INTERNATIONAL PRODUCT POLICY & PLANNING

INTERNATIONAL PRODUCT MIX

INTRODUCTION

• A product is anything that can be offered to a market to satisfy a want or need.

• Products that are marketed include physical goods, services, experiences, events, persons, places, ideas etc.

• The following components are an integral part of a product:

Core componentPackaging componentAugmented component

Basic mistakes done by transnational food companies like KELLOG’S, MCDONALD’S,

PIZZA HUT, DOMINOS’S PIZZA

• Gross overestimation of spending patterns of Indian consumers: The customers of South Asia are very conscious while spending. They look for value for money more than their western counterparts.

• Gross overestimation of the strength of their transnational brands.

• Gross underestimation of the strength of ethnic Indian products.

PRODUCT STANDARDIZATION

• It refers to the process of marketing a product in overseas markets with little change except for some cosmetic and ornamental changes in packaging and labelling.

• For e.g.: Pepsi and Coca-cola are globally standardised products even though their taste may be altered a little to suit different cultural variations of taste. As Coca- Cola may be a little sweeter when it is marketed in Middle East.

ADVANTAGES OF STANDARDISATION

• Builds up a global brand and product image.• Economies of large-scale production

help achieve an economic cost.• Global marketing mix can be

developed at an optimum cost.

FACTORS THAT FAVOR STANDARDIZATION

• High technology intensive industry: Industrial capital equipments, processors and computer hardware.

• Prohibitive adaptation cost• Emergence of global customers: Levi’s Jeans, Mc

Donald’s, Pizza Hut, KFC, CCD.• Country of origin impact: Consumer Electronic Durables-JAPANFashion designs-ITALYHeavy machinery-GERMANYWine, fragrances-FRANCEComputer software-INDIAHerbal products-CHINA AND INDIA

PRODUCT ADAPTATION/CUSTOMIZATION

• Making changes in a product in response to the needs of the target market.

• For e.g.: When Mattel Toys launched in India, it is carried only the American version of the Barbie Doll. Today, however in order to lure Indian children, the American Toy maker offers dolls that are replicas of Indian Brides.

• Similarly , when Barbie was introduced in Japan, there was not much response to American Barbie. When it was modified to look like an Oriental girl, sales of Barbie increase.

FACTORS INFLUENCING ADAPTATION

• Global variations in physical conditions, such as geography, weather, climatic conditions, per capita income & standards of living of the inhabitants of the country.

• Varying cultural manifestations, consumer tastes & perceptions, usages, purchasing patterns, consumption & satisfaction drivers.

For e.g. Mc Donald’s (adapted with different needs), Haldiram & MTR (only vegetarian segment)

Cholle bhature - Punjab Kachori & jalebi-UP Dhokla, phapda & Khari –Gujarat Idli, dosa, uthapam-southern states Poha & Shrikhand- MP

“KELLOG’S WAS FAILURE” Dark & lovely Brand in African Market Fair & Lovely Brand for India

Contd…….

• Various levels of competition and the competitive strategies adopted by the other international marketing firms around the globe.

• Government regulations: Approval by Food & Drug Administration (FDA) is needed for

marketing food & pharmaceutical product in the US. Follow codex standards for such products in EU. Regulations in Canada & Brazil require the use of shock graphics

warnings on cigarette packs. EU has unveiled a library of 42 shocking pictures of blackened

lungs, rotten teeth, throat tumors, corpses in hospital morgues to be used on cigarette packs.

• Standards for electric current: Electric equipment modification like in US (110-120 volts at a

frequency of 60 Hz) while in India( 220 volts at a frequency of 50 Hz).

Contd…..• Operating system:Televisions operate on Phone Alternating Lines( PAL) in

India, China, UK, Singapore, Pakistan, UAE, Tanzania National television system committee( NTSC)- US, Japan,

Phillipines & South Korea. System electric pour couleur avec memoire (SECAM)-

France, Vietnam, Russia & Mauratius.• Measurement system:Metric system with kilogram, metre, litre –IndiaImperial System with pound, feet, gallon-US• Packaging & Labelling requirement:Food Packages to exhibit a mark i.e. Veg. or Non-veg.

PRODUCT-PROMOTION STRATEGIES

PRODUCT

Don't Change AdaptDevelop

New Product

PROMOTI

ON

Don't Change

Straight Extension Or Dual Extension

Product Adaptation Or Communication Extension

Product Invention

AdaptPromotion

Adaptation, Product Extension

Dual Adaptation

Contd….

• Dual extension: Pepsi and Coca-Cola, Lux, Heineken(Beer brand)

• Product extension/communication adaptation: Motorcycle Personal Means of

Transport in IndiaAn item of Sports &

Recreation in US

Three-wheeled Auto rickshaws

Commercial Transport Vehicle in India

Converted the Same into Proud Personal

Possession Like a Car in Sri Lanka

Refrigerators Food Storage Purposes Also viewed as a Status Symbol in Third

World Countries

Contd…..

