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GLOBAL PRODUCT POLICIES IN THE FACE OF INTERNATIONAL
MARKETS
Introduction
Today's global competition requires companies to compete with each other in
marketing and selling their products. Businesses need to maintain their products with
the right strategies so that consumers always use them. That is why it is important for
any business to pay attention to attracting new customers and retaining old customers.
Marketing is usually thought of as just selling goods or services. However, marketing
is more than the process of creating, offering, and delivering products or services to
consumers. To reach consumers, products or services must first be introduced to
consumers. In addition, communication in product care is also important. Companies
communicate through advertising. Advertising is one of the forms of marketing
communication, marketing communication refers to marketing activities that aimed at
disseminating information, influencing / convincing the target market of the company
and its products and / or reminding them to be ready to accept the products offered, to
buy and to be loyal to them through the company concerned (Tjiptono, 2008).
Products define the scope of the company. Every aspect of the business
(including pricing, marketing communications, and sales decisions) must adhere to the
product policy. A company's product range is also determined by customers and
competitors. Research and development needs and requirements depend on product
technology and the company's management vision. The challenge for companies
entering global markets is to develop product policies and strategies that respond to
the demands of markets, competition, and organizational resources around the world.
Product policies must balance the benefits of product adaptation with the benefits of
concentrating local market preferences and organizational resources on a small
number of non-commercial products. Global products differ from global brands in that
they have global names and images. Global products do not use the same name and
image in different countries. However, like global brands, global products are based
on the same strategic principles, use the same/similar positioning and different
marketing mixes. Efforts should be made to standardize the product name and image
so that the global product becomes a global brand.
With the background described above, the purpose of this research is to find
out what policies are applied in global product marketing. Therefore, this research
uses the title "Global Product Policy".
Overview
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
Policy
Policy is a set of concepts and principles that serve as a guide and basis for
planning, leading and acting. The term can be applied to governments, private sector
organizations and groups, and individuals. Policies are different from rules and laws.
While laws can mandate or prohibit an action (e.g. a law requiring income tax),
policies only guide actions that are most likely to produce the desired outcome.
A policy is a series of targeted actions set by one or more parties to fix a
problem or change (Legal Dictionary, 2008). On politics Agustino (2008) defines
policy as a series of activities with certain intentions/purposes followed and carried
out by a person or group of people in connection with a problem or matter of concern.
The shift from this paradigm is seen from how the policy can manage people,
especially in organizational governance. According to Suhairi, et al (2020) there are
three factors in managing organizations, namely people, production, and
organizational strategic assets. These three factors are intangible and tangible forms of
productivity value in measuring the level of knowledge that produces effectiveness
and efficiency.
The term politics or some people use the term politics is often equated with the
meaning of politics. Based on several definitions of politics that have been put
forward by these scientists, it can be concluded that the study of politics basically
consists of the following questions: what, why, who, where and how. All of these
questions relate to issues decided by the organization; content, determination method
or procedure, strategy, when decisions are made and implemented.
(Kumpulanpengertian.com, 2015).
Products
A product is anything that can be offered to the market for attention, purchase,
use, or consumption to satisfy a want or need. Tangible / tangible benefits and
intangible / intangible benefits can satisfy customer desires. Another definition of a
product is the perception (desire) of consumers as described by the manufacturer
through its production. According to their durability and tangible properties, products
can be classified into 3, namely: (1) Consumables; (2) durable goods; (3) Services.
(Irawan, 2009).
Products are an important aspect of international marketing programs.
Products are defined as anything that can be offered to satisfy consumer needs and
wants. Local products are different from global products because marketers must be
observant of international market conditions. In order for products and services to be
marketed in the global market. In order to be on target and get positive feedback from
consumers, marketers must be careful in organizing market expansion strategies and
global product positioning in the international market. Furthermore, marketers need to
be creative in designing and modifying products because sometimes designing and
modifying products can increase sales. Strategy is not only about market expansion
programs but how to extend the product life cycle. (Kertajaya, 2008).
