Product Design

Product design denotes the shape, appearance, colour, smell etc. of a product. Product
design is the physical appearance of the product, which attracts customers. If an individual
is attracted towards a product, he will purchase it, otherwise not. Thus, design of a product
largely, determines a firm’s success or failure.

Strategies of Product Designing for Global Markets

The important question is, whether a manufacturer should make changes in the design of
the product according to the needs of the various overseas markets or should he
manufacture in an existing design for selling in international markets. The former is known
as adaptation and the latter is called standardization. Thus, product design strategy can be
based on the following two strategies:

(A) Product Adaptation

(B) Product Standardization

(A) Product Adaptation

An important element to the success in the international marketing is that the product
should be made and sold in the foreign markets according to the cultural tastes and
economic characteristics of the particular overseas market than to sell it as it is sold in the
domestic market. Thus, the product should be adapted to the consumers of that particular
nation or the product must satisfy the needs of the people of that nation. This is known as
product adaptation. In other words, product adaptation means making appropriate changes
in a product to match local perspectives.

Because of a number of reasons, product perfect in every aspect and good for
one market may not necessarily be good for another market. Physical conditions or
functional requirements may differ from one market to another. A product may be used in
different ways and for different purposes in different countries. The tastes, levels of skills
and technical development may vary from country to country and may dictate changes in
the product. Hence, there are many products, which cannot be sold in overseas markets as
they are sold in domestic markets, as they require some adaptations for making them
suitable to the foreign markets. For instance, making modification in the automobile
according to right hand drive or left hand drive is product adaptation. Product adaptation
may be in terms of size, functions, materials, design, style, colour, tastes and standards.
Sometimes, the adaptation may be made at low cost and in an easy way, at other times; it
may be costly and difficult. Before going for any adaptation process, the manufacturer or
the marketer must carefully take into account the cost factor.

Factors Necessitating Design Changes

R.D Robinson has identified the following thirteen environmental factors, which may
necessitate design changes:

Environmental Factor Design Change

1. Level of technical skills Product simplification.

2. Level of labour cost Automation or manualization of product.

3. Level of literacy Remarking and simplification of product.

4. Level of income Quality and price change.

5. Level of interest rates Quality and price change (investment in high

quality might not be financially desirable).

6. Level of maintenance Change of tolerances.

7. Climatic differences Product adaptation.

8. Isolation (heavy repair difficult and Product simplification and durability

expensive) improvement.

9. Differences in standards Recalibration of product and resizing.

10. Availability of other products Greater or lesser product integration.

11. Availability of materials Change in product structure and fuel.

12. Power availability Resizing of product.

13. Special conditions Product redesign and invention.

All these factors are relevant in the marketing of durable consumer goods or machinery
items but some of these factors are not relevant for other consumer goods such as food
products or clothing. In the case of such products variables like level of income, climatic
differences, customs, creed and convenience assume supreme importance in deciding the
product adaptation requirements. Irrespective of the nature of product, a firm will have to
assess the need for product adaptation on a continuing basis.

Product Adaptation Strategy

Competitors resort to product adaptation strategy for selling their products in foreign
markets. Sometimes when a product has different stages of life cycle in different markets, it
requires different types of adaptations in different stages. The modifications in the product
act as the ‘selling point’. The process may also result in cost reduction, which is an added
advantage. A firm may now encounter the difficult choice of choosing a product adaptation
strategy so that it may be successfully sold in the foreign markets, as a slightly modified
product may have a better chance of success in getting a foothold in the market than a
product, which is similar to the existing product in every essential aspect. A product may
have to change in various ways to meet physical or mandatory requirements of a new
market ranging from simple package changes to total redesign of the physical core product.
Legal, economic, political, technological and climatic requirements of the local market place
also dictate product adaptation.

At a time in India, when the government was very anti-foreign investment,

Pepsi-Cola changed its product name to Lehar Pepsi to gain as much local support as
possible. The name was changed back to Pepsi-Cola when the political climate turned
favourable. Similarly, Sprite became the best-selling clear soft drink in Japan after being
reformulated. The lime taste was removed because were found to prefer a purer lemon
flavour. Laws that differ among countries usually set specific package sizes and safety and
quality standards. In order to make a product more affordable in low-income countries, the
number of units per package may have to be reduced from typical quantities offered in
high-income countries. For example, razor blades, cigarettes, chewing gum and other
multiple pack items are often sold singly or two to a pack instead of the more customary 10
or 20. Modifications in products may also have to be made to accommodate climatic
differences. For instance, General Motors of Canada encountered major problems with
several thousand Chevrolet automobiles shipped to Mideast country, it was soon discovered
that they were unfit for the hot, dusty climate. Supplementary air filters and different
clutches had to be included to adjust for the problem. The less economically developed a
market is the greater degree of change a product may require for acceptance.
Conditions for Product Adaptation
Product adaptation is necessary under the following two conditions:

