan for an SME)
Siti Nazrana 
ProductPolicyandAdaptation.pptxProduct policy and adaptation in international markets
Chapter 9
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Learning objectives
Explain the different approaches to creating product offerings.
Discuss various market-related differences in international markets.
Describe the characteristics of a product.
Engage with the company considerations in offering a product in the international marketplace.
Evaluate strategies to combat against counterfeiting.
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Product variables
Tangible and intangible
The core product: the main benefit?
Augmented features:
Differentiation
Positioning
Augmented product i.e. installation, delivery and warranty
Core (or generic) product –solves the problem
core benefit consumers are seeking (car – transport, food to feel full / satiated)
Actual product – the buyer’s most basic expectations
differences between sellers start to appear at this level
i- quality level, features, styling, brand name, packaging
Augmented product – a bundle of benefits that the buyer may not expect – adds value
differentiates the market offering from its competitors
may not always be wanted by price-sensitive consumers. Augmented product; for example, installation, delivery and warranty
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Standardisation versus adaptation
Four basic alternative approaches to product modifications:
no change
modify for different countries or regions
design new products for foreign markets
incorporate all the differences into one product and introduce it globally
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Factors affecting adaptation
The market(s) that have been targeted
The products and its characteristics
Company characteristics (resources and policy)
The majority of the products have to be modified for the international marketplace
Mandatory versus discretionary adaption
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Factors affecting product-adaptation decisions
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Other factors affecting adaptation
Assessment as a function of time and market involvement
Export learning leads to greater standardisation
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Ikea – standardises most of its products
International marketing, Czinkota et al. Asia Pacific Edition
IKEA is an example of a firm that standardizes most of its products but leaving some decisions to local managers. Almost 90% of the product line is identical across many different countries. However, IKEA modifies some furniture offerings to suit tastes in individual countries. An overall, standardized marketing plan is centrally developed at the firm’s headquarters in Sweden, but is implemented with local adjustments. Management decentralizes some decision-making to local store managers (i.e., product displays, advertising in local language).
Source: Cavusgil. International Business. Pearson
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Whirlpool standardizes most of its products
12-10
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Factors affecting adaptation
Standardisation results in production and marketing cost savings.
Other approaches include building adaptation around a standardised core.
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Platform – example
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time
Platform B
Platform
Product
Development
Derivatives
Research and
Technology
Development
Platform A –
i.e., Car model
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Considerations in the international market
Government regulations:
political and social agendas
the single most important factor contributing to product adaptation
Non-tariff barriers:
product standards
testing or approval procedures
subsidies for local products
bureaucratic red tape
ISO standards
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Customer characteristics, expectations and preferences
Local behaviours
Tastes
Attitudes
Traditions
Consumption patterns
Psychosocial characteristics
General cultural criteria
Positioning:
consumer perception of a brand relative to competitors’ brands
reflect the differing lifestyles across markets
.
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Customer expectations and preferences vary enormously in relation to food
Campbell’s soup – Malaysia versus Australia
Mars bar – too sweet for some tastes
.
Cultural and psychological factors affecting product adaption
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The market environment
Economic development:
buyers buy and demand more sophisticated products and product versions
backward innovation
Competitive offerings:
monitor competitors’ product features
determine what has to be done to meet and beat them
Climate and geography:
can make products vulnerable to damage (e.g. chocolate)
trade-off between shelf life and preservatives
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Product characteristics: product & brand constituents
Product: food ingredients must be sensitive to local market:
ingredients in violation of legal requirements, religious norms or social customs; for example, McDonald’s in India
Brand: one of the most easily standardised items in the product offering
Trade mark and counterfeiting
Establishment of worldwide brands is difficult
Government might require brand name changes
Brand - name, term, symbol, sign or design used by a firm to differentiate its offerings from those of its competitors Trademark’ refers to the legally protected part of the brand, indicated by the symbol
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Global brand: a brand that is marketed, and recognized, in most parts of the world.