There are 5 levels of products, namely: (1) MAIN PRODUCTS/goods/goods
are products that bring the main benefits/uses that customers need; (2) GENERAL
PRODUCTS are products that reflect the basic functions of the product; (3)
EXPECTED PRODUCTS are terms that customers usually expect when buying them;
(4) ADDITIONAL/UPGRADED PRODUCTS include services and benefits that
differentiate one company's products from another company's products; (5)
PRODUCT POTENTIAL/INNOVATION are all additions and variations to a product
that may be made in the future. In this case, the company is trying to find something
new to satisfy and fulfill its customers. Fulfill desires customers.
Globalization
Globalization is the process by which borders or barriers between countries
disappear, making them united and interconnected. The process of globalization
covers many different areas. From political, social and cultural to economic and
educational.
Reporting from Hesri Mintawati's book Democratization and Globalization
(2022), the following is the definition of globalization according to Anthony Giddens:
"Globalization is a situation in which many people realize that they are participating in
an uncontrollably changing world." (Mawardi, Rafi, 2022)
Globalization is also a contemporary development that affects the emergence
of various possibilities to change the world. The influence of globalization can remove
many barriers that make the world more open and in need of each other. It can be said
that globalization has brought a new perspective to the concept of "World Without
Borders", which has now become a reality and has an impact on the world significant
to the development of culture, which in turn brings about changes in cultural renewal.
This definition of globalization has also been presented by several experts when it is
said that globalization is the process by which individuals, groups, communities and
countries interact, connect, depend and influence each other, beyond national borders.
(Beerkens, 2006).
Marketing
For all business people, marketing is a very important activity because it
affects survival, profit and growth. The following are expert opinions on the concept
of marketing: According to Laksana (2019) marketing is a meeting between sellers
and buyers to conduct transactions for goods or services. So, the notion of market no
longer refer to a place but rather on activity or activities that brings together sellers
and buyers to provide a product to consumers. According to Kotler and Keller (2016),
marketing is the identification and fulfillment of human and social needs. One of the
most concise definitions of marketing is satisfying needs in a profitable way.
According to Tjiptono and Diana (2016) marketing is the process of creating,
distributing, promoting, and pricing goods, services, and ideas to facilitate exchange
relationships that satisfy customers, as well as build and maintain positive
relationships with customers stakeholders in a dynamic environment
Research Methods
This research is a literature study of research related to global product policy
theory. Literature study research is a series of activities related to library methods in
data collection, reading and recording, and managing research materials
(Kartiningrum, Eka, 2015). Literature research is a mandatory activity in research,
especially academic research, with the main objective of theory development as well
as practical development. The data sources for this research are sourced from internet
media, books, previous documents and journals as references. Starting with the search
results in the order of most relevant, relevant, and moderately relevant.
Results And Discussion
Global Production Strategy
Products are an important part of international marketing. Product refers to
anything that can be offered to satisfy consumer needs and wants. Local products are
different from global products because traders must be smart to distinguish
international market conditions. In order for products and services marketed in the
global market to be right on target and get a positive response from consumers,
marketers must be careful in organizing market expansion strategies and positioning
global products in the international market. In addition, marketers must be creative in
designing and modifying products because product design and product modification
can increase sales at certain times. The strategy is not only about market expansion
programs, but also about extending the product life cycle.
Product refers to everything that can be offered to satisfy consumers' needs and
wants. As such, products can include both physical (tangible, such as shape, color,
characteristics, etc.) and non-physical (intangible, such as image, reputation, etc.)
aspects. A product is a collection of various physical, psychological, service-related,
and symbolic attributes that combine to create satisfaction or benefits for buyers or
users. (Kotler, P. and Keller, 2006).