• Product adaptation/communication extension:Clothing may serve the same purpose of fashion

everywhere, yet the fashion designer will have to design clothes to fit different body types of countries. Color preferences and other style fits may also differ from country to country.

Various cars exported & marketed abroad by Indian Manufacturers will have to redesign their engine emissions & steering systems to suit the needs of left hand drive & pollution control laws. Advertising messages about luxury drive, fuel efficiency & customer safety will be the same.

TV (Different Operating System)

CONTD….

• DUAL ADAPTATION:Clothing in low-income countries serves the

purpose of physical protection but in high-income countries as a status and reflects personality.

Deep freezer for Americans.

INTERNATIONAL PRODUCT STRATEGY

Product Strength

High Barons Kings

Low

Commoners Crusaders

Low High

Geographical Coverage

STRATEGIES FOR NEW PRODUCT LAUNCH

• Waterfall approach:

Country A

Country B

Country C

MA

RK

ET

TIME

CONTD…

• Sprinkler Approach:

NEW PRODUCT

COUNTRY CCOUNTRY BCOUNTRY A

INTERNATIONAL PRODUCT LIFE CYCLE(IPLC)

Innovating CountryStage

Other Developed Countries Or Middle Income Countries

Less Developed Countries

Production Early Imports Late Imports

Exports Production Production

Imports Exports (Large volume

declining to small volume)

Exports (Small volume rising

to large volume)

CONTD….

• Terpstra and Sarathy have identified four phases in the international product life cycle:

1. Export strength is evident by innovator country2. Foreign production starts 3. Foreign production becomes competitive in

export market4. Import Competition begins

PRODUCT PLANNING IN INTERNATIONAL MARKETS

• It basically refers to the process of determining the length and depth of the product line to be offered in the target international market.

• The length will specify the number of products to be offered and the depth will relate to the various shades to be adopted for the same product in different international markets.

• Local products: MTR spices in southern India.

• National products: Campa-Cola, Dabur India offers “Real Fruit Juices” and Godrej markets “Appy” in the Indian Market.

• International Products: Suzuki, Honda, Hyundai, Mittal Steel become global after acquisitions of Arcellar & achieved the status of No. 1 steel manufacturer in the world.

• Global Products: Pepsi, Coke, Sony, National Panasonic, Philips, Cadbury’s, BMW, Renault, Mercedes, Kodak & Xerox.

NEW PRODUCT DEVELOPMENT (NPD)

• Blue Ocean Strategy: Providing value addition to the customers & the entrepreneurs

by the way of value innovation to the already crowded product mix. (VALUE-COST TRADE-OFF)

COSTS

VALUE INNOVATION

BUYER VALUE

CONTD….

• For e.g.:1. The introduction of Maruti Cars by the Indo Japanese

joint-venture Maruti Suzuki can be cited as the best example of value innovation i.e. introduction of 800cc cars.

2. Honda’s 100cc bikes in the Indian market, in collaboration with the Hero group.

3. Sunlight, washing powder of HUL as an alternative to surf range of detergents at a reduced price yet enhanced value to the customers of developing countries.

PROCESS OF NPDGENERATION OF NEW PRODUCT IDEAS

SCREENING OF NEW PRODUCT IDEAS

DEVELOPING & EVALUATING INTERNATIONAL PRODUCT CONCEPT

ANALYSING PRODUCT BUSINESS PROPOSAL

DEVELOPING THE INTERNATIONAL PRODUCT PROTOTYPE

TEST MARKETING

PRODUCT SPREAD IN INTERNATIONAL MARKETS (DIFFUSION PROCESS)

• The speed at which customers adopt a new product or idea.

• Product features: A unique advantage offered by a product. E.g. when Nestle has launched “Maggi Noodles” new flavors in India, the

firm had put up stalls serving small helpings of cooked noodles at retail stores & supermarkets & at various places to offer a trial taste to the customers.

• Country culture features: High context culture/ Fast Diffusion-South-East Asia, Japan Low Context Culture/ Slow Diffusion- UK, Europe• Lead Countries: Where international marketing firm introduces its new

product first.• Lag Countries: The countries that take to the new product after it has been

accepted in the lead countries.

GLOCALIZATION• “Think globally but act Locally.”•  Roland Robertson, who is credited with popularizing the term.• A combination of the words "globalization" and "localization" used to describe a

product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market. This means that the product or service may be tailored to conform with local laws, customs or consumer preferences.