(a) Mandatory (b) Optional

(a) Mandatory Product Modifications

Product modification is mandatory when without adaptation a product either cannot enter
a market or is unable to perform its functions there. Such mandatory standards make the
adaptation decision easy as a marketer must either comply or stay out of the market. The
mandatory factors affecting product modification are as follows:

(1) Government’s mandatory standards, i.e., country’s regulations

The most significant factor that makes modification mandatory is government regulation. To
gain entry into a foreign market, a firm has to satisfy certain requirements. Regulations are
generally specified and explained when a potential customer requests a price quotation on a
product to be imported. For instance, beginning in 1986, Switzerland banned the use of
phosphates in detergents. The new regulation also necessitates labels and packages to show
the chemical composition of the product. In another case, Avon shampoos had to be
reformulated to remove the formaldehyde preservative, which is a violation of regulations
in many Asian countries. Usually food products are heavily regulated. Added vitamins in
migraine, prohibited in Italy, are compulsory in the United Kingdom and Holland.

(2) Electrical current standards

Products are often modified to compensate for differences in electrical current standards,
i.e., phase, voltage, and frequency. Stereo receivers and TV sets manufactured for the U.S.
110- to 120- volt mode will be severely damaged if used in countries where the voltage are
twice as high. Thus, products must be adapted to higher voltages. Even if there is no voltage
problem, a product’s operating efficiency can be impaired if the product is operated in the
wrong electrical frequency. For example, alarm clocks, tape recorders and turntables
designed for the U.S. 60 Hz system will function more slowly in countries where the
frequency is 50 Hz. In order to solve this problem, marketers may have to substitute a
special motor or arrange for a different drive ratio to achieve the desirable operating RPM
or service level.
(3) Measurement systems

Measurement standards may also differ from country to country. United States has
adopted the English (imperial) system of measurement such as feet, pounds etc. On the
other hand, most countries employ the metric system and product quantity must be
expressed in metric units. Since 1989, the EU countries do not accept non-metric products
for sale.

(4) Operating Systems

Some products require modification because of different operating systems adopted by

various countries. For example, there are three different T.V operating systems used in
different parts of the globe, i.e, the American NTSC (National Television Systems
Committee), the French SECAM (Systeme Electronique Pour Couleur Avec Memoire), and
the German PAL (Phone Alternating Lines). Mostly, a TV set designed for one broadcast
system cannot receive signals broadcast through a different operating system. Videotex and
HDTV (high-definition TV) are other examples of products that thus so far do not possess a
universal system accepted by the industry.

(b) Optional Product Modifications

Optional modification decision is more complex and difficult as it is based on the

international marketer’s discretion in taking action. The optional factors affecting product
modification are as follows:

(1) Physical distribution

Physical distribution is a condition that makes optional modification attractive. This entails
the facilitation of product transportation at the lowest cost. Since assessment of freight
charges are made on the basis of either weight or volume, the carrier may charge on the
basis of whichever is more profitable. The marketer may be able to cut delivery costs if the
products are assembled and then shipped. Several countries also have narrow roads,
doorways, stairways, or elevators that can lead to transit problems when products are large
or are shipped assembled. Hence, a slight product modification may significantly facilitate
product movement.

(2) Local Use conditions

Local use conditions are other determinants for optional adaptation. Local use conditions
include climatic conditions, space constraint, consumer demographics, user’s habits, and
environmental characteristics.

(i) Climatic conditions

Local use conditions also take into account climatic conditions, which may affect product
durability or performance. For example, Avon modified its Candid moist lipstick line for
suiting to a hot and humid climate. Certain changes may call for in gasoline formulations. If
the heat is intense, gasoline needs a higher flash point to avoid vapour locks and engine
stalling. For example, in Brazil, automobiles are designed to run on low-quality gas, to
endure the country’s rough dusty roads and to withstand its sizzling temperatures.
Consequently, these automobiles are attractive to customers in LDCs, especially when the
automobiles are also durable and simple to maintain.

(ii) Space Constraint

Space constraint is another local condition that necessitates product modification. For
example, Sear’s refrigerators were redesigned to be smaller in dimensions without
sacrificing the original capacity, so that they could meet the requirement of compact
Japanese home. In the same way, Philips had to reduce the size of its coffeemaker.

