International Product

policy
Some additional Thoughts

An important question that multinational

marketers tend to answer is whether the
product approach successful at home will be
equally successful in foreign markets.

Standardization v/s customization

Standardization means offering a common product

on a national/worldwide basis.

Customization means adapting a product i.e to

make appropriate changes in it to match local
perspectives.

International marketers must examine all the criteria

in order to decide the extent to which products
should vary from country to country.

Decision criteria
1)Nature of product :
More standardization is feasible in the case of
industrial goods than consumer goods.
Among consumer goods , non durables require
greater customization than durables , because
nondurable consumer goods appeal to tastes, habits
and customs.

2) Market development:
Different national markets for a given product are in
different stages of development.
If a products foreign market is in a different stage of
market development than in U.S market ,
appropriate changes in the product design becomes
desirable in order to make an adequate product/
market match

e.g
Polaroids swinger camera failed in France
because the company pursued the same
strategy there as in U.S at a time when then
two markets were in different stages of
development.
The U.S market was in maturity stage
whereas France was in introductory stage.

3) Cost /benefit Relationship:

Product adaptation to match local conditions involves
costs .
These costs may relate to R& D , physical alteration of
the products design , style, features or changes in
packaging , brand name, performance guarantee etc.

In contrast with standardization the above is not required,

hence huge saving in cost .
The only big cost that standardization may involve is
opportunity cost. If a product is customized , presumably
it may have a greater appeal to the mass market.

A cost/benefit analysis for customization is

necessary to be carried out.
The result of that analysis should then be
compared with the same analysis applied to
standardization.
The net difference indicates the relative
desirability of the two strategies.

4) Legal requirements:
Different countries have different laws about product
standards , patent laws and tariffs and taxes.
These laws may require product adaptation.
e.g Europe the 220 volt electrical system is used. As a
result, European govt. set stringent safety standards for
such products as irons-cord connections must be
stoenger, radio interference must be shielded

5) Competition :
In the absence of current or potential
competition, a company can do well in overseas
market without ever changing its standard product.
But with rising competition , product customization
is essential if a company is to have any chance of
maintaining market share.
e.g Kodak used to sell a standard film globally.
With competition from Fuji, Kodak began
marketing films with ruddier flesh tones in Japan.

6) Support System :
The support system refers to institutions and
functions that are necessary to create , develop and
service demand.
These include retailers, wholesalers, sales agents,
warehousing , transportation , creditors, media.
The availability, performance and cost of the support
system profoundly affect the product design
strategy.

E.G Frozen foods cannot be marketed in

countries where retailers do not have facilities
with freezers.

When Lever brothers attempted to introduce

frozen vegetables in developing countries ,
the lack of refrigeration facilities at the retail
level (as well as in homes) prevented
implementation of the plan.

7) Physical environment :
The physical conditions of a country (climate and
resources) may also require product adaptation.
E.g A/C in Middle east require additional features for
satisfactory performance.

Differences in the size and configuration of homes in

some countries affect product design for home
appliances and home furnishings.
European kitchens are usually smaller than U.S
kitchens and European homes generally dont have
basements.

Thus compactness of design in washers and dryers

is a necessity , since they must be accommodated
within a crowded area.

GEs European washing machines are designed

vertically to conserve water.
P& Gs Tide and \Pantene shampoo ,packaged in
small , low priced packets in India.
Whirlpool markets light weight airconditioners in
Asia.

8) Market conditions:
Cultural differences, economic prosperity and customer
perceptions in the foreign country should also be considered in
deciding whether to adapt the product.
E.g British prefer slightly more bitter taste in soup than Americans
do.
The taste difference required the Campbell soup to modify soup
ingredients in Britain.
To cater to local taste in Japan, Dominos offers pizza with such
toppings as chicken teriyaki, apple, rice and corn.

Mcdonalds offers local appealbeer in Germany.

Adding British Cadbury chocolate sticks to their icecream
cones in England, Japan added a sandwich of fried
chicken soaked in soy sauce to its menu.
The new item called Chicken Tatsuta did exceedingly
well.
Also Mcdonalds offers burgers dipped in teriyaki sauce
and buns made of rice.
To bring products such as automobiles and appliances
within the reach of the middle class in developing
countries , the product must be appropriately modified to
cut costs without reducing functional quality.