Chapter 7

Global Product Policy Decision

Learning Objective

 To understand about global product strategies.

 Standardization VS customization.
 Multinational diffusion.
Global Product Strategies
Companies can pursue three global strategies to
penetrate foreign markets.
• Extension.
• Adaptation.
• Invention.
Extension
Company simply adopt the same product or communication policy
used in their home market as an extension of their home grown
product/communication strategies to their foreign markets.
Adaptation
Companies adapt their strategy to the local marketplace.

This strategy of adaptation enables the firm to cater to the needs

and wants of its foreign customers.
Invention
Invention is creating an entirely new product for the target market. In this strategy,
companies go back to the drawing board and rethink how best to design a product
for that country.
Products are designed from scratch for the global market place.
Entrants can succeed by adopting distinctive positioning and marketing strategies.

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Standardization VS Customization
There are a lot of people in a world that having different needs
and wants.
People in Japan does not having same needs and wants with
people in Germany.
Therefore, company needed to offer standardization and
customization.
Standardization
Offering a uniform product on a regional or worldwide basis.
Minor alternations are usually made to meet local regulations or
market conditions (for instance, voltage adjustments for
electrical appliances).
However, by and large, these changes only lead to minor cost
increases.
A uniform product policy capitalizes on the commonalities in
customers’ needs across countries.
The goal is to minimize costs
Customization
Customization also known as country-tailored product strategy.
Management focuses on cross border-differences in the needs
and wants of the firm’s target customers.
Appropriate changes are made to match local conditions.
Customization is inspired by a market-driven mind set—
increase customer satisfaction by adapting your products to
local needs
Key Of Product Characteristics That
Drive The Adoption Of New Products.
Common customer needs.
For many product categories, consumer needs are very similar in
different countries.
The functions for which the product is used be identical.
Global customers.
In business to business marketing, the shift toward globalization means
that a significant part of the business of many companies from MNC
(multinational company) that are essentially global customers.
Scale economies.
Cost savings from scale economies in the manufacturing and
distribution of globalized products is in many cases the key
driver behind standardization moves.
Time to market.
In scores of industries, being innovative is not enough to be
competitive.
Companies must also seek ways to shorten the time to bring
new product projects to the market.
Regional market agreement.
The formation of regional market agreements such as the
Single European Market encourages companies to launch
regional products or redesign existing products as pan-regional
brands.
Multinational Diffusion
Refers to the process by which innovations are spread among the
members of a social system over time in your organization, where
adoption a decision of implementing innovations based on
knowledge, persuasion of individuals within a given system.
The speed and pattern of market penetration for a given product
innovation can differ enormously between markets.
It is not uncommon that new products that were phenomenally
successful in one country or region turn out to be flops in other
markets.
 Product characteristics to be considered in
adoption of new products
Complexity :
Relative Advantage : Is the product easy to understand? Easy
To what extent does the new to use?
product offer more perceived value
to potential adopters than existing Triability :
alternatives? Are prospects able to try out the product
Compatibility : on the limited basis?
Is the product consistent with Observability :
existing values and attitudes of the
individuals in the social system? How easy is it for possible adopters to
observe the results or benefits of the
innovation?
Developing New Product For Global
Market
For most companies, new products are the bread-and-butter of
their growth strategy.
Unfortunately, developing new products is a time-consuming
and costly endeavour, with tremendous challenges.
The new product development process becomes especially a
major headache for multinational organizations that try to
coordinate the process on a regional or sometimes even
worldwide basis.
Steps to be followed in the global
new product development
1. Identifying new product ideas.
Every new product starts with an idea. Companies can tap into any of the
so-called 4 C’s—company, customers, competition and collaborators
(e.g., distribution channels, suppliers)—for creative new product ideas.
2. Screening.
Clearly not all new product ideas are winners. Once new product ideas
have been identified, they need to be screened. The goal here is to weed
out ideas with little potential.
Steps to be followed in the global
new product development
3. Concept testing.
translated into a product concept. A product concept is a fairly detailed description,
verbally or sometimes visually, of the new product or service. To assess the appeal of
the product concept, companies often rely on focus group discussions.
4. Test marketing.
Test marketing is essentially a field experiment where the new product is marketed in a
select set of cities to assess its sales potential and scores of other performance measures.
In a sense, a test market is the dress rehearsal prior to the product launch.
allows them to make fairly accurate projections of the market share, sales volume, and
penetration of the new product.
5. Time of entry.
A key element of a global or regional product launch strategy is the entry timing
decision: When should you launch the new product in the target markets?
Global Branding Strategies
For many firms the brands they own are their most valuable assets.
A brand can be defined as ‘‘a name, term, sign, symbol, or
combination of them.
To identify the goods and services of one seller or group of sellers
and to differentiate them from those of competitors
Russell Taylor
https://youtu.be/J_bSFCfBl9k

https://www.theborneopost.com/2021/03/28/9-years-of-its-
establishment-lazada-continues-to-trailblaze-future-of-
ecommerce/
How to build global brand
•Understand customers behavior
•Position yourself properly
•Know how your brand translates
•Think broadly
•Find good partner

• Understand customers behavior
• Just because consumers have certain
buying preferences or habits in one
culture, doesn't mean that such
preferences are universal
• Position yourself properly
• if you sell athletic clothing, look at
where people are buying their athletic
clothing. It could be from specialty
stores, online retailers, or sporting
goods stores. If you have a high-end
brand and you're going into a market
where the preferred buying location is
discount retailers, it may take a
different strategy from the one you use
• Know how your brand translates
• A clever brand or product name in one language may
translate into an embarrassing misstep in another. For
example, the French cheese brand Kiri changed its
name to Kibi in Iran because the former name means
“rotten” or “rank” in Farsi -- not exactly the
association you want for cheese.
• Think broadly
• Since your company may need to expand into offering
new products based on regional market demands, it's
important that your company name be broad enough
to accommodate those changes.
• Find good partner
• If you decide to license your product or service name
to a manufacturer or provider overseas, exercise tight
controls to make sure that the provider is reputable
and won't misuse or misappropriate your name and
will adhere to your quality control standards.
Concerns when building up and
managing brand equity in a multinational
How do we strike the balance between a global brand that shuns cultural
barriers and one that allows for local requirements?
What aspects of the brand policy can be adapted to global use?
Which ones should remain flexible?
Which brands are destined to become ‘‘global’’ mega-brands?
Which ones should be kept as ‘‘local’’ brands?
How do you execute the changeover from a local to a global brand?
How do you build up a portfolio of global mega-brands?
 Product Line
A product line is a group of related products all marketed under a
single brand name that is sold by the same company. Companies
sell multiple product lines under their various brand names,
seeking to distinguish them from each other for better usability for
consumers.
Companies often expand their offerings by adding to existing
product lines because consumers are more likely to purchase
products from brands with which they are already familiar.
Managing Product Lines
Most companies sell a wide assortment of products.
The product assortment is usually described on two
dimensions:
the width and the length of the product mix.
Width
refers to the collection of different product lines marketed by
the firm
Examples : Body care, syampoo, detergents and beverages.
Length

refers to the number of different items that the company sell

within a given product line.
Examples : 5 items in syampoo such as anti hair fall and anti
dandruff.