(iii) Consumer demographics as related to physical appearance

These can also influence the way how products are used and how suitable they are. For
example, Philips downsized its shaver to fit the smaller hands of Japanese. Similarly, Barbie
doll became more popular in Japan after it had been modified to better resemble the
physical appearance of local people.
(iv) User’s habits

User’s habits also lead to product modifications. For example, as the Japanese prefer to
work with pencils as against people in United States, who commonly go for typed business
correspondence. Therefore, copiers require special characteristics that allow the copying of
light pencil lines. In another case, Microsoft’s plant in Ireland was charged with the task of
localizing Windows 95 into more than 50 languages.

(v) Other environmental characteristics

Other environmental characteristics are also related to use conditions and should be
examined. For example, IBM had to create a completely new design so that its machine
could include Japanese word-processing capability. In the same way, Kodak made a number
of changes in its graphic arts products for Japanese professionals most of whom have no
dark-rooms and have to work in different light environments.

(3) Price

Price may frequently impact a product’s success or failure in the market. The income of
Americans is relatively at higher level and their products also tend to be expensive. Offering
high priced products by American companies can be a disadvantage in other low-income
countries. To solve the problem of high price, American companies can reduce the contents
of the products or remove any non-essential parts or do both because they may
unnecessarily drive up the price. This approach has been adopted by General Motors in
manufacturing and selling the so-called Basic Transportation Vehicle in less industrialized
countries.

(4) Limiting product movement across national boundaries

International marketers often voluntarily modify their products in individual markets in

their desire to maximize profit by limiting product movement across national boundaries.
The rationale for this desire to discourage gray marketing is that price controls and other
laws are in existence in some countries that restrict profits and prices. When there are no
such laws in other nearby countries marketers are encouraged to move products into those
nearby countries where higher prices can be charged. However, a problem can come up,
wherein local firms in countries where product prices are high are bypassed by marketers
who buy directly from firms handling such products in countries where prices are low.

In several cases, because of anti-trust laws, international marketers who

wish to maintain certain market prices are not able to ban this kind of product movement
by threatening to cut-off supply from those firms re-exporting products to high-priced
countries. Despite the efforts of the authorities to prevent companies from keeping lower-
priced products out of higher-priced countries, the marketers may do so by resorting to a
number of tactics. Several manufacturers try to hinder these practices by deliberately
varying packaging, package coding, product characteristics, colouring and even brand names
in an attempt to spot violators or to confuse consumers in markets where products have
moved across borders.

(5) Historical preference or local customs and culture

This is one of the most important reasons for product modification. Product size, colour,
speed, grade and source may have to be redesigned in order to satisfy local preference. For
example, Kodak made changes in its film to cater to Japanese idea of attractive skin tones.
In the same way, Kraft’s Philadelphia Cream Cheese has different taste in the United States,
Great Britain, Germany and Canada. In Asia, Foremost sells chocolate and strawberry milk in
place of low fat and skim milk. Alterations in products are not necessarily related to
functional attributes such as durability, quality, operation method, maintenance and other
engineering aspects. Aesthetic or secondary qualities should also be frequently taken into
consideration. In a number of cases, minor cosmetic have significantly increased sales.
Therefore, functional and aesthetic changes should both be taken into account in regard to
how they affect the total complete product.

Alternative Adaptation Strategies

Warren Keegan has outlined the following five alternative adaptation strategies, which a
firm may use for selling the product in different overseas markets.

(1) One Product, One Message -Worldwide (Straight Extension)

This strategy is also called as product extension strategy. The theme of this strategy is one
product, one message worldwide. In this strategy, firms, which are extending their
operations to overseas markets, sell the same product, with the same advertising and
promotional themes and appeal, which they are using in the domestic markets. This strategy
is saves cost due to economies of scale. It also eliminates research and development costs
and reduced promotion and packaging costs. However, this strategy does not work in those
conditions where foreign consumers’ perception of a product differs or where the tastes
and preferences are different from that of the domestic consumers. Under these
circumstances, the marketer should make an effort to adjust or use new product strategy,
but only after surveying the markets. When some of the Indian companies tried to market
Indian pickles in the USA and Europe, they were not successful as the taste was very bitter
and hot. Thus, straight extension strategy may be successfully employed only if the product
function in terms of need satisfaction and the condition of the product use are the same in
all the markets, and the customers in all the markets are financially capable of buying the
product at the same price. This strategy has been successful for Coca Cola to sell its product.