- Global product range
Products can be classified in various categories, for example, based on the type
and purpose of the user, so products can be divided into consumer goods (purchased
for personal or family use) and industrial products (purchased for further processing,
rental or resale). Based on material durability and utility, products can be classified
into durable goods, consumables, disposable goods and services. In addition,
consumer goods can be subdivided into four types based on consumer purchasing
habits: convenience, shopping, specials and unwanted items). Industrial products are
classified according to their relative cost and role in the production process as follows:
raw materials and components; capital goods; and supplies and services. Such
classifications, which were developed in domestic marketing, also apply to Global
marketing. The difference lies in the geographical scope, which can be divided into
three types, namely: local/national products, international products and global
products.
- National product
A national/local product is a company's product that is offered or sold only in a
national or country market. Sometimes national products can give birth to global
companies that seek to serve the needs and preferences of specific country markets.
For example, Coca-Cola developed a ginseng-flavored non-carbonated drink sold only
in Japan and a specialty drink branded Pasturina to compete with Peru's most popular
soft drink (Inca Cola).
Even if domestic products are highly profitable, they can have significant
opportunity costs for the company. First of all, the existence of a company in only one
country does not provide an opportunity to develop and use global levers in terms of
marketing, research and marketing and production. Secondly, local/national products
do not allow to transfer and apply the experience gained from the market to others. In
other words, traders in one country cannot use the power of comparative analysis,
which is very useful when evaluating markets in several countries. Third, a country's
products cannot benefit from the transfer of administrative skills from the production
area.
- International Products
International/Regional products are products that are offered in the global
market. Such products are international and multi-regional in nature. Some global
products are specifically designed to meet the needs of the global market, whereas
many other global products are designed to meet the needs of specific national
markets as well as the needs of the global market. It should be noted that such
products are not synonymous with brands. For example, a personal stereo is a product
category whereas Sony is a global brand. Global brands, like national or international
brands, contain certain symbols that consumers believe in. Marketers should create a
global brand because global brands can act as an "umbrella" for the production of new
products.
Global brands have the same/similar image, same/similar positioning and are
based on the same strategic principles. However, the marketing mix of global brands
(product, price, promotion, and distribution channels) may vary from country to
country. A global product differs from a global brand in that it has a global name and
image. Global products do not use the same name and image in different countries.
However, like global brands, global products are based on the same strategic
principles, use the same/similar positioning and different marketing mixes. Efforts
should be made to standardize the product name and image so that the global product
becomes a global brand.
- product placement
Product positioning means positioning the brand in the minds of consumers in
a way that is perceived as unique and superior to competing brands in terms of
product features and benefits.
Positioning Based on Features and Benefits The most commonly used
positioning strategy is based on certain benefits or features such as economy,
reliability, durability, functionality, etc.
Positioning based on quality/price This strategy views positioning as a
continuum between high fashion/quality and high price, and good value and low
price.
Positioning by use/user application Positioning can also be done by explaining
how the product will be used or associating it with a particular user or category
of users in all markets in the same way.
High Tech Positioning Laptops, stereos and cars are products that are compatible
with High Tech Positioning. Such products are usually purchased based on the
physical attributes of the product, although image is also important. Buyers
usually have sufficient technical information.
High-Touch Positioning Marketing High-touch products require less precise
information and emphasize more on image. High-touch products have high
consumer participation. Buyers also have a specialized language and set of
symbols associated with wealth, materialism, and romance.
- Global product design
Product design is a key factor in global marketing success. To some extent,
changing the design can increase sales. However, the benefits of potential This
increase in sales should outweigh the cost of changing the product design and testing
it in the market. There are four factors that every global marketer must carefully
consider when making product design decisions: Preferences, Costs, Laws and
Regulations, and Compatibility.
Preferences Every global marketer needs to understand the important and
significant differences in preferences between cultures and countries, such as
colors and tastes. This greatly affects the marketing of various products such as
food, clothing, cars, children's toys, electronic products, etc. Marketers who
ignore differences in consumer preferences could be in big trouble.
Cost When designing a product, the cost factor must be fully considered. This
means that not only the actual production costs are taken into account, but also
other project-related costs, both of which must be borne by the manufacturer and
the end user.
