Aspects of International/Global Marketing

Product Issues in International Marketing

Standardization versus adaptation Product strategies in foreign markets Timing and sequence of product introductions New product development approaches Global branding Country-of-origin effects
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Adaptation versus Standardization

Mandatory Adaptation
Differences in standards
metric systems left vs. right hand driving

Discretionary Adaptation
Levels of income Differences in consumer tastes Levels of education and technical sophistication

Government regulations
efficiency standards packaging

The Tradeoff Between Standardization and Adaptation

Incremental manufacturing cost

Combined costs

Cost of lost sales

Fully adapted

Fully standardized
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Two Approaches to Standardization

Domestic Product as World Product
Manufacturing economies of scale Marketing economies of scale Lower costs of market and product research Satisfying international customers Maximizes returns during different stages of the product life cycle

Proactively Developing a World Product

World Car approach of Ford (Mondeo, Mystique, Contour) Modular Approach: GM, Volvo Trucks Core-Product/Common Platform Approach: Honda, Toyota

International Product Strategies

Whether the product function or the need satisfied is the same or different in a new market?
Whether the conditions of product use are the same in a new market? Whether the consumers in the new market have the ability to buy the product?

Alternative Strategies
Strategy Product Conditions of Ability to Product function product use buy the Strategy product Communi ca-tions Strategy Relative Cost of Adjustm ent 1 Examples

Same

Same

Yes

Extension

Extension

Soft drinks

Different

Same

Yes

Extension

Adaptation

Bicycles

Same

Different

Yes

Adaptation Extension

Gasoline, Detergents Greeting cards Cars, washing machines

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Different

Different

Yes

Adaptation Adaptation

Same

--

No

Invention

New

Timing of Product Introductions in Foreign Markets

Waterfall Strategy
product is introduced into foreign markets one at a time (IPLC model approach) Useful when:
lifecycle of product is long high fixed costs of entry into individual markets foreign markets are not equally developed some customization is needed firms have little foreign experience

Sprinkler Strategy
simultaneous introduction of the product in multiple markets Useful when:
short product life cycle high R&D costs in product development competition is very strong (pre-emption of markets) firms have existing presence in target countries homogenized preferences

New Product Development Approaches

INCREMENTALIST Technological Emphasis Incremental product improvement Manufacturing process GIANT LEAP Pure research

Rate and speed of Product Innovation

Competitive Benefits

Fast and easily accepted by Slow but create new customers lifestyle Continually newer Sometimes disruptive products Gain experience Dominant position Debug technological Monopoly profit glitches Reduce costs Adaptive designs Context specific Designers, engineers & marketing personnel job Context-free generalization Marketing research specialists job

Marketing Research

New Product Development Costs

U.S.
Market Research Product Characteristics Design Engineering Supplier Pricing COST if cost is too high, return to design phase Manufacturing Periodic Cost Reduction Manufacturing Continuous Cost Reduction
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Japan
Market Research Product Characteristics Planned selling price less desired profit TARGET COST Design Engineering Supplier Pricing

Negotiate tradeoffs to meet target costs

Branding Issues
Global/Regional Brands
scale economies in brand development and promotion brand awareness and prestige

Local Brands
legal constraints dont translate well into local languages avoid negative nationalistic associations

Umbrella Brands (corporate pre-fix or multiple product categories under same name)
scale economies in building brand recognition easier for adding new products (extensions)
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Country-of-Origin Effects
Impact of where the product is manufactured
perceived quality? patriotism/nationalism?

Country-of-origin versus country-of-manufacture Interaction of country-of-origin and brand name effects Hybrid products (e.g., components manufactured in multiple countries; products via strategic alliances)

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Triggers of Internationalization
Domestic Market Saturation Trade Deficit Foreign Competition New Market Opportunities Economies of Scale Others
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Globalization Forces: Market Drivers

Convergence of per capita income and lifestyles and tastes?? Global Customers due to increased travel and organizational buying Growing global and regional channels Increasing number of world brands and global advertising
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Globalization Forces: Cost Drivers

Continuing push for economies of scale (but offset by flexible manufacturing) Accelerating technological innovation Increasing cost of product development relative to market life Advances in transportation Emergence of newly industrialized countries with productive capability and low labor costs

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Globalization Forces: Competitive Drivers

More countries becoming key competitive battlegrounds Rise of new competitors intent on becoming global Growth of global networks making countries interdependent in particular industries More companies becoming internationally oriented rather than nationally centered New global alliances

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Globalization Forces: Government Drivers

Reduction of tariff barriers Reduction of non-tariff barriers Creation of new trading blocs Decline in the role of government as producers and consumers Market liberalization and privatization Adoption of common standards

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Globalization Standardization Philosophy

Customer needs and interests are becoming increasingly homogenous worldwide Consumers are willing to sacrifice preferences in product features for lower prices at higher quality Substantial economies of scale in production and marketing can be achieved by developing standardized marketing programs

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Constraints to Implementing Global Standardization Strategy

External Governmental and trade restrictions Differences in marketing systems Nature of competitive structure Socio-cultural influences on consumer preferences
Internal Financial and managerial constraints Local management motivation and attitudes
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Terminology
Export Marketing
International/Multinational Marketing Global Marketing

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Roles of International Marketing Manager

The Foreign Entry Role Country Potential; Barriers to Entry Mode of Entry; Expansion Paths Finding Middlemen; Negotiating with partners Local Marketing Local buyer behavior; Marketing research Localized marketing strategy Global Management Globalization (pros and cons); global customers Formulating global strategies Coordination on a global basis
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Framework
Economic Environment Political/Legal Environment

Product

Price Socio-cultural Environment

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Financial Environment

International Customer Promotion Distribution

International Economic Institutions and Agreements