(2) Same Product, but Modified Communication (Communication Adaptation)

This approach is practical when the same product can be used to fulfill different needs in
foreign markets. This strategy is used when the product is almost the same which the
marketer sells in the home market but the communicational message or the promotional
themes and appeals differ in different markets according to the needs of the people it cater
to in different markets. Hence, different propositions are used in different markets for
selling the same product. In case, where the approach of product satisfying the diverse
needs is pursued, a product transformation occurs. Consequently, it may be called a product
transformation strategy. This strategy is low cost, as the product is same originally, and
costs associated with research and development, manufacturing set–up, inventory and
tooling are avoided. The only additional cost incurred is for reformulating the
communication message around the newly identified product function. For example, Indian
bicycles are advertised overseas for the pleasure they give rather than for their
transportation qualities since bicycles are used more for fun and pleasure in Europe and the
USA than for transportation.

(3) Product Adaptation - Communications Extension

This strategy is to adapt the product to suit the overseas market conditions by essentially
extending the same communication message as developed in the domestic market. This
strategy assumes that the product will serve almost the same purpose in overseas markets
under different use conditions, as it serves in the home market. But given that the use
conditions are changed, the promotional appeal differs. This strategy is used mainly by
detergent manufacturers, who alter the formula to suit the local water conditions or
weather conditions but use the same theme for advertising. In the same way, chemical
fertilizers are altered to fit soil conditions. Voltage requirements lead to alteration of
electrical appliances, and climatic factors make for packaging changes. Esso followed this
strategy when it adapted its gasoline formulations to meet the weather conditions
prevailing in foreign markets areas but employed without change its communications
appeal “Put a Tiger in your Tank”. Under this strategy the additional costs are incurred in
extra-engineering and production changes, but in the long run it may be better than
introducing an unaltered product possessing less appeal. This strategy is economical since
the promotional strategy is the same.

(4) Dual Adaptation

Total adaptation is based on the assumption that the conditions in overseas markets differ
considerably, so the marketer should adapt his marketing strategy to suit those conditions.
Under this strategy, the marketer should adapt the product as well as the communication to
suit the local markets and to enhance the product acceptability. This strategy is employed
when differences exist in the environmental conditions of use and in the function that a
product serves. For instance, the National Cash Register Company took an innovative step
backward by developing a crank-operated cash register that would sell at half the price of a
modern cash register. They developed special advertising that laid emphasis on its low cost.
This unit caught on to a great extent in the Philippines, the Orient, Latin American and
Spain. Thus, this strategy is the combination of the second and third alternatives. For
instance, this strategy is used by garment manufacturers who design their products
differently for different overseas markets and adapt their communication accordingly. Dual
adaptation is an expensive strategy but is worthwhile if markets in the various countries are
huge enough.

(5) Product Invention

Product invention strategy involves the development of new product suitable for tapping
an overseas market. For example, in developing countries’ markets, where people do not
have significant purchasing power, a low cost product needs to be developed which they
can buy. The firm must follow the strategy of developing a new product specially to suit
their needs and at price, which is affordable to them. In this strategy, the company develops
a new product in response to overseas market demands. A product invention strategy may
even imply “inventing backward”. There was a case of a leading manufacturer of mechanical
washing machines was asked to apply its know-how not to produce a better automatic
machine, but instead develop a better manual washer. The outcome was an inexpensive
($10) hand-powered plastic washer with the tumbling action of an automatic machine.
However, product invention would appear to be costliest of all strategies, but it can reap
good returns in international marketing because but the pay-offs to the successful firm also
appear to be the highest.

.
Factors to be considered in choosing the correct product adaptation strategy

Following factors should be considered in choosing the correct product adaptation strategy:

(1) Firm’s objectives

If profit maximization were a firm’s objective, then the best strategy for it would be product
extension, i.e. the same product with the same communication appeals may be sold in
overseas markets. It entails no additional expense and the firm gains by way of economies
of scale. However, this strategy should be viewed in relation to other factors.

(2) Product market analysis

The firm should establish the product-market analysis of its product. It must take into
account the various issues relevant in relation to the product such as, who uses the product,
when it is used, for what purpose it used and how it is used. Mandatory adaptation
situations, purchasing power of its prospective customers and the price of the product
should also be taken into consideration while deciding the strategy. Before choosing the
product adaptation strategy, in depth analysis of different factors deciding the nature of the
demand of the product should be done. In the light of these factors, the firm should decide
whether the needs of the individual markets differ so much so as to necessitate
differentiation in the product.

(3) Company resources

While selecting the product strategy, the firm must pay attention to its own financial and
non-financial resources as product adaptation involves costs. It may be rewarding to
differentiate the product from one market to another, but the cost involvement may be
beyond what its financial resources allow. In such circumstances, it is inadvisable to adopt
the strategy, which requires excessive costs involvement. A strategy, which does not involve
costs, may be followed in such situations such as product and communication extension
strategy.