• The increasing presence of McDonald's restaurants worldwide is an example of globalization, while the restaurant chain's menu changes in an attempt to appeal to local palates are an example of glocalization. For promotions in France, the restaurant chain recently chose to replace its familiar Ronald McDonald mascot with Asterix the Gaul, a popular French cartoon character.

• Yahoo! is an example of a company that practices glocalization. It markets a portal that is viewed worldwide and offers different versions of its website (and related services) for different users. For example, it provides content and language variations in some 25 countries including China, Russia and Canada. It also customizes content to appeal to individuals in those locations. 

ASTERIX THE GAUL

INTERNATIONAL PACKAGING

• Much like the brand name, it is another integral part of a product. It serves two primary purposes:

Functional Promotional (capable of protecting the product at minimum cost).• Time and distance involved• Country’s Adverse environment: when moisture is

a problem, a company have to wrap pills in foil, or put food in tin boxes or vaccum-sealed cans.

Contd….• Package should be economical: For e.g. in Mexico, where most

consumers cannot afford to buy detergents in large packages, detergents suppliers found it necessary to use plastic bags for small packages because card-board would be too expensive for that purpose.

• Promotional function: e.g. To satisfy the Japanese preference for beautiful packaging, Avon upgraded its inexpensive plastic packaging to crystalline glass.

• Novel shapes & designs can be used to stimulate interest & create excitement.

• The successful campaign for Bailey’s Irish cream ( Irish whiskey and cream based liqueur, made by Gilbeys of Ireland) in the US included a fancy gold foil box package that promotes this whiskey-based drink’s upscale image.

CONSIDERATIONS IN INTERNATIONAL PRODUCT PACKAGING

• Importer specific instructions• Cultural factors• Point-of-Purchase Features.( Attractive)• Environmental features• After use disposability

LABELLING

• A label is a part of the product which carries verbal information about the product or the sellers (manufacturers or middlemen).

• A label may be a part of the package or it may be tag attached directly to the product.

• It carries information regarding : Ingredients, usage, precautions, expiry, retail

price, weight etc.• Types of labels: Brand label, Grade label,

Descriptive label, Combination label.

INTERNATIONAL BRANDING

• According to AMA, “ Brand can be defined as a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or a group of sellers and to differentiate them from those of competitors.

• Branding a product adds an emotional dimension to the product-consumer relationship & creates a bond between the two.

• For e.g. Jeans as a product were historically used by mining labourers because of its inherent product qualities such as ruggedness, durability & low cost of maintenance. Branding the jeans as “Levi’s” added intangible benefits to the product & convert it into highly desirable product among the youth.

• In the automotive industry, brands were originally called marques.

GLOBAL BRAND

• A global brand is one which is perceived to reflect the same set of values around the world.

• Global brand variables:Corporate sloganProducts and servicesProduct namesProduct featuresPositioningMarketing mixes (including pricing, distribution,

media and advertising execution)

CONTD…..

• These differences will depend upon: Language differences Different styles of communication Other cultural differences(e.g. In 1920, Coca-Cola entered the

chinese market as Coca-Cola which is pronounced as “KOU-KE-KOU-LA”. In Chinese this translates as ‘ a thirsty mouth & full of candle wax’ or ‘bite the wax tadpole’ that was not accepted. Subsequently Coke has to change the brand name to ‘KE-KOU-KE-LE’ that means ‘ a joyful taste & happiness’ or ‘happiness in the mouth’.

Different consumption patterns Different competitive sets and marketplace conditions Different legal and regulatory environments Different national approaches to marketing (media, pricing,

distribution, etc.)

TOP GLOBAL BRANDS 2012

COMPARISON

BENEFITS OF GLOBAL BRANDING• Economies of scale (production and distribution)• Lower marketing costs• Laying the groundwork for future extensions worldwide• Maintaining consistent brand imagery• Quicker identification and integration of innovations (discovered

worldwide)• Preempting international competitors from entering domestic

markets or locking you out of other geographic markets• Increasing international media reach (especially with the explosion

of the Internet) is an enabler• Increases in international business and tourism are also enablers

known throughout the world• People can buy product anywhere in the world, so if they travel,

they still can get their product

GLOBAL BRAND NAME – DISADVANTAGE

• Expensive - you need to build the brand image everywhere

• The benefits of your brand don't necessarily work everywhere. For example, a global beer brand won't play well in Muslim countries, where alcohol is forbidden.

PRODUCT WARRANTY & SERVICES

• It defines the manufacturer liability in case of non-performance or under-performance of the product.

• It constitute an integral part of the added value of the product offered in international market.

• Customer service means enhancing efficiency of the product as well as that of the customer.

• If the host country’s service infrastructure is found to be at satisfactory level, international marketers (GM and TELCO) have preferred to have tie-ups with local services for provision of services and have supported them with regular supply of spares, manuals, drawings and the training of their personnel.