International marketing management lesson 07

100 International Marketing Management LESSON PRODUCT MIX PLANNING CONTENTS 7.0 Aims and Objectives 7.1 Introduction 7.2 Product Strategies 7.2.1 Local/National Products 7.2.2 International Products and International Brands 7.3 International Product Planning 7.3.1 Product Objectives 7.3.2 International Product Life Cycle 7.3.3 New Products in International Marketing 7.3.4 Product Segmentation 7.3.5 Product Positioning 7.4 Product Adoption and Standardisation 7.4.1 Product Adoption 7.4.2 Standardisation 7.5 International Product Marketing 7.6 Marketing of Services 7.6.1 Importance of Services 7.7 International Branding and Packaging Decisions 7.7.1 Perspectives on International Branding 7.7.2 Factors of International Branding Strategy 7.7.3 Dynamics of International Brand Architecture 7.7.4 International Packaging 7.7.5 Design Requirements around the Globe 7.7.6 Future Direction and Application of Packaging Requirements 7.8 Let us Sum up 7.9 Lesson End Activity 7.10 Keywords 7.11 Questions for Discussion 7.12 Suggested Readings 7.0 AIMS AND OBJECTIVES After studying this lesson, you will be able to: Describe product strategy and planning keeping in view the objectives of international marketing Distinguish between national and international product Take decisions related to branding and packaging for international market 7.1 INTRODUCTION You want to buy a washing machine for domestic use How you go about it? You first want to survey the market for which you go through the advertisements and identify various shops from where you can buy the washing machine When you go to the market, you indulge in window-shopping to identify various kinds of washing machines available in the market You ask your neighbours, peers, colleagues and friends about the best washing machine keeping in view the affordable price, which you can buy The shopkeepers, on the other hand, has positioned the washing machines in showrooms to make it look attractive He has organised demonstrations of the washing machine to ensure customer satisfaction for buyers Some shopkeepers participate in trade fairs where these washing machines are displayed Other clever ones put their slightly older stock on sale to attract the customers This is the way product positioning and product adoption is carried out The customer is also very keen to find the life-cycle of this machine He wants to have a durable and robust washing machine so that he does not have to change it every now and then For the MNCs that produce washing machines go in for international product life-cycle and developing countries have followed suit to get the best producing technology for washing machines This is how the cycle continues and the customer gets the best that they want for their delight 7.2 PRODUCT STRATEGIES A product can be defined in terms of its tangible, physical attributes — such things as weight, dimensions and materials Thus, an automobile could be defined as 3,000 pounds of metal or plastic, measuring 190" long, 75" wide and 59" high However, any description limited to physical attributes gives an incomplete account of the benefits a product provides At a minimum, car buyers expect an automobile to provide safe, comfortable transportation, which derive from physical features such as air bags and adjustable seats However, marketers cannot ignore status, mystique and other intangible product attributes that a particular model of automobile may provide Indeed, major segments of the auto market are developed around these intangible attributes Similarly, Harley-Davidson riders’ get much more than basic transportation from their beloved “hogs” The Harley is a recreational product: even people who ride their Harleys to work are riding because it is a form of recreation The motorcycle, in low-income countries, is a form of transportation Clearly, there is a literal world of difference between the need served by a motorcycle to the recreational rider and the rider who is using the motorcycle as a form of transportation Some companies like Harley are focused on the recreational riders and to the basic transportation market Harley, however, focuses on needs Harley is a luxury brand: expensive, exclusive, and special Harley-Davidson is selling a social and personal experience The Harley has a unique sound and feel It is a 101 Product Mix Planning 102 International Marketing Management brand that has evolved over time with a genetic link to its origins The Harley is an American bike that celebrates the romance, adventure and camaraderie of travel When you buy a Harley, you are eligible to become a member of the Harley Owners Group (HOG) As a HOG member, you will meet other Harley owners and share the fun and pleasure of motorcycling with others Honda is an example of an activity-based strategy company: if you can power it with a motor, Honda will make it, from 50 to 5000 cc, from a few hundred dollars to $ 75,000 dollars, from the transportation market in the developing world to the recreation market in any country A product, then, can be defined as a collection of physical, psychological, service and symbolic attributes that collectively yield satisfaction, or benefits, to a buyer or user A number of frameworks for classifying products have been developed A frequently used classification is based on users and distinguishes between