(4) Packaging

While deciding on the strategy for the different overseas markets a significant factor to be
kept in mind is the product package. The products may be differentiated in diverse markets
by the size, design, colour and language on the package. Factors like the climate of the
importing country, length of distribution channel, transportation, mandatory provisions,
customs requirements etc should be taken into consideration in packaging.

Analysis of Product Components for Adaptation

Before entering a market, an international marketer should analyze the components of a

product in order to determine what features need adaptation to ensure that the product
meets both the market-perceived quality and performance quality. To identify all the
possible ways a product may be adapted to a new market taking into account all the
cultural, physical and mandatory factors, a product may be separated into three distinct
components like core component, packaging component and support services component.
These components encompass all a product’s tangible and intangible elements and provide
the bundle of utilities the market obtains from the use of the product. A product should be
carefully evaluated on each of the three components for mandatory changes that may call
for in the product.

(1) Core Component

The core component includes the physical product, i.e. the platform that contains the
essential technology and all its design and functional features. It is on the product platform,
that product variations can be added or deleted to suit local differences. Major adjustments
in the platform aspect of the core component may be expensive because a change in the
platform can have an effect on the product processes and thus require additional capital
investment. However, alterations in design, functional features, flavours, colour and other
aspects can be made to adapt the product to cultural differences. For example, in Japan,
Nestle originally sold the same type of cornflakes as it sells in the United States, but found
that Japanese children ate them mostly as snacks instead of having it for breakfast. In order
to expand their product into the larger breakfast market, Nestle reformulated its cereals to
more closely meet Japanese taste. Nestle, therefore developed cereals with familiar tastes,
i.e. seaweed, carrots and zucchini, and coconuts and papaya, resulting in a 12 percent share
of the growing breakfast-cereal market. The functional features of a product can also be
added or eliminated, depending upon the market needs. Additional alterations may be
necessary to meet safety and electrical standards or other mandatory requirements. Thus,
physical product and all its functional features must be examined as potential elements for
adaptation.
(2) Packaging Component

The packaging component consists of style, features, packaging, labeling, trademarks,

brand name, quality, price and all other aspects of a product’s package. The significance of
each of these elements for the consumer depends on the need the product is designed to
serve. Packaging components often necessitate both discretionary and mandatory changes.
For instance, while some countries require labels to be printed in more than one language,
others prohibit the use of any foreign language. Sometimes elements in the packaging
component may incorporate symbols, which convey an unintended meaning should be
changed. For example, yellow flowers used in a company’s trademark were rejected in
Mexico, where a yellow flower symbolizes death or disrespect. Package size and price have
an important relationship in not so developed countries. Companies have to package their
products in small units to bring the price in line with spending norms. Unilever packages its
Sunsilk brand shampoo in tiny plastic bags, enough for one shampoo, in order to make the
product affordable in India. Moreover, in some countries law stipulates specific bottle, can,
package sizes and measurement units, which requires a company to adapt a product’s
packaging. Different labeling laws in different countries also create special problems for
companies selling products in various markets. For example, In Venezuela, prices are
required to be printed on the labels, but in Chile, it is illegal to put prices on labels or in any
way suggest retail prices. Thus, marketers must examine each of the elements of the
packaging component to be sure that this part of the product conveys the appropriate
meaning and value to the target market.

(3) Support Services Component

The support services component encompasses repairs and maintenance, instructions,

installations, warranties, deliveries, and the availability of spare parts. Repairs and
maintenance are especially difficult problems in many developing countries. In the same
way, the concept of routine maintenance and preventive maintenance is not a part of the
culture in some countries. Consequently, products need to be adjusted to require less
frequent product’s instructions. A simple term well understood in one country may be
incomprehensible in another. For example, in rural Africa, consumers had difficulty in
understanding that Vaseline Intensive Care lotion is absorbed into the skin. The confusion
was eliminated when ‘absorbed’ was changed to ‘soaks into’. There is another case of
Brazilians who have successfully triumphed over low literacy and technical skills of users of
the sophisticated military tank it sells to Third World countries. They incorporate
videocassette players and videotapes with detailed repair instructions as part of the
standard instruction package. The also minimize spare part problems by using standardized,
off-the-shelf parts available all over the world.
(B) Product Standardization

An important element of the marketing process is determining the shape or form of the
product in which it should be offered to the market. This relates to the problem of
establishing, maintaining standards and providing conformity to them. Standards play a
significant part in securing efficiency and economy. They are ideal or model products which
gives basis of composition with identical products. They put across an idea of uniformity and
identity in respect of quality or quantity or some other matters. In the words of Ouddy and
Ravzan, “Standard is a measure that is generally accepted as having a fixed value”. This
measure could in units of intrinsic qualities or characteristics of the product or service. A
standard is determined by the scientific study of the essential qualities or characteristics
that must exist in a product.

