© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Managing Products in International Business

Thanks to…  Many of the notes for the International Marketing supplements are borrowed from Czinkota/Ronkainen (2013), South-Western Cengage Publishers.

Global- Go or No Go?  Cost of going global is high both in intellectual and monetary investment.  Must decide whether global products should be standardized or adapted for local markets

Product Variables  Product/service – Complex combination of tangible and intangible elements distinguishing it from others in the market  Core product of a firm may be similar to that of competitors  Differentiation can be achieved with the augmented features of the product  Differentiation may be by product composition, country of origin, packaging, quality, warranties, etc.

Product Variables  Standardization versus adaptation  4 basic alternatives for international markets  Selling the product as is in the international marketplace  Modifying products for different countries or regions  Designing new products for foreign markets  Introducing a flexible global product  Product standardization is increasing  Differences still exist depending on the products marketed and the places they are marketed in

Factors Affecting Product-Adaptation Decisions

The Market Environment  Government regulations  Nontariff barriers  Product standards  Approval procedures  Subsidies  Bureaucratic red tape

The Market Environment  Customer characteristics, expectations, and preferences  Local behavior  Tastes  Attitudes  Traditions  Positioning: Consumer perception of a particular brand compared with competitors’ brands

The Market Environment  Economic development  As a country’s economy advances, buyers demand better products  Companies adapted a new process called reverse innovation to meet demands of different countries

The Market Environment  Competitive offerings  Provides a baseline for measuring the firm’s resources  Climate and geography  Product has to be protected against longer transit times and longer shelf life  Care must be taken to ensure that no nonallowed preservatives are used

Product Characteristics  Product constituents and content  Should not be in violation of legal requirements or religious or social customs  Branding  Name, term, symbol, sign or design used by a firm to differentiate its products from those of its competitors  Trademark - Legally protected part of the brand  Indicated by the symbol ®

Product Characteristics  Packaging  Protection  Promotion  User convenience  Appearance  Method of operation  Quality  Service  Country-of-origin effects

Company Considerations  Product adaptation depends on the firm’s ability to:  Control costs  Correctly estimate market potential  Secure long term profitability  Decision to adapt should be preceded by a thorough analysis of the market

Global Product Development *****the heart of the global marketing process****  Essential for catering to new or changing customer needs on a global basis (develop new products or modify old)  Worldwide planning at the product level provides a number of tangible benefits  Build adaptability into products and product lines to achieve worldwide appeal

Global Product Development  Remember your Principles of Marketing class….  Stages of the product development process  Idea generation  Screening  Product and process development  Scale-up  Commercialization

Global Product Development  Time lag between product development and introduction into the market depends on:  The product involved  Degree of newness  Customer characteristics  Geographic proximity  Firm-related variables  Degree of commitment of resources

Global Product Development  Companies focus on reducing the language and cultural barriers among R&D teams  R&D consortia have been established to develop technologies ranging from artificial intelligence to those in semiconductor manufacturing

Global Product Development  Reasons for product failure  Lack of product distinctiveness  Unexpected technical problems  Mismatches between functions

Global Product Development  Global product launch  Introducing the product into countries in three or more regions within a narrow time frame  Measures undertaken for successful launches  Involvement of country managers  Pre-launch attention to localization and translation requirements

Global Product Development  Benefits of a successful global launch  Permits the company to showcase the product  Removes old models at once

Managing the Brand Portfolio  Managing the brand portfolio  Branding is one of the major beneficiaries of a well- conducted portfolio analysis  Brands help to:  Shape customer decisions and create economic value  Influence the purchasing decisions of B2B and B2C consumers

Managing the Brand Portfolio  Co-branding - Two or more brands are combined in an offer  Global marketers have three choices of branding  Use of the corporate name  Use family brands for a wide product line  Use individual brands for each item in the product line

Managing the Brand Portfolio  Brand strategy decisions  Global brands: Reach the world’s megamarkets and are perceived as the same brand by consumers and internal constituents  Some are completely standardized, but some elements may be adapted to local conditions

Managing the Brand Portfolio  Brand strategy decisions  Three main implications for the marketing manager to consider:  Avoid hiding globality by communicating the features of a brand to consumers  Tackle home-country bias  Satisfy the basic quality and aspiration associated with brands

Managing the Brand Portfolio  Private brand policies  Private brands: Intermediaries’ own branded products or “store brands”  Methods used for private branding:  Umbrella branding with the intermediary’s name  Separate brand names for individual products or product lines  Private brand goods have achieved significant penetration in many countries

Product Counterfeiting  Counterfeit goods - Goods bearing an unauthorized representation of a trademark, patented invention, or copyrighted work that is legally protected in the country where it is marketed

Product Counterfeiting  Companies are taking measures to help protect their products against counterfeits  Legitimize offenders by converting them into authorized licensees  Maintain close contact with the government  Retain outside investigators to monitor the market and stage raids with the help of law enforcement officers