consumer and industrial goods Both types of goods, in turn, can be further classified on the basis of other criteria, such as how they are purchased (convenience, preference, shopping, and speciality goods) and their life span (durable, non-durable, and disposable) These and other classification frameworks developed for domestic marketing are fully applicable to international marketing Many countries find that, as result of expanding existing businesses or acquiring a new business, they have products for sale in a single national market For example, Kraft Foods, at one time, found itself in the chewing gum business in France, the ice-cream business in Brazil, and the pasta business in Italy Although each of these unrelated businesses was, in isolation, quite profitable, the scale of each was too small to justify heavy expenditures on R&D, let alone marketing The basic question regarding any product is whether it has the potential for expansion into other markets The answer will depend on the company’s goals and objectives and on perceptions of opportunity Managers run the risk of committing two types of errors regarding product decisions in international marketing One error is to fall victim to the “not invented here” (NH) syndrome, ignoring product decisions made by subsidiary or affiliate managers Managers who behave in this way are essentially abandoning any effort to leverage product policy outside the home-country market The other error has been to impose product decision policy on all affiliate companies on the assumption that what is right for customers in the home market must also be right for customers everywhere German Car maker, Volkswagen A.G., has learned the consequences of this latter error; VW saw its position in the US import market erode from leader to also ran over the past two decades Although the company once sold more cars in the United States than all other foreign automakers combined, today VW has less than a per cent market share in the United States One industry observer sums up the company’s main mistake this way: “Up to now Volkswagen has thought that what works in Germany should work in the United States.” Volkswagen recently opened a design studio in Los Angeles, hoping to become better attuned to the tastes of American car buyers 7.2.1 Local/National Products A national product is one that, in the context of a particular company, is offered in a single national market Sometimes national products appear when a global company caters to the needs and preferences of particular country markets For example, CocaCola developed a non-carbonated, ginseng-flavoured beverage for sale only in Japan and a yellow, carbonated flavoured drink called Pasturina to compete with Peru’s favourite soft drink, Inca Cola Similarly, Sony and other Japanese consumer electronics companies produce a variety of products that are not sold outside of Japan The reason: Japanese consumers have a seemingly insatiable appetite for electronic gadgets One recent example is Casio’s 16,000-yen ($155) Can-Tele, a television in a beer can, with a oneinch screen It is designed to fit in an automobile drink holder Also, there is Sony’s Uka LaLa, a desktop speaker system designed to work with Walkman and Discman portable music players Such examples notwithstanding there are several reasons why national products—even those that are quite profitable—may represent a substantial opportunity cost to a company First, the existence of a single national business does not provide an opportunity to develop and utilise international leverage from headquarters in marketing, R&D and production Second, the local product does not allow for the transfer and application of experience gained in one market to other markets One of the major tools available to the multicountry marketer is comparative analysis By definition, single country marketers cannot avail themselves of this tool A third shortcoming that a single country product has is the lack of transferability of managerial expertise acquired in the single product area Managers who gain experience with a local product is sold Similarly, any manager coming from outside the market in which the single product is sold will lack experience in the single product business For these reasons, purely local products should generally be viewed as less attractive than products with international potential 7.2.2 International Products and International Brands International or regional products are offered in multinational, regional markets The classic international product is the Euro product, offered throughout Europe but not in the rest of the world The Renault is a Euro product: offered in every EU market, it is clearly an international product; however, unlike the Toyota, for example, it is not a international product International products are offered in international markets They are international and multi-regional A true international product is offered in the Triad, in every world region, and in countries at every stage of development Some international products are designed to meet the needs of an international market; others are designed to meet the needs of a national market but also, happily, meet the needs of a international market Note that a product is not a brand For example, a portable personal sound or personal stereos are a category of international product; Sony is a