Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.1 Global Marketing Management, 4e Chapter 11 Global Product Policy Decisions I: Developing New Products for Global Markets

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.2 Chapter Overview 1.Global Product Strategies 2.Standardization Versus Customization 3.Multinational Diffusion 4.Developing New Products for Global Markets 5.Truly Global Innovation

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.3Introduction  A cornerstone of a global marketing mix program is the set of product policy decisions that multinational companies (MNCs) constantly need to formulate.  The range of product policy questions may include: –What new products should be developed for what markets? –What products should be added, removed, or modified for the product line in each of the countries in which the company operates? –What brand names should be used? –How should the product be packaged and serviced?

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.4Introduction  Examples of improper product policy decisions in global marketing: –Ikea in the United States –Proctor & Gamble in Australia –U.S. Car Makers in Japan

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.5 1. Global Product Strategies  Three global strategies to penetrate foreign markets: –Extension strategy –Adaptation strategy –Invention strategy

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.6 1. Global Product Strategies  Five strategic options for the global marketplace: –Strategic Option 1: Product and Communication Extension -- Dual Extension –Strategic Option 2: Product Extension -- Communications Adaptation –Strategic Option 3: Product Adaptation -- Communications Extension –Strategic Option 4: Product and Communications Adaptation -- Dual Adaptation –Strategic Option 5: Product Invention

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.7 1. Global Product Strategies

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.8 2. Standardization versus Customization  Five forces favoring a globalized product strategy: 1. Common customer needs 2. Global customers 3. Scale economies 4. Time to market 5. Regional market agreements

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc.9 2. Standardization versus Customization  Degree of Standardization –Modular Approach –Core-Product (Common Platform) Approach  Balancing act between standardization and adaptation  Overstandardization vs. overcustomization

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Multinational Diffusion  Examples: –Microsoft’s Xbox videogame –NTT DoCoMo’s iMode  The Adoption of new products is driven by three types of factors: –Individual Differences –Personal Influences –Product Characteristics 1. Relative advantage 2. Compatibility 3. Complexity 4. Trialability 5. Observability

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Multinational Diffusion  Other country characteristics used to predict new product penetration patterns include: –Homogeneous population –Lead countries –Lag countries –Cosmopolitanism –Mobility –Labor force profile, Developing vs. Developed countries

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Multinational Diffusion Time-to-Takeoff - Most new products display a distinct tradeoff-average 6 years from launch - Varies a great deal across product categories, between countries, previous takeoff experience

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Development of New Products for Global Markets  Identifying New Product Ideas –4 C’s:  Company  Customers  Competition  Collaborators  New Product Development (NPD) Process  Screening (see Exhibit 11-3 in your text)  Concept Testing –Conjoint Analysis –To Standardize or not to Standardize

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Development of New Products for Global Markets  Test Marketing  Timing of Entry: Waterfall versus Sprinkler Strategies (see Exhibit 11-9) –Waterfall Strategy: Global phased rollout where new products trickle down in a cascade-like manner –Sprinkler Strategy: Simultaneous worldwide entry

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Development of New Products for Global Markets

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Truly Global Innovation  Scores of companies have research centers spread across the world. Challenge is to establish a truly global innovation process that transcends local clusters, i.e., to become a metanational innovator.  To harvest the benefits of metanational innovation: –Prospecting- find valuable new pockets of knowledge around the world. –Assessing- decide on an optimal footprint (number and dispersion of knowledge sources).

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Truly Global Innovation –Mobilizing- to harness the benefits of global innovation, companies must find ways to mobilize pockets of knowledge (e.g., technical blueprints, patents, equipment, market knowledge). –The optimal strategy for mobilizing knowledge depends on the type (simple vs. complex) and nature (technical vs. market) of the knowledge involved.

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Truly Global Innovation  4 possible strategic scenarios for mobilizing knowledge: –Exchange information (arm’s length, digital transfer is sufficient). –Move information about the market where the technology is. –Move information about the technology to where the market knowledge is –Move knowledge by rotating people and by temporary co-location

Chapter 11Copyright (c) 2007 John Wiley & Sons, Inc Truly Global Innovation