However, problems may arise with some brand names in foreign markets and can be resolved through:
translation
transliteration
transparency
transculture
Product characteristics: branding
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Product characteristics: packaging
Protection
Promotion – labelling, aesthetics
User convenience
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Product characteristics: packaging
Government requirements for labelling: language requirements; information and description
Name must match contents
Packaging technology development
Environmentally-friendly packaging
Package aesthetics, such as colours and shapes
Package size
Consumer perception:
brand identification
feature reinforcement
Sachets – meet customers needs but are thrown away, no waste collection/infrastructure, plastic problem
Huge waste in developing world – due to use of small sachets (affordable – very low incomes BoP pyramid markets)
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SMALL RETAIL PACKS ARE ESSENTIAL
Chinese Consumers – desire packaging of fresh produce
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Company considerations
What are our capabilities?
What is the level of adaptation needed to accommodate various market-related differences between domestic and international markets?
Is it worth it?
Can we afford not to do it?
Can a specific ROI be attained?
What are the quality, price and user perceptions?
What should the warranty cover?
Do we have the managerial talent?
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Company considerations: method of operation or usage
Voltage, power plugs and sockets vary
Metric standard
Local language
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Company considerations: quality
Cannot compete on price alone
Technical advantage
R&D investment
Compliance with ISO 9000 may be required
Huawei
Samsung is a South Korean multinational conglomerate headquartered in Seoul.
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Product characteristics: service
Repair arrangements
Servicing
Warranties
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Product characteristics: country-of-origin effects
‘Made in (country)’
Built-in positive or negative stereotype of product quality
Influences perceptions of a product
Promotional tool:
product must match country’s image
If CoO is negative, firms can change the name!
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Country-of-origin effects
Italy’s finest coffee – promoting the country’s positive attributes.
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Product Counterfeiting
30/27
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Intellectual property violations:
trademark
patented invention
copyrighted work
Billions lost every year
Hardest hit are innovative, fast-growing industries (software, pharmaceuticals and entertainment)
Intellectual Property
What is vulnerable?
Brand names, logos, design, packaging
Consequences:
Lost sales. Loss of brand equity. Price drops
Strategic options for fighting IPP violations:
Secure IPP rights and mask works
Enforce rights through: legislative action; bilateral and multilateral negotiations; joint private-sector action
individual company measures: product policy – make it difficult to copy the product, engage in NPD; communicate with customers; remain vigilant and be proactive - perform online searches.
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Lobby the government
Take legal action
Customs officers – can search travellers and seize fake goods.
Measures to combat counterfeiting
In advanced economies, intellectual property is usually protected within established legal systems and methods of recourse. A firm can initiate legal action against someone who infringes on its intellectual assets and will usually achieve a satisfactory remedy. Advanced economies have taken the lead in signing treaties that support international protection of intellectual property. TRIPS: a comprehensive international treaty that lays out remedies, dispute-resolution procedures, and enforcements to protect intellectual property.
The European Patent Convention (EPC) is a treaty that established a single, unified patent examination system for the European countries. An applicant now files his application at the European Patent Office (EPO) in Munich or The Hague. This means a single European patent valid in all EU member states.
TRIPS requires member states to provide strong protection for intellectual property rights. For example, under TRIPS:
Copyright terms must extend at least 50 years, unless based on the life of the author. (Art. 12 and 14)[3][not in citation given]
Copyright must be granted automatically, and not based upon any "formality," such as registrations, as specified in the Berne Convention. (Art. 9)
Computer programs must be regarded as "literary works" under copyright law and receive the same terms of protection.
Patents must be granted for "inventions" in all "fields of technology" provided they meet all other patentability requirements (although exceptions for certain public interests are allowed (Art. 27.2 and 27.3)[4] and must be enforceable for at least 20 years (Art 33).
Exceptions to exclusive rights must be limited, provided that a normal exploitation of the work (Art. 13) and normal exploitation of the patent (Art 30) is not in conflict.
Many of the TRIPS provisions on copyright were copied from the Berne Convention for the Protection of Literary and Artistic Works and many of its trademark and patent provisions were modeled on the Paris Convention for the Protection of Industrial Property. The WTO created the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). http://www.wipo.int/patentscope/en/patents_faq.html#protection
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Summary
By now, you should be able to:
Explain the different approaches to creating product offerings.
Discuss various market-related differences in international markets.
Describe the characteristics of a product.
Engage with the company considerations in offering a product in the international marketplace.
Evaluate strategies to combat against counterfeiting.
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