international brand An international brand, like a national brand, is a symbol about which customers have beliefs or perceptions Many companies, including Sony, make personal stereos Sony created the category more than 10 years ago, when it introduced the Walkman It is important to understand that marketers must create international brands; an international brand name can be used as an umbrella for introducing new products Although, Sony, as noted above, markets a number of local products, the company also has the steller track record both as in international brand and as a manufacturer of international products 7.3 INTERNATIONAL PRODUCT PLANNING International product planning involves determining which products to introduce into which countries; what modifications to make in the products; what new products to add; what brand names to use; what package designs to use; what guarantees and warranties to give; what after sales services to offer; and finally, when to enter the market All these are crucial decisions requiring a variety of informational inputs Basic to these decisions are three other considerations (1) product objectives, (2) coordination of product planning activities between headquarters and subsidiary, and (3) foreign collaboration The process of product planning in the international context is diagrammed in Figure 7.1 A company interested in an international market should first define its business intent 103 Product Mix Planning 104 International Marketing Management based on the objectives of both the corporation and the host country The product objectives of a company would flow from the definition of its business Ultimately, the offering should provide satisfaction to the customer, which would be reflected in the realisation of the goals of both the corporation and the host country 7.3.1 Product Objectives Product objectives emerge from host country and corporate objectives combined via the business definition The company’s goals usually are stability, growth profits and return on investment Stated differently, the corporate objectives may be defined in terms of activities (the manufacture of a specific product, or export to a particular market), financial indicators (to achieve a targeted return on investment), desired position (its market share and relative market leadership) and all these in combination with each other The parent company usually also has a series of objectives on behalf of the various stakeholders’ interests for which it is accountable Host country objectives vary depending on the country’s economic, political and cultural environment For example, the typical goals of a less developed country would be to seek faster economic growth, to build a balanced industrial sector, to create employment opportunities, and to earn foreign exchange On the other hand, the objectives of an oil-rich country might be to provide a modern living standard to its masses in a short time without disrupting the cultural structure of its society and/or to diversify its economy to reduce its dependence on oil over the longterm Obviously, the objectives of the host country and the company are poles apart In any emerging market worldwide, however, no company can hope to succeed without aligning itself with the national concerns of the host country There are no models to use in seeking a description of such an alignment Conceptually, however, a macro analysis of a country’s socio-economic perspectives should provide insights into its different concerns and problems The company can then figure out if its business would help the country in any way, directly or indirectly The business definition should then be developed accordingly For example, shortage of foreign exchange might be a big problem for a country A multinational marketer’s willingness to pursue a major effort of export promotion in the country would amount to an objective in line with the country’s need On the other hand, a company simply interested in manufacturing and selling such consumer goods as toiletries and canned foods, in a nation that is interested in establishing a basic infrastructure for industrial development in the country, may not be serving the national interest The definition of product objectives should emerge from the business definition Product objectives can be defined in physical or marketing terms “We sell instant coffee” is an example of defining objectives in physical terms In marketing terms, the objective statement would emphasise the satisfaction of a customer need The latter method is preferred because it reinforces the marketing concept To illustrate the point, assume that the RCA is interested in establishing a plant for manufacturing consumer electronics in Egypt The product objectives may be defined in the following manner: RCA corporate objective: Earn a minimum of 25 per cent return on investment in any developing country Egypt’s national concerns: Create employment opportunities and build up faltering foreign exchange balances Business definition: Establish a large consumer electronics plant in Egypt to compete effectively in the Middle-east Product definition: Meet the electronic home entertainment needs of the masses The perspectives of international product planning can be categorised between issues of day-to-day concern on the one hand and strategic issues on the other The day-to-day issues