INTERNATIONAL PRODUCT AND PRICING DECISIONS

CONCEPT OF INTERNATIONAL PRODUCT DECISIONS

• Product is the starting point of all mktg activities

• product is a bundle of perceived physical, chemical &/or intangible attributes having the
capacity to satisfy the present & future customers.

• Study of the product in intl mkt includes:-

a. Product Planning and Development

b. Product life cycle

c. Branding decisions

d. Packaging decisions

Defn-Product- is anything that can be offered to a mkt for attn, acquisition, consumption that
might satisfy a want/ need and includes physical objects, services, persons, places, orgns
& ideas.

Defn-Product Planning- is an act of making out & supervising the search, screening,
development and commercialisation of a new product, the modification of existing lines &
the discontinuation of marginal or unprofitable items
INTERNATIONAL PRODUCT MIX DECISION
• Relates to no of different products offered for sale by a marketer
– depends upon availability of various resources at his disposal
• ex. CocaCola, Apple, Microsoft, Nestle, Hindustan Unilever
Defn- Product mix- composite of products offered for sale by a firm/ biz unit
Product line- Group of related products mfgd or mktd by a single co.
• is subset of product mix.
• class of products similar in technology,
customer needs, distribution channel, mkts.
• Orgn may be having a single or multiple
product lines in product mix
• individual product is called Product item.
• there are several product items in product
line
• Ex. Product mix of Nestle
• Milk based PL- milkmaid
• food based PL- maggi
• Chocolate - kitkat
DIMENSIONS OF PRODUCT MIX
• Product mix refers to the –
– Length- Number of products in the product line.
Ex. Co. has 4 product lines & 10 products in each product line, then the length
of product mix is 40.
Length of the product mix shows the total no of individual products offered by
a co.
– Depth- assortment of sizes, colours, models offered within
each product line.
different varieties of product for different consumers.
HUL mfgrs lux , lifebuoy, hamam , liril , breeze, dove , pears
– Breadth-Number of product lines in the product mix.
Ex. Bajaj electrical offers variety (fans, lamps, mixers, presses)
– Consistency- degree of similarity betn different product lines
in end use, prodn requirements, price range, distribution,
advg.
ex. Surf, surf excel, surf ultra by HUL in terms of end use
• “ Product mix is called product assortment”
PRODUCT STANDARDISATION VS PRODUCT ADAPTATION
• According to Warren Keegan, there are 3 alternative strategies for
designing a product for intl mkt.
a. Product Standardisation(One product, One msg, Worldwide)
b. Product Adaptation strategy
• Communication adaptation (same product, modified communication)
• Product adaptation (different products, same message)
• Dual adaptation ( different product, different message)

c. Product innovation strategy

• backward invention
• forward invention
INTERNATIONAL PRODUCT LIFE CYCLE
• Product life cycle is an attempt to recognise distinct stages in the sales history of
the product
a. Introduction stage- low sales, high cost per unit, low competition, less profits
• zero level- local innovation
b. Growth stage- rapid sales, rising profits, increased competition, mkt seg, new
models
• stage 1- Overseas innovation
c. Maturity stage-saturated demand, entry of new sellers, falling profits, intensive
sales promotion expenditure.
• stage 2- maturity
d. Decline stage- new innovative products with new features, decline in sales &
profit, high turnover of firms
• stage 3- reversal
PACKAGING
Packaging refers to the inner wrapping of container which contains one or more units of a
product while packing is the outer layer which is used to transport a product or number of
units of a product.

Requisites of Good packaging :

a. Protection

b. Preservation

c. Convenience

d. Presentation

e. Recycling

f. Reusable

g. Identification

h. Lightness

i. Conformity
ROLE OF PACKAGING
Primary functions-
• Protection
• Preservation
• Presentation
Secondary functions-
• Self-service
• Handling & Transportation
• Identification
• Information
• Integrated marketing approach
LABELLING
• means display of information about a product on its container, packaging or the product itself.

• a label is a carrier of information about the product

• it can include-

– care & use of the product

– recipes or suggestions

– ingredients or nutritional information

– product guarantees

– manufacturer name & address

– weight statements

– sale by date & expiration dates

– warnings

– symbols used in labels

• ingredients. Nutritional info/ usage warning, complete chemical breakdown of food articles, prohibition

of” best/ most effective “, info in local languages, false info etc.
ECO-LABELLING
• Its a voluntary method of environmental
performance certification and labelling that is
practised around the world.