Regulations and laws Compliance with laws and regulations in different
countries directly affects product design decisions and often even requires
product design adjustments that increase costs.
Compatibility The final issue in product design concerns the compatibility of the
product with the environment in which it will be used. For example, the lack of
translation of user manuals into multiple languages can negatively impact global
product sales in countries with different native languages.
- Standardization versus customization
In theory, global marketers can gain several benefits from standardization,
such as savings, use and sharing of knowledge, a unified image of quality and service,
and easier coordination and control.
In practice, full standardization is difficult to achieve. This is due to many
barriers in terms of regulation, infrastructure, competition and different customer
preferences. Global marketers must adapt their products to better adapt to the
operating and environmental conditions that vary from country to country. The
process of product modification often has to be carried out under the influence of the
following factors: (1) Product standards and regulations In many cases, products must
be modified in order to meet product regulations and national and international quality
standards (e.g. ISO 9000). (2) Measurement and calibration systems Different sizes
such as kg, gr, pound, liter, gallon, kilometer, mile, etc. make packaged foods such as
detergents, cereals and others need to be adjusted. (3) Trademarks Trademarks and
other forms of intellectual property protection, such as patents and copyrights, may
require changes to the product and its brand and packaging. If a company's brand or
packaging has been used for marketing purposes by another company, changes should
be made. (4) Climate and operating conditions Sometimes products should be
modified to function effectively under different environmental or climatic conditions.
(5) Language and symbols In general, packaging labels and instructions for use should
be translated into national languages, e.g. when it comes to dosage, application and
instructions for use. In addition, marketers must be able to pay attention to packaging
symbolization and language. Color associations can also trigger product changes, for
example in Malaysia green means danger, therefore green is rarely used for packaging
there. 6. Model, theme and flavor settings. Product changes are also needed to meet
customer demand in terms of model or design, for example Avon changed its cosmetic
packaging in Japan from plastic tubes to frosted glass packaging. Products should also
be tailored to consumers, especially in terms of sweet or bitter flavors. (Cateora, R.
Philip and Graham, 2007).
Multinational Differences
The speed and pattern of market entry of a particular product innovation can
vary greatly between markets. It is not uncommon for a new product that is
phenomenally successful in one country or region to be marginalized in another
market. An example is Microsoft's Xbox video game console, which was first released
in November 2001 in the United States and then in February 2002 in Japan and March
2002 in Europe. Although Xbox sales were impressive in the US, they fell short of
expectations in Japan and in Europe. Seven months after the launch of the Xbox, only
274,000 consoles were shipped in Japan. One of the reasons why the Xbox didn't
appeal to Japanese gamers is that most Xbox games are aimed at people who use PCs
for games which are much less popular in Japan than in the US. Another reason is that
it turns out that Japan is a market home of Xbox's two main competitors, Sony and
Nintendo. In this section, we present some concepts and insights from multinational
research on new product diffusion. This explains some of the differences in new
product performance between countries.
In general, three types of factors guide new product launches: individual
differences, personal influences and product characteristics. Individuals vary in their
desire to try new products. Early adopters are usually eager to try a new idea or
product. Late adopters take a wait-and-see attitude. Early adopters differ in
socioeconomic characteristics (income, education, social status), personality, and
communication behavior. The influence of previous adopters also plays an important
role. Word of mouth of previous adopters often has a much greater impact on adoption
decisions than impersonal factors such as advertising media. In many product groups,
peer pressure often decides whether (and when) one adopts an innovation. The third
group of authors refers to the nature of the product itself Five important product
characteristics:
Comparative advantage. To what extent do potential users perceive the value the
new product offers to be better than existing alternatives?
Compatibility. Is the product compatible with the existing values and attitudes of
individuals in the social system? Do switching costs apply if they choose to
adopt the innovation?
Complexity. Is the product easy to understand? Easy to use?
Testability. Is there anyone who can test the product to some extent?
Observability. How easy is it for potential adopters to see the results or benefits
of the innovation? Are these benefits easy to communicate?