arise in implementing decisions already made For example, following up on the RCA example, an issue may arise concerning the need for extra precautions to be taken to protect working televisions from dust This issue applies only to the Middle-east market where the climate requires that windows be open all the time and where the winds carry a lot of dust into the houses Local managers would handle the issue appropriately If any specific technological help were needed, it would be sought from the parent corporation on an ad hoc basis Strategic issues require major commitments which must be taken up with the parent corporation For example, using the RCA illustration, the question might be raised whether colour picture tubes for TV sets should be imported from RCA in the United States or from a relatively new Japanese subsidiary located in Egypt Another strategic question could arise with reference to trading with a country that is not on friendly terms with the United States Let us assume that Egypt does a lot of trade with Uganda Assume further that the United States has a trade embargo against Uganda Will it be all right for the RCA subsidiary in Egypt to export electronic goods to Uganda in view of the US government’s trade embargo? Strategic questions cannot be handled by subsidiary management alone and must be referred to the parent organisation It is difficult to accumulate an inventory of decisions to label as day-to-day or strategic It all depends on the individual situation The subsidiary management must decide if the matter involved is strategic enough to require input from or a decision by the parent At the risk of overgeneralization, an issue/matter/decision can be considered strategic: If the United States government comes into the picture If substantial investment needs to be made If previously agreed upon arrangement would be overturned by a decision If long-term financial interests of the parent are affected If the host government appears to be imposing regulations that might affect the long-term survival of the company If technical problems have arisen that cannot be handled locally If certain accusations have been made against the subsidiary that could flare up in labour trouble or have other ramifications In addition to ad hoc problems, which may be day-to-day or strategic, the parent may require a periodic review of the subsidiary’s plants Product planning for established product lines and plans for the development and marketing of new product lines would then be prepared by each host country/geographic area and separately submitted to corporate management for approval 7.3.2 International Product Life Cycle Another reason for modifying a product is to cope with the limited International Product Life Cycle (IPLC) of the good Ford Motor, for example, was extremely profitable in Europe during the 1980s, but those earnings disappeared by the early 1990s because Ford did not develop new, competitive products This is in contrast to Coca-Cola of Japan, which introduces an average of one new soft drink per month and has the competition scurrying to keep up Gillette, which has been particularly effective in combining 105 Product Mix Planning 106 International Marketing Management technology, provides another good example and marketing to bring new products to market before the market share of old offerings begins to decline significantly One of the most effective strategies has been to shorten the IPLC by offering new goods and services before the demand for the old ones has dropped significantly Figure 7.3 provides a graphic illustration Note in the figure that there are two types of IPLCs One is the standard IPLC, which covers an extended time, continue, often to years The other is a short life cycle that lasts much less Many companies are discovering that by shortening the IPLC and offering new product adaptations, they are able to capture and retain large market share This is typically done by offering a new product and then modifying it and bringing out a new version before the competition can effectively combat the first offering For example, a company will offer a notebook computer with a 30-megabyte internal memory Then within months the company will come out with a 60-megabyte internal memory and a built in modem Six months later the firm will offer still another version of the product with additional features In each case the competition is left scurrying to keep up As long as the firm can continue this adaptation strategy, it can outmode the old product (and those of competitors as well) and maintain market position At some point the competition may gain the advantage by offering a product that revolutionizes the field, but as long as a product improvement strategy remains viable, the firm will continue to be the product leader, and this strategy is being implemented by MNEs throughout the world (Figure 7.1) Extended Life Cycle Short Life Cycles Sales Time Source: International Business, A Strategic Management Approach; Alan M Rugman, Richard M Hodgetts Figure 7.1: International Product Life Cycles 7.3.3 New Products in International Marketing In today’s dynamic, competitive market environment, many companies realize that continuous development and introduction of new products are keys to survival and growth Which companies excel at these activities? Gary Reiner, a new-product