Product standardization means offering a common product on a national,

regional, or worldwide basis. In other words, product standardization denotes that a
product originally designed for a local market is exported to other countries with virtually no
change, except perhaps for the translation of words or other cosmetic changes. For
instance, Revlon used to ship successful products abroad without changes in product
formulation, packaging (without any translation in a number of cases) and advertising. Thus,
standardization means manufacturing a product having one single design, shape, colour and
other features. In the words of Lipson and Darling, “standardization is the process of
establishing particular physical attributes and chemical composition against which other
items may be compared”.

The standardization of products across national borders eliminates

duplication of costs such as research and development, product design and packaging. In
addition to that, standardization allows realization of economies of scale. Further,
standardization makes it feasible to achieve consistency in dealing with customers and in
product design. The consistency in product style, that is, features, design, brand name,
packaging etc, should establish a common image of the product around the globe to help
increase overall sales. For example, if a consumer is accustomed to a particular brand, he is
likely to purchase the same brand overseas if it is available. The global exposure that brands
receive today because of extensive world travel and mass media requires the consistency
feasible by way of standardization. Lastly, standardization may be advocated on the grounds
that a product that has proved to be successful in one country should do equally well in
other countries that present more or less similar markets and similar competitive
conditions.
Advantages or benefits of standardization

Following are the advantages or benefits of standardization:

(1) Simplicity

The strength of standardization in the production and distribution of products and services
is in its simplicity. It is an easy process for executives to understand and implement in the
target markets.

(2) Economies of scale in production

International standards expand the markets. If one standard version of a product is sold in
all the regions, it will have a greater demand and consequently greater production runs. The
firm will thus be able to attain the large-scale economies, resulting in lower cost of
production and distribution and bringing the break-even point lower. Thus, economics of
operation usually favour standardization of the product offering. Benefits of standardization
are expected to accrue because of large-scale operations. If the company’s plants are
currently operating below their most efficient levels, the additional volume from the
standardized production allows the company to spread its costs over a larger volume of
output.

(3) Economies in product research and development

As a firm generates larger profits due to large-scale economies, it may be able to spend
more on research and development to improve the quality of the product. Thus, research
and development costs can be spread over a larger number of units. The benefits of
research and development may give the benefit of cost reduction to the firm and make the
firm’s product whether sold domestically or internationally more profitable. It may also be
able to introduce a new product having larger adaptability. The costs incurred by the firm in
product research and development may be recovered from the sale of the product. Per unit
cost of research and development expenditure will be lesser for the firm. Thus,
standardization reduces the cost of product research and development.
(4) Economies in Marketing

Standardization provides economies in marketing. When the same product is launched in

different markets, a variety of economies can be achieved in terms of production,
advertising, sales, inventory management, sales literature and after-sale service
requirements. The firm does not have to change its marketing mix to suit the local
requirements. It may result in increase in sales. Considerable economies may also be
achieved in the area of product packaging. If the firm makes use of the same advertising
theme for all of its national markets, total advertising costs can be reduced significantly.
Standardized advertising also presents a consistent image of the firm’s products across its
various markets. Consumers are now-a-days are increasingly mobile, and encountering a
common advertising theme from one country to the next tends to reassure them as to the
sincerity of the advertiser and the quality and reliability of the product. Thus, standardized
advertising can result in cost efficiencies as well as customer relation benefits.

(5) Increased sales

The consistency in product style, features, design, brand name, packaging etc., helps in
assists in establishing a common image of the product around the world resulting in
increased sales. A consumer loyal to a particular brand in his home market is more likely to
remain loyal to it when he travels to some other country. If a product is successful in one
market, it is expected to do equally well in other countries having similar competition.

(6) Consumer loyalty

Consumer today is more mobile as he travels all over globe. Transcontinental travels
happen to be fairly common. If a consumer can purchase a product in the same style and
fashion in overseas markets that he can purchase in his home country, he becomes more
loyal to such a firm than to a firm, which differentiates its products from country to another.
For example, Levi Strauss’s attempt to penetrate the European market with lighter-weight
jeans failed because European consumers wanted the standard heavy-duty American type
after all. In the same way, package standardization boosts ready identification and brands
similarity lends assurance of performance. It is for this reason that Kodak film and package
are readily recognizable in many parts of the world.

