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Chapter 8
Product Adaptation
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Product Variables
• The Core Product
– a product or services that is essentially the same
as that of competitors.
• The Tangible Product
– a product or service that is differentiated
composition, origin, or tangible features from
competing products.
• The Augmented Product
– a product or service which is serviced after the
sale and carries a warrantee from the producer,
producing a continuing relationship with the seller.
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Standardization versus
Adaptation
• The fundamental international product decision after
the decision to internationalize.
• International market approach alternatives to
adaptation.
– Sell the product as it is internationally.
– Modify product for different countries or regions.
– Design new products for foreign markets.
– Incorporate all differences into one product and
introduce it globally.
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Standardization versus
Adaptation
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FACTORS ENCOURAGING
STANDARDIZATION
Economies of scale in
production
Economies in product R&D
Economies in marketing
“Shrinking” of the world
marketplace/economic
integration
Global competitions
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FACTORS ENCOURAGING
ADAPTATION
Differing use conditions
Government and regulatory
influences
Differing consumer behavior
patterns
Local competition
True to the marketing
concept
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Strategic Adaptation to Foreign
Markets
High
Need for
Adaptation
Degree of
Cultural
Grounding
Low
Industrial/ Technology Intensive
Consumer
Nature of Product
Source: Adapted from W. Chan Kim and R. A. Mauborgne, “Cross-Cultural Strategies,” Journal of Business Strategy 7 (Spring 1987): 31; and John A. Quelch and
Edward J. Hoff, “Customizing Global Marketing,” Harvard Business Review 64 (May-June 1986): 92-101.
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Factors Affecting Adaptation
Decision to Alter
Domestic
Product
SOURCE: Adapted from V.Yorio, Adapting Products for Export (New York; Conference Board, 1983), 7. Reprinted with permission
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The Market Environment
• Government Regulations
– Political and social agendas often dictate regulatory
requirements.
• Nontariff Barriers
– Product standards, testing, subsidized local products.
• Customer Characteristics, Expectations, and
Preferences
– Physical size, local behaviors, tastes, attitudes, and
traditions.
– Consumption patterns, psychosocial characteristics,
and general cultural criteria.
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The Market Environment
• Economic Development
– The stage of economic development affects the market
size and demand characteristics. Backward innovation
of the product may be required to meet local
requirements.
• Competitive offerings
– Monitoring competing local products is critical in
adjusting the product for competitive advantage.
• Climate and geography
– Local climatic conditions and terrain features can make
products vulnerable to damage.
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Product Characteristics
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Product Constituents
Branding
Packaging
Appearance
Method of Operation or Usage
Quality
Service
Country-of-Origin Effects
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Product Constituents and
Branding
• Product ingredients must not violate local legal regulations and
social or religious customs.
• Care must be taken that the brand in name, symbol, sign, or design
does not offend the local customer. Trademarks are especially
vulnerable to counterfeiters.
• Selecting the global brand name
– Translation
– Transliteration
– Transparency
– Transculture
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Packaging and Appearance
• Packaging serves three major functions:
– Protection
• Improper handling and pilferage
– Promotion
• Language and symbols
– User convenience
• Packaging aesthetics- color and shape, overall size, and
purchase quantity
• Adaptations in styling, color, size, and other
appearance features play an importance role in how
a consumer perceives a product.
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Method of Operation or Usage
• The product that is operable in in the domestic
market may not be operable in the foreign market.
• Electrical voltages and connectors vary around the
world. English and metric standards are not
comparable.
• Software may have to be translated into the local
language.
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Quality and Service
• Quality is essential to marketing products
internationally, especially in markets where price is
an important competitive factor.
• ISO compliance may be required by buyers.
• Servicing products in international markets requires
producers to develop local repair staffs.
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Country-of-Origin Effects
• The origin of a product may have a strong effect on
consumer perceptions and biases about foreign
products.
Swiss
France
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“Mad Cow”
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Company Considerations
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Organizational capabilities?
Is it worth it?
Can we afford not to do it?
Can a specific return-on-investment (ROI) be
attained?
• Quality, price, and user perceptions?
• Warranties?
• Managerial talent?
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Product Counterfeiting
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Costs U.S. firms over $60 billion a year
In 2001, losses to software piracy were more than 11 billion dollars.
Counterfeiting is estimated at 2% to 5% of total world trade annually.
The largest number of counterfeit goods come from:
– China
– Brazil
– Taiwan
– Korea
– India
How to avoid Software
piracy informational site
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Product Counterfeiting
FIGHTING PRODUCT COUNTERFEITING
– Secure valuable intellectual property rights
• patent applications
• registration of trademarks
• mask works
– Act to enforce
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legislative action
bilateral and multilateral negotiations
joint private sector action
individual company measures
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