specialist with the Boston Consulting Group, has compiled the following list: Honda, Compaq, Motorola, Canon, Boeing, Merck, Microsoft, Intel and Toyota One common characteristic: they are international companies that pursue opportunities in international markets in which competition is fierce, thus ensuring that new products will be world class Other characteristics noted by Reiner are as follows: They focus on one or only a few businesses Senior management is actively involved in defining and improving the product development process 3 They have the ability to recruit and retain the best and the brightest people in their fields They understand that speed in bringing new products to market reinforces product quality What is a new product? Newness can be assessed in the context of the product itself, the organisation and the market The product may be an entirely new invention or innovation, for example, the Video Cassette Recorder (VCR) or the compact disc It may be a line extension (a modification of an existing product) such as Diet Coke Newness may also be organisational, as when a company acquires an already existing product with which it has no previous experience Finally, an existing product that is not new to a company may be new to a particular market Identifying New Product Ideas The starting point for an effective worldwide new-product programme is an information system that seeks new-product ideas from all potentially useful sources and channels Those ideas relevant to the company undergo screening at decision centres within the organisation There are many sources of new product ideas, including customers, suppliers, competitors, company salespeople, distributors and agents, subsidiary executives, headquarters executives, documentary sources (for example, information service reports and publications), and finally, actual first-hand observation of the market environment The value of first-hand market observation as a source of new product ideas is illustrated by troll dolls which were originally popular in the United States during the 1960s While travelling in Denmark in 1982, Steven Stark, a United States marketing executive, discovered that trolls had never gone out of style in that country Stark and his wife licensed the Danish designs and began to manufacture them in the United States; by 1992, company sales had reached the $150 million mark The International New Product Department As previously noted, a high volume of information flow is required to scan adequately for newproduct opportunities and considerable effort is subsequently required to screen these opportunities to identify candidates for product development An organisational design for addressing these requirements is a new product department The function of such a department is fourfold (1) to ensure that all relevant information sources are continuously tapped for new product ideas (2) to screen these ideas to identify candidates for investigation (3) to investigate and analyse selected new product ideas (4) to ensure that the organisation commits resources to the most likely new product candidates and is continuously involved in an orderly programme of new product introduction and development on a world-wide basis With the enormous number of possible new products, most companies establish screening grids to focus on those ideas that are most appropriate for investigation The following questions are relevant to this task: How big is the market for this product at various prices? What are the likely competitive moves in response to our activity with this product? Can we market the product through our existing structure? If not, what changes and what costs will be required to make the changes? Given estimates of potential demand for this product at specified prices with estimated levels of competition, can we source the product at a cost that will yield an adequate profit? 107 Product Mix Planning 108 International Marketing Management Does this product fit our strategic development plan? a Is the product consistent with our overall goals and objectives? b Is the product consistent with our available resources? c Is the product consistent with our management structure? d Does the product have adequate international potential? Testing New Products in National Markets The major lesson of new product introduction outside the home market has been that whenever a product interacts with human, mechanical, or chemical elements, there is the potential for a surprising and unexpected incompatibility Since virtually every product matches this description, it is important to test a product under actual market conditions before proceeding with full-scale introduction A test does not necessarily involve a full scale test marketing effort It may simply involves observing the actual use of the product in the target market Failure to access actual use conditions can lead to big surprises, as in the case of Singer Sewing machines sold in African markets These machines, manufactured in Scotland by Singer, were slightly redesigned by Scottish engineers The location of a small bolt on the product’s base was changed; the change had no effect on product performance but did save a few pennies per unit in manufacturing costs Unfortunately, when the modified machine reached Africa, it was discovered that this small change was disastrous for product sales