(7) Image building

An image of the product or the country is projected in the minds of the consumers through
standardization. As name of a product or country is associated with the high standard of
quality, the same product in a foreign country manufactured by the same producer or in the
same country may benefit from the psychological premium in the minds of the consumers in
the foreign markets. Projected by the sale of standardized products worldwide, this image
will increase the sales of the product. For example, the worldwide success of McDonalds’s is
based on consistent product quality and services, which has on other hand, resulted in
building its image in the minds of consumers.

(8) Same level of service

Standard specifications can be found in industrial products. If one product is popular in one
country because of its standardized specifications/technology, it may be demanded by the
customers and dealers in other countries also. The motive behind the dealers asking for the
standardization appears to be their desire to offer the same level of service to their
customers all over the world. They do not require much adaptation for overseas markets
unless climatic and other similar conditions demand it.

(9) Consistency in dealing with customers

Standardization provides an opportunity to the firm to achieve consistency in its dealings

with customers globally. Consistency in respect of product styles, in sales and customer
service, in brand names and packages can be a powerful tool for increasing sales. It projects
an image in the minds of the consumers and they recognize, as they are familiar with it. For
example, watches are used to keep time around world and thus can be standardized.

(10) Significant control over operations

A firm also adopts a standardization strategy in order to command significant control over
the operations in the world market. Different standards for different markets may render
the control over the operations of associates difficult, resulting in a state of anarchy in its
pricing policy and the distribution system.

(11) Benefits to consumers

If the product having the same standard features are available in all markets, it becomes
easy to get them repaired in any country where the consumers might go. Spare parts
become easily available in various countries.
Disadvantages or limitations of Standardization

Even though standardization offers benefits, too much attachment to standardization can
be counterproductive. Marketing environment differs from country to country, and
therefore a standard product originally conceived and developed in a particular country may
not in fact match the conditions in each market. In other words, standardization can result
in substantial opportunity loss. Following are the disadvantages of standardization:

(1) Differences in physical environment

A severe limitation of standardization occurs due to the differences among national

markets on account of their physical environment like climate, topography and resources
position. The differences in physical environment require making differentiations in the
standardization strategy in each market by the firm. Climatic conditions to a great extent
may restrict the use of a product in a particular form. The form of the product will have to
be altered if that particular market is to be served.

(2) Technological factors

Certain technological and legal factors restrict the application of standardization strategy all
over the world markets. This leads to product adaptation strategy on the part of exporting
firms. For instance, if a firm wants to export electrical products to Japan these will have to
be of 110 volts and not 220 volts. Similarly, the metric system in used in all the major
trading countries except the United States.

(3) Governmental factors

Governments affect the product design in numerous ways, each of which has a potential
impact on product standardization. A direct influence is exerted by government of a country
in its programmes for power sources, medical programmes, energy conservation etc., which
represent vast markets for goods. The direct purchasing influence is exerted by way of
specifications, which must be met before a company can bid for government projects.
Indirect influences are exerted by the government through laws that establish minimum
standards for safety and health regulations. For example, in case of exporting food items,
the health regulations imposed by the importing country must be followed. Labelling laws
may necessitate specific information and sizes of containers.
(4) Choice of the buyer

Where the products are to be exported according to the specifications spelt out by the
buyer, the exporter has no option but to send the products in conformance to the
specifications.

(5) Substantial marketing costs in some cases

In case, there is already an established demand for a product line that has been acquired
through purchase or merger, the marketing costs associated with obtaining market
acceptance of the home version can be substantial. Therefore, it might be rewarding to
develop the goodwill already present by maintaining the separate product in the market.

(6) Other factors

Other factors, which restrict the use employment of standardization strategy in every
foreign market, are the differences arising out of the stages of economic and industrial
development, culture, competitive practices, presence or absence of marketing institutions,
stage of product life cycle in each market etc.

Factors to be considered in deciding product design strategy –

Adaptation /Standardization:
A decision must be made by the international marketer about which is more appropriate of
two product design strategies, i.e., adaptation or standardization. The marketer must
examine the following criteria in order to decide the extent to which the products should
vary from country to country:

(1) Nature of product

Product design strategy for international markets varies with the nature of the product.
More standardization is feasible in case of industrial goods in comparison to consumer
goods. In the same way, certain products have truly universal sales. Items like razor blades,
electric irons, automobile tires and ballpoint pens are sold primarily because of their
physical characteristics. Among consumer goods, non-durables like biscuits, drinks etc.,
necessitate greater customization than durables because nondurable consumer goods
appeal to tastes, habits and customs. These traits are unique to each country, thus
adaptation becomes significant. However, an alternative to adaptation is to limit the target
market to a small identifiable segment.

