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INTERNATIONAL MARKETING 6e
Chapter 10
Production 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.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
10-2
Product Variables
Augmented
Product
Installation
Tangible
Product
Packaging
Delivery Brand
Name
and
Credit
Core
Benefit
or
Service
Quality
Styling
Features
After
Sale
Service
Core
Product
Warranty
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Source: Adapted from Phillip Kotler, Marketing Management,
10th edition, 2000 p. 395. Reprinted by permission of PrenticeHall, Inc., Englewood Cliffs, New Jersey.
10-3
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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10-4
Factors Encouraging Standardization
 Economies
of scale in production
 Economies in product R&D
 Economies in marketing
 “Shrinking” of the world marketplace and
increasing economic integration
 Global competition
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10-5
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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10-6
Strategic Adaptation to Foreign Markets
High
Need for
Adaptation
Degree of
Cultural
Grounding
Low
Industrial/ Technology Intensive
Consumer
Nature of Product
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Source: Adapted from W. Chan Kim and R. A. Mauborgne,
“Cross-Cultural Strategies,” The 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
Regional,
Country, or Local
Characteristics
Product
Characteristics
Company
Considerations
Decision to Alter the Domestic Product
Copyright © 2001 by Harcourt, Inc. All rights reserved.
Source: Adapted from V. Yorio, Adapting Products for Export (New
York: Conference Board, 1983), 7. Reprinted with permission.
10-8
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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10-9
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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10-10
Product Characteristics
 Product
Constituents
 Branding
 Packaging
 Appearance
 Method of Operation or Usage
 Quality
 Service
 Country-of-Origin Effects
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10-11
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.
term, 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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10-12
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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10-13
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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10-14
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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10-15
Country-of-Origin Effects
 The
origin of a product may have a strong
effect on consumer perceptions and biases
about foreign products.
Swiss
“Mad Cow”
France
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10-16
Company Considerations
 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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10-17
Product Counterfeiting
 Costs
U.S. firms over $60 billion a year
 In 1999, 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:
•
•
•
•
Brazil
Taiwan
Korea
India
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10-18