The Scottish engineers did not take into account the fact that, in Africa, it is customary for women to transport any bundle or load including sewing machines on their heads The relocated bolt was positioned at exactly the place where head met machine for proper balance; since the sewing machines were no longer transportable, demand decreased substantially The product is the most important element of a marketing programme International marketers face the challenge of formulating a coherent international product strategy for their companies Product strategy requires an evaluation of the basic needs and conditions of use in the company’s existing and proposed markets Whenever possible, opportunities to market international products should be given precedence over opportunities to market local or international products The same positioning and marketing approaches can be used with international brands such as Coca-Cola Marketers must consider four factors when designing products for international markets; preferences, costs, regulations and compatibility Attitudes toward a product’s country of origin must also be taken into account Five strategic alternatives are open to companies pursuing geographic expansion: product/communications extension; product extension/ communications adaptation; product adaptation/communications extension; dual adaptation; and product invention International competition has created pressure on companies to excel at product development There are different definitions of what constitutes a new product; the most difficult type of new product launch is clearly one involving an entirely new product in a market in which a company has little or no experience Successful international product launches requires leverage An organisation must accumulate and disseminate knowledge concerning past practices both successful and unsuccessful Opportunities for comparative analysis further enhance the effectiveness of marketing planning activities within the international system Box 7.1: Cola majors plan Rs 1000 cr Investment to hike capacity With the heat wave continuing and summer just half gone, if early trends are to be believed, carbonated soft drinks never had a better season than the present Bottles are being sold almost as fast as they are being filled Is this a result of aggressive advertising? Unlikely Industry sources admit that after the cricket world cup, cola majors had throttled back their television advertising and have concentrated more on far cheaper ground activities And to justify their talk of “immense growth potential” for the Indian market, both PepsiCo and Coca Cola are putting their money where their mouths are According to officials in both the companies, while PepsiCo is spending $70 million in expanding their bottling facilities, Coca-Cola is spending close to $200 million over the next two years boosting their facilities All told, both companies are investing over Rs 1,000 crore in the next two years Initial growth figures for this summer seem to justify the confidence displayed by both the companies Cola consumption has grown by an estimated 55 per cent this summer as against 25 per cent last summer Per capita consumption, measured by the number of eight-ounce servings consumed every year, has risen from to 9.5 servings per annum From 350 million crates sold last year (each crate is calculated as consisting of 24 eight-ounce servings), estimates are pegging that 500 million crates will be sold in 2003, making the market worth Rs 7,000 crore Despite this estimated growth figure, both PepsiCo and Coca-Cola admit that this is among the lowest carbonated soft drink consumption figures in the world An average Mexican consumes fifteen times more carbonated soft drinks, and even in Sri Lanka the number is pegged at 12.5 servings per capita per annum In India, consumption figures are also skewed towards metropolitan areas In Delhi for example, the number is conservatively estimated at 50 servings per capita per annum However, according to Coca-Cola deputy president Sanjiv Gupta, the growth so far this summer has come from rural India He believes that there has been a paradigm shift in consumption, particularly given the increased focus on the chhota (200 ml) bottle “Our strategy of affordability has worked very well, and we hope to pump prime business by further growth in the rural markets,” he said Even though both companies were loathe to give further concrete details, the Hindustan Times has learnt that huge investments are being made by both the companies in their distribution networks and cold chains After being badly hit by the truckers strike, both are expanding their own truck fleets as well as investments in fridges and retailer training Source: Hindustan Times, New Delhi, June 12, 2003 Launching a new product is not an easy task, and many things can go wrong As demonstrated by Unilever, the Anglo-Dutch multinational giant heavily promoted its new detergent called Persil Power in the United Kingdom and Omo Power elsewhere The launch was a Europe wide extravaganza Proctor & Gamble’s researcher, however, noticed the new detergent’s pinkish granules and found that they contained manganese The substance can clean clothes quite well — perhaps too well Eventually, the substance will tear holes in clothes P&G subsequently released its lab tests as well as pictures of clothes