In addition to these variables, there are some country-specific characteristics
that can be used to predict new product penetration patterns. Communication that
leads to the transfer of ideas is usually easier when it occurs between people who
share the same cultural mindset. Therefore, new product adoption rates tend to be
faster in homogeneous countries (e.g. Japan, South Korea, Thailand) than in countries
with very different cultures. If a new product is introduced at different intervals, there
will be large countries where it is first introduced and lagging countries which will
come later. In general, adoption rates appear to be higher in underdeveloped countries
than in developed countries. Potential adopters in underdeveloped countries have
more time to understand and evaluate the perceived characteristics of an innovation
than their counterparts in developed countries. Over time, product quality also tends to
improve, and prices usually decrease due to economies of scale. (Keegan, W.J. and
Green, 2005).
A study looking at the spread of consumer goods in Europe identified three
other country-specific characteristics. The first variable is cosmopolitanism.
Cosmopolitans are people who look beyond their immediate social environment,
while natives are more oriented towards their immediate social system. The more
cosmopolitan a country's population is, the greater the desire to innovate. Another
country is about mobility. Mobility means that members of a social system can move
and interact with other members. It is now largely determined by the country's
infrastructure. Mobility facilitates communication and therefore has a positive effect
on the penetration of a product in a particular market. Lastly, the proportion of women
in the labor force affects certain types of innovations. A higher proportion of women
in the labor force means higher income and purchasing power. Time-saving products
(e.g. washing machines, dishwashers) appeal to working women. Similarly, longevity
will be undervalued in a society where female workers make up a large proportion of
the labor force.
Another study examined the distribution of six products in 31 developing and
developed countries around the world. The most important observation is that
developing countries generally have a much slower adoption rate than developed
countries. The average penetration potential in developing countries is about one-third
(0.17 versus 0.52) that of developed countries. Developing countries also take 18
percent longer on average (19.25 versus 16.33 years) to reach peak sales.
One of the characteristic matrices for new product decision-making, time to
market, is the period from the launch of a new product to the country's market. 38
Launch marks the turning point between the introduction and growth phases of the
product life cycle. A recent study examined the time to market of sixteen new
products in 31 countries. Lead times (averaged across all product categories) range
from 5.4 years in Japan to 13.9 years in China and Vietnam (see Figure 10-3).
Research by Tellis and his colleagues offers the following insights:
Start times have become shorter over the years. The release time for product
communications decreased from 8.6 years for mobile to 3.4 years for broadband.
Strong national differences. New emerging countries in Asia (e.g. South Korea)
are adopting faster than European countries (e.g. France). Emerging markets
(e.g. China, India, Philippines) are still far behind other countries: 11 years
versus 7 years.
Economic development and cultural differences explain the different start times
between countries. High collectivism, power distance and religiosity are
associated with long triggering times.
"Fun" products (e.g. CD players, cell phones, digital cameras) are much faster
than "work" products (e.g. kitchen appliances): 7 vs. 12 years.
It is likely that the start time in the destination country is longer than the
previous start time in the other country. (Keegan, W.J. and Green, 2005)
Strengths in Support of Global Production Strategy
- General Customer Requirements.
In many product groups, consumers in different countries are very similar. The
functions of the products used may be the same. Similarly, the terms of use or benefits
sought may be similar. An example of a product that targets the global segment is the
Apple iPhone. Since Apple released the iPhone in early 2007, it sold about 13 million
units as of October 2008. In addition to the competitive features and advantages of
smartphones, the "emotional edge" of the iPhone's "coolness" was also a major reason
for its launch. global adoption Popularity especially among young people. A gradual
but steady convergence of consumer preferences can also be observed across many
product categories. Growing similarities in consumer preferences can also be observed
in the automotive industry. For example, the DuPont Automotive Color Popularity
Report (2008) shows that color preferences are converging worldwide, but there are
small differences between markets (see also Figure 10-2). White is the choice popular
around the world, winning top spots in North America, India, and Japan. Other
popular choices were black (China, Mexico and Europe) and silver (Brazil, China,
Europe, India, Russia and South Korea). One trend observed was the growing
popularity of blue around the world, especially among consumers looking for a
different theme.