(2) Market Development

Different overseas markets for a given product are in different stages of development.
Product life cycle concept is a convenient way of explaining this phenomenon as products go
through several life cycle stages over a period of time and in each stage different marketing
strategies are suitable. Products go through different life cycle stages like introduction,
growth, maturity, saturation and decline. If a product’s overseas market is in a different
stage of market development, appropriate changes in the product design becomes
necessary in order to make an adequate product/market match. For example, Polaroid’s
Swinger camera failed in France because the company followed the same strategy there as
in the United States, when the two markets were in different stages of development. The
U.S market was in the mature stage, whereas the French market was in the introductory
stage.

(3) Cost/Benefit Relationship

Product adaptation to match local conditions involves costs in the form of R&D, physical
alteration of the product’s design, style, features, changes in packaging, brand name,
performance guarantee etc. On the other hand, standardization brings certain cost savings,
as no R&D is required because manufacturing technology and quality control procedures
have been established. Performance has also been tested and improved. Therefore, in order
to determine, whether the product calls for adaptation, a cost/benefit analysis in terms of
what it would cost to go for adaptation and what benefits may be expected in the form of
market growth must be undertaken. Further, the cost/benefit analysis should then be
compared with the growth and profitability that would be the outcome of standardization.
The net difference should signify the relative desirability of seeking product adaptation.

(4) Legal Requirements

Different countries have diverse laws about product standards, patent laws, and tariffs and
taxes. These laws necessitate product adaptation. For instance, the 220-volt electrical
system exists in Europe, which has led Europeans governments to set stringent safety
standards for such products like iron-cord connections must be stronger, radio interference
must be shielded etc. In the same way, foreign auto manufacturers must adapt their cars for
export to the United States because of the safety standards and emission control
requirements of the U.S. government.
(5) Competition

In the absence of current and potential competition, a company may continue to do well in
a foreign market with a standard product. However, the presence of competition may
require adaptation to gain an advantage over the rivals by offering a product that ultimately
matches local conditions. For instance, the firms from the newly industrializing countries of
Asia are able to successfully compete by rapidly adapting their products to changing
markets and adopting more innovative product strategies. In this manner, the MNCs from
these countries are able to gain leverage against the MNCs from the industrialized
countries.

(6) Support System

The support system refers to institutions and functions that are essential to create, develop
and service demand. These comprise of retailers, wholesalers, sales agents, warehousing,
transportation, creditors and media. The availability, performance and cost of the support
system have a profound impact on the product design strategy. For example, in the absence
of refrigeration facilities at the retail level and also in homes, the frozen vegetables could
not be introduced by Lever Brothers. Hence, the company developed and sold a line of
dehydrated vegetables, such as peas, carrots and beans, in countries like India, Pakistan,
Thailand and the Philippines.

(7) Physical Environment

The physical conditions of a country, that is, climate, topography and resources may also
call for product adaptation. For instance, products such as air conditioners in a hot climate
as in the Middle East require additional features for satisfactory performance. Variations in
the size and configuration of homes affect product design for appliances and home
furnishings. Kitchens in Europe are usually smaller than kitchens in the U.S. Moreover,
European homes generally do not have basements. Consequently, compactness of design in
appliances like washers and dryers is a necessity as they must be accommodated within a
crowded space.

(8) Market Conditions

Differences in Culture, economic prosperity and customer perceptions in the foreign

country would also influence the decision for product adaptation. For example, in order to
cater to the local taste, Campbell Soup Company modified soup ingredients in Britain, where
people prefer a slightly more bitter taste than their American counterparts. In many
countries, the masses are not able to afford the variety of products that U.S. consumers
consider essential. To make the products such as automobile and appliances within the
reach of middle class in developing countries, the products must be suitably modified to cut
costs without lessening the functional quality. Lastly, foreign products in various cultures are
perceived as high quality products, which make standardization desirable. In contrast, if the
image of a country’s products is weak, it would be strategically desirable to adapt a product
so that it could be promoted as a different, rather than typical product of the country.

(9) Homogeneity of the Markets

The more alike the people are as regards their income, education, occupation, and similar
characteristics, the greater the probability that they will buy similar products. It is because
of this reason that it is relatively easy to adopt standardization for most of the Western
European countries.

(10) Interaction of International Consumers

The more consumers from various countries interact with the international marketplace,
the more suitable is the environment for adopting standardization strategy. Such interaction
may include reading newspapers or magazines from other countries, watching television,
listening to radio broadcasts from other nations, or travelling from one country to another.
Hence, as Europe turns out to be more ‘internationalized’, firms will go for standardization
of products for the European markets rather than adapting products for the German or
French markets.

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