damaged by the new Persil Power The independent Netherlands-based consumer organisation also confirmed that the detergent weakened fibres and that cotton clothes lost much of their normal strength Unilever claimed that the British Textile Technology Group (BTTG), an independent lab, found no physical damage on garments But BTTG subsequently stated that its favourable report was only preliminary and that the report did not contain fabric safety data Although 109 Product Mix Planning 110 International Marketing Management 500 volunteers used the new powder to wash towels with positive results, there might not have been enough time for deterioration to appear in garments Moreover, linen is the toughest fabric, and towels made of linen would show little damage Even though Unilever officials spent three years testing the detergent in the lab and with consumers, the product was tested neither sufficiently nor appropriately After initially threatening to file a lawsuit against P&G, Unilever had to instead change the formula and the instructions for its use 7.3.4 Product Segmentation Market segmentation is an acceptable concept to which marketers and academics all over the world like to pay great deal of attention Without market segmentation the product cannot be marketed in a big way This phenomena probably derives from an assumption that by going abroad, geographic segmentations have been implemented but geographic segmentation is often over emphasised and is usually inappropriate Marketers fail to appreciate that the purpose of segmentation is to satisfy consumer needs more precisely — not to segment the market just for the sake of segmentation Another mistake which business people make in foreign countries is attempting to capture the total market at once The resulting disappointment in the market performance demonstrates that two major problems have been overlooked Firstly, consumers in a foreign country are unlikely to be homogeneous Marketers must distinguish rural consumers from urban consumers In India, it is essential to segment Indian consumers The needs or urban rich and the rural poor are entirely different, 76 per cent population of India is rural and only 24 per cent urban out of which only one per cent is the affluent society Japanese firms usually fix targets carefully avoiding head-to-head competition with major US manufacturers in mature industries Starting at the low end of product spectrum, a Japanese firm establishes a reputation for product excellence and eventually gets customers to trade up over time This strategy has worked exceedingly well in the automobile and consumer electronics industries Japanese computer makers have used the same market strategy in breaking into the world computer market especially the US Japanese firms market commodity products such as personal computers, disc drives, printers and other peripherals before attempting to trade up with their customers to the larger systems, which have the highest profit margins The most important reason behind the utilisation of market segmentation is market homogeneity/heterogeneity Based on national boundaries, homogeneity can be vertical (homogeneous in one country) or horizontal (homogeneous across the countries) Therefore, two countries exhibiting a lack of homogeneity within their borders may still be homogeneous horizontally when a particular segment of one country is similar to an equivalent segment of another country This is what Hassan and Katsanis call global market segment and they derive it through “the process of identifying specific segments whether they be country groups or individual consumer groups of potential consumers with homogeneous attributes who are likely to exhibit similar buying behaviour” 7.3.5 Product Positioning Product positioning is a marketing strategy that attempts to occupy an appealing space in consumers’ mind in relation to the spaces occupied by other competitive products The mind is like a computer in that it has slots and each bit of information is placed and retained in the proper slot The mind screens and accepts information according to prior experience The target market of Polaroid’s One Film is that of amateur’s in United States who are overwhelmed by the choices Polaroid, however, decided not to sell one film in Europe because European consumers are sophisticated enough to know that one film is essentially a conventional moderately fast (ASA 200) film that is positioned in the market as a versatile film for different light situations The success of Maruti car in India has largely been due to its positioning as a least fuel consumption model in comparison with others In automobiles, Mercedes Benz for wealthy and BMW try to maintain a uniform international image by appealing to the racy A marketer determines the perceived position of a product as well as the ideal position in a number of ways One way is to use focus groups to explore possible alternatives Another positioning method is to rely on perceptual and preference mapping Respondents compare brands based on perceived similarities and in relation to their ideal brands The statistical technique of Multi-Dimensional Scaling (MDS) can then be used to determine the number and type of dimensions and to transform similarities into distances Attributes can later be examined to see how each attribute is associated more or less with a