- Global customers.
In business-to-business marketing, globalization means that most of the
business of many companies comes from multinational companies that are primarily
global customers. Purchasing and acquisition decisions are usually made centrally or
at least regionally. As a result, these customers demand globally harmonized services
or products.
- Economies of scale.
Economies of scale in global product production and distribution are in many
cases caused by the standardization movement. Economies are also often made for
efficiency reasons or to reduce production costs which initially starts with lower prices
for customers. Economies of scale offer global competitors a tremendous competitive
advantage over local or regional competitors. However, in many industries, the
"economies of scale" argument has lost its appeal. Manufacturing practices such as
flexible manufacturing and just-in-time (JIT) production have shifted their focus from
scale to timeliness. CAD/CAM technology allows companies to manufacture products
in small batches to reduce costs. While size can lower per-unit costs, economies of
scale should not be overlooked. Dissatisfaction with bureaucrats and large-scale
workers often leads to hidden costs.
- Market time.
In some industries, innovation is not enough to be competitive. Companies
must also find ways to reduce the time it takes to bring new product projects to
market. This is especially true for products in the short-cycle category. By focusing on
research and incorporating new product development, investment in projects is
reduced, allowing companies to shorten time to market. For example, Procter &
Gamble notes that the introduction of liquid laundry in the European Union occurred
in 10 percent of the time it took in the early 1980s, when marketing activities were
still very limited decentralized. Similarly, Swedish engineering group Alfa Laval has
accelerated time-to-market operations by streamlining its global new product
development process.
- Regional Marketing Agreement.
The creation of regional market agreements, such as B. the European single
market, encourages companies to bring products to regional markets (e.g. the EU) or
redesign existing products as regional union brands. The legislation that led to the
creation of the European single market in January 1993 was partly aimed at removing
trade barriers within the EU. It was also done to harmonize technical standards in
many industries. This move supported the EU's production strategy. For example,
Mars currently views Europe as one of its huge market areas. Mars changed the brand
names of some of the company's products, turning them into EU trademarks.
(Kristanto, 2011).
Product Design Policy
- Modular approach
The first approach starts with the development of product materials that can be
used worldwide. Parts can be assembled in different product configurations.
Economies of scale arise from mass production with more or less standardized product
components in different locations. Vaillant, a French company that is the largest boiler
manufacturer in Europe, is a prime example of this approach. With diverse consumer
tastes and construction standards in the EU market, Vaillant offers hundreds of
different boiler models. But recently, the company has been trying to minimize
customization costs without limiting its services to customers. The trick is to develop
boilers that meet local requirements but have as many common features as possible
(e.g. burners, controls).
- Core Product Approach (Common Platform).
The Core Product (Common Platform) approach starts with designing a core
product or a broad unified platform. Accessories are added to the basic product as
required by the local market. Savings are realized by reducing production and
purchasing costs. At the same time, companies that adopt this approach has the
flexibility to modify the product easily. An example of this French car model design
process approach is Renault. More than 90% of Renault's revenue comes from the
European market. The body, engine, transmission and chassis models offered are the
same in different markets. Small changes, such as a powered radiator in the Nordic
countries or a good air conditioner for cars sold in Southern Europe, are easy to make.
The common platform approach has become the vehicle of choice for many other
global automakers. The Jaguar S-Type brand shares a platform with the Lincoln LS,
another platform from Ford's luxury brand. It is also used by Volkswagen for several
variants of Audi, Seat and Skoda - several other brands belonging to Volkswagen's
stable. Sweden's Saab, owned by General Motors, uses a platform originally
developed for Opel, another European GM brand. Global Perspectives 10-2 explains.
How Deere and Electrolux use a product-based approach in their product design.
(hanindo cummunication, 2021).