• Eco labels are seals of approval given to products

that are deemed to have fewer impacts on the
environment than functionally or competitively
similar products.
BRANDING :
• Is a name, term, symbol or design or a combination of them which is
intended to identify the goods /services of seller/group of sellers and to
differentiate them from those of competitors.
• legal term for brand is trademark.
ROLE OF BRANDING: Branding decisions in Intl market:
• Identification- visibility • Decision on Generic or no brand
• Premium pricing • Decision on mfgr’s or private brand
• Higher volumes-std price level • Decision to have local or global brand
• Decision to have single/multiple brand
• Lower costs
• Promotion
• Brand loyalty
• Brand extension
• Helps marketing
• Helps consumers
• Helps retailers
INTERNATIONAL MARKET SEGEMENTATION & TARGETING
Defn: is the process of dividing the total heterogenous mkt for a
product into several submkts/segments in such a way that each of
the segment tends to be homogenous in all respects.
IMPORTANCE OF INTL MKT SEGMENTATION:
a. Increases market opportunities
b. Helps in foreign market decisions
c. helps to identify & compare market opportunities
d. Helps to design a product
e. Helps to fix prices
f. Assists in deciding distribution strategies
g. Helps in deciding apt promotion mix
h. helps to forecast marketing budgets
i. Ensures optimum utilisation of resources
j. Provides better services to customers
k. Increases sales volume.
BASES OF INTL MKT SEGMENTATION
a. Geographic segmentation
b. Demographic segmentation
– Age / life cycle stage
– sex
– Income
– Education level
– Race and religion
– Family size
– Economic activities
c. Psychographic segmentation
– Social class
– Lifestyle
– Personality
d. Behavioural segmentation
– User status
– Usage rate
– Loyalty
– Attitudes
– Benefits sought
e. Using multiple segmentation bases
 INTERNATIONAL PRODUCT POSITIONING
“Positioning is the act of designing the co’s offer so
that it occupies a distinct and valued place in the
target customer’s mind.”
STEPS IN PRODUCT POSITIONING :
a. Identify competitive differentiation
i. Product differentiation
ii. Service differentiation
iii. Personnel differentiation
iv. Image differentiation
b. Selecting differences for product positioning
c. Formulation of positioning strategy
d. Communicating the positioning strategy
e. Follow up
PRODUCT POSITIONING STRATEGIES
• Positioning by Product characteristics
• “ “ combination of product characteristics
• “ “ customer benefits
• “ “ Price and quality
• “ strategy based on use or application
• “ strategy based on users or class of users
• “ strategy based on Product class
• “ strategy based on cultural norms
• “ strategy based on competitors
• “ strategy based on company image
• “ strategy based on emotions
INTERNATIONAL PRODUCT PRICING
• In Intl mktg, pricing decisions are complex. A firm may have to follow different
pricing strategies in different markets.

• Price is the value of utility of goods & services expressed in terms of money.
Objectives of Intl Product pricing is to-
a. achieve organizational objectives

b. increase profitability

c. penetrate the market

d. skim the cream

e. increase market share

f. develop brand loyalty

g. face competition

h. reflect the quality of product

 FACTORS AFFECTING INTL PRODUCT PRICING DECISIONS
a. Cost of product
b. Competition
c. Elasticity of demand
d. Govt policies
e. Export incentives and Assistances
f. Frequency of Purchase
g. Product differentiation & Brand image
h. Miscellaneous factors
INTERNATIONAL PRODUCT PRICING METHODS
a. Cost based pricing
b. Demand based pricing
 Price skimming
 Price penetration
 Price discrimination
c. Competition based pricing
d. Value based pricing
e. Target return pricing
f. Going rate pricing
g. Marginal cost pricing
h. Differential pricing
SKIMMING Vs PENETRATION PRICING STRATEGY
• Meaning
• Objectives
• Market share
• Promotional expenditure
• Suitability
• Effect on competition
• Tenure of strategy
• Economies of scale
• Type of customers
GRAY MARKET:-

The gray mkt does not involve illegal channels like the black mkt, but is considered a
parallel mkt where goods such as electronics, computer games, cell phones are
often sold for lower prices.
COUNTERTRADE:-
Is a reciprocal form of intl trade in which goods/ services are exchanged for other
goods or services rather than for hard currency.
FORMS OF COUNTERTRADE:-
a. Barter
b. Counter purchase
c. Buyback
d. Tolling
e. Clearing arrangements
TRANSFER PRICING-
It happens whenever two companies part of the same multinational group trade with
each other.