particular brand A product must be positioned carefully Mazda erred in its initial attempt to sell its rotary engine automobile as an economy car when in fact it is a performance car A company may possibly use dual or even triple positioning Beechem has positioned aqua fresh as (i) tooth paste (ii) breath freshener and (iii) plaque remover Regarding positioning, the Japanese have clear focus on quality, service and innovation In comparison, British firms emphasise traditional brand names while American firms emphasise product range and technology and are less likely to adapt to local market conditions In the final analysis, consumer needs must determine how products are to be positioned Kellogg’s, on discovering that its rice krispies were consumed in large quantities in Mexico, changed its promotional message to reflect consumer needs In India, Kellogg corn flakes have been positioned as an iron and calcium substitute for Indian consumers Check Your Progress 1 Define product positioning What is market segmentation? 7.4 PRODUCT ADOPTION AND STANDARDISATION 7.4.1 Product Adoption Before breaking into the foreign market, marketers must consider factors that influence product adoption As explained by the Diffusion Theory, at least six factors have a bearing on the adoption process: relative advantage, compatibility, trialability/divisibility, observability, complexity and price These factors are all perceptual and thus subjective in nature For a product to gain acceptance, it must demonstrate its relative advantage over existing alternatives Products emphasising cleanliness and sanitation may be unimportant in places 111 Product Mix Planning 112 International Marketing Management where people are poor and struggle to get by Wool coats are not needed in a hot country and products reducing static cling (cling free) are useless in a humid country A sunscreen film attached to auto windshields to block out sunlight may be necessary in countries with a tropical climate but it has no such advantage in cold countries Dish washing machines not market well in countries where manual labour is readily available and is inexpensive A product must also be compatible with local customs and habits A freezer would not find a ready market in Asia where people prefer fresh food In Asia and such European countries as France and Italy, people like to sweep and mop floors daily, and thus there is no market for carpet and vacuum cleaners Deodorants are deemed inappropriate in places where it is the custom for men to show their masculinity by having body odour Dryers are unnecessary in countries where people prefer to hang their clothes outside for sunshine freshness Kelloggs have difficulty in selling pop tarts in Europe because many homes have no toasters Unlike American women, European women not shave their legs and thus have no need of razors for this purpose The Japanese who did not like to have their lifestyles altered by technology have skillfully applied technology to their traditional lifestyle The electrical kotatsu (foot warmer) is a traditional form of heater in Japan New kotatsu are equipped with temperature sensors and microcomputers to keep the interior temperature at a comfortable level A new product should also be compatible with consumers’ other belongings If a new product requires replacement of those other items that are still usable, product adoption becomes a costly, proposition That is why Victor Company of Japan, known as JVC in the United States, have chosen a new digital video cassette recorder that while replacing the standard unit can still run on the existing VHS tapes The new machines offer significant advantages over the conventional VCR by providing clearer, sharper picture and better colour A new product has an advantage if it can be divided and tested in small trial quantities to determine its suitability and benefits This is a product’s trialability/divisibility factor Disposable diapers and blue jeans lend themselves to trialability rather well Non-dairy coffee creamer, likewise, has not found great resistance in replacing sweetened condensed milk in many countries But when a product is large, bulky and expensive, consumers are more apprehensive about making a purchase Thus washers, dryers, refrigerators and automobiles are products that not lend themselves well to trialability/divisibility Observation of a product in public tends to encourage social acceptance and reinforcement resulting in the product being adopted more rapidly with less resistance If a product is used privately, other consumers cannot see it and there is no prestige generated by its possession Blue jeans, quartz watches and automobiles are used publicly and are highly observable products Japanese men clip their ties so that the labels show Refrigerators, on the other hand, are privately consumed products though owners of refrigerators in the Middle-east and Asia may attempt to enhance observability by placing them in the living room where guests can easily see it In any case, a distinctive and easily recognised logo is very useful Complexity of a product or difficulty in understanding the product’s quality tends to slow its market acceptance This factor explains why ground coffee had a difficult time in making headway to replace instant coffee in many countries Likewise, 3M tried unsuccessfully in foreign markets to replace