Global Product Development
For most companies, new products are the bread and butter of their growth
strategy. Unfortunately, new product development is time-consuming and expensive,
with major challenges. The new product development process is a headache,
especially for multinational organizations trying to coordinate the process regionally
or sometimes globally. The steps in the global New Product Development (NPD)
process are very similar to the national marketing situation. In this section, we will
focus on the unique aspects that occur when innovation efforts are made on a global
scale. Global view 10-3 illustrates the development of vitamin-rich drinks for children
in developing countries.
- Identification of new product ideas
Every new product starts with an idea. There are many sources of new product
ideas. Companies can utilize any of the so-called 4 Cs of business, customers,
competition, and collaborators (e.g. distribution channels, suppliers) for the creation of
new product ideas. Obviously, many successful new products start in the R&D lab.
Other internal sources include suppliers, employees, and market researchers.
Multinational companies often capitalize on global know-how by transplanting new
product ideas that are successful from one country to another. Take the Dockers
Striped Relaxed pants for example. Introduced in Japan by Levi Strauss Japan in
1985, the line was very successful in Japan. Therefore, Levi Strauss then decided to
launch this line in the United States and Europe.
Competition is a good source for finding new product ideas. The Global New
Product Database (GNPD) created by Mintel International can be a useful resource.
This database tracks new product launches for 39 types of consumer packaged goods
in 48 countries around the world. The service sends email notifications to customers
about products launched by competitors around the world.
Many multinational companies are now creating organizational structures that
promote globalization (or regional product development). Unilever has established a
global network of Innovation Centers (ICs) for food and personal care products. Each
IC unit consists of marketing, publicity and technical staff and is headed by a
corporate director from the branch country where the IC is established. The centers are
responsible for product idea development and expertise in research, technology and
marketing. Black & Decker established sales teams for global product development.
Each team is led by a Product General Manager and has representatives from different
geographies. The team's goal is to develop new products with "the right level of
commonality and the right level of uniqueness for the local market". Project leaders
are assigned to countries or regions that dominate a common class. (Nandy, 2020)
- Idea filtering
Of course, not all new product ideas are winners. Once new product ideas have
been identified, they must be reviewed. The goal is to eliminate ideas with low
potential. The selection process is carried out according to a formal rating model. An
example of a rating model is New Prod, which is based on almost two hundred
projects from about one hundred companies. Each project is evaluated by managers
against around fifty selection criteria and rated for commercial success. This model
has been confirmed in North America, Scandinavia and the Netherlands. According to
the new production model, the most important success factor is product excellence
(competitive advantage of the product, superior quality and unique characteristics),
followed by the match between customer needs and the needs of the company project
and company resources/capacity, and customer needs. Studies interviewing Chinese
and Japanese product managers have reinforced the role of salient product advantages
in selecting successful new products from losers. However, research from China also
shows that: (a) Competitive activity is negatively correlated with new product success;
(2) Being first to market (pioneer) is an important success factor; (3) Product ideas
originating from the market are more likely to succeed than ideas originating from
engineering or lab work.
- Conduct design experiments
After getting a product idea from the above selection, the next step is to
develop the idea and test the new product idea. The concept here is the result of
development efforts from several selected ideas. Where the product concept must be
able to satisfy consumer needs. So that it can be better understood by the target market
in certain segments.
concept development
When developing an idea, the company must develop the previously selected
idea. Then turn it into a product concept that can be processed further.
Therefore, in the process of product development, it is necessary to create
several other alternatives that can adapt to market needs and are also
considered attractive.
concept test
New concepts that have been developed must first be tested with the intended
target market. Both on a small and large scale. This concept can appear in
various forms. For some types of products, it can be presented with pictures or
written descriptions. The point is, the message you want to convey to
consumers must be easily accepted by the target market.(ECONOMIC Science
ID, 2022)
- Conduct a Marketing Test
According to McDaniel and Gates (2013), the definition of a test market is the
actual testing of a product or several elements of the marketing mix using an
experimental/experimental design, including test forecast testing. Market testing, also
known as market testing, is one of the applications of testing try in marketing
research. In marketing research, there are several types of research designs, namely
descriptive and causal. Experimentation is the primary data collection technique in
causal research designs. Test markets are implemented using a semi-experimental
design. An experiment is a research method where one variable is manipulated and its
effect on another variable is observed. In an approximate experiment, the researcher
does not have full control over the testing process. These tests are often used in
marketing studies because cost and field constraints often do not allow researchers to
exercise direct control over the testing process.
Market testing is an application in marketing research that is applied not only
to test new products, but also to change marketing strategies that are being used, such
as product, price, and location, promotion points within a market or group of markets.
New product introductions play an important role in the financial success or failure of
a business. The conventional wisdom in the corporate world is that new products
should be more profitable in the future than in the past due to higher levels of
competition and faster pace of change. Estimates of failure rates for new products
vary and are often over 90%.
Market tests are conducted to gather information on issues such as: (a)
Estimated market share and volume. The effect of the new product on the sales of
similar products (if any) already introduced by the company. This is called
cannibalism; (b) Characteristics of consumers who buy the product. This can be done
by collecting demographic data such as lifestyle and psychographics. This information
is useful to help the company improve its product marketing strategy. For example,
knowing the demographics of potential buyers will help build a communication plan
that effectively and efficiently reaches target consumers. Knowing the psychological
characteristics and lifestyles of target consumers will provide valuable information on
how to position products and what types of promotions or advertisements appeal to
them. (c) Competitor behavior during testing (test market). This can give an indication
of what competitors will do when the product enters the market.
- Product launch
Product launch is the activity of launching a product for the first time. This
single operation can be carried out by startups and large companies. A product launch
is most likely to be successful when there is a series of processes that support the
event. So companies need to be smart in the strategy of launching or coming back
with a new product. The product launch process should be done in the best possible
way to attract potential buyers. Below, we will discuss the various ways a new
product launch can create a stir in the market. A large-scale study conducted by
researchers at the University of North Carolina wanted to examine the key drivers of
the first year of consumer adoption of new packaging. (Wibowo, 2020)
The researchers analyzed a database of 301 new product launches in Germany,
the UK, France and Spain. Some of the key findings include: (a) Greater consumer
acceptance when products are introduced by brands with greater market power (e.g.
market support, distribution reach, amount of shelf space, and quality volume) and
when marketed as brand extensions; (b) There is a U-shaped relationship between
novelty and consumer acceptance. Products with significant additions or novelty are
often more successful than products with average novelty; (c) New product
acceptance is also strongly influenced by the competitive environment. higher in less
focused, less heavily advertised, and less advertised categories, and in more
competitive innovative categories; (d) However, competitive behavior (e.g. price
competition) is more important than competitive structure (e.g. market concentration);
(e) In addition, the company's brand reputation and product novelty can minimize the
adverse impact of competition; (f) Consumer characteristics are also important:
acceptance is higher among consumers who tend to buy new products, younger
consumers and large families.
Conclusions
Products are an important aspect of international marketing programs. Local
products are different from global products because marketers must be observant of
international market conditions. In order for products and services marketed in the
global market to be right on target and get positive feedback from consumers,
marketers must be careful in setting strategies market expansion and global product
positioning in the international market. Furthermore, marketers need to be creative in
designing and modifying products because sometimes designing and modifying
products can increase sales. Strategy is not only about market expansion programs but
how to extend the product life cycle.
Products define the scope of a company's activities. Every aspect of the business
(including pricing decisions, marketing communications, and distribution) is subject
to product policy. Customers and competitors are also defined by the products offered
by the company. R&D demand and needs depend on product technology and the
company's management vision. The challenge for companies entering the global
market is to develop product policies and strategies that are sensitive to market needs,
competition, and organizational resources on a global scale. Product policies must
balance the benefits of adapting products to local market preferences and the benefits
of concentrating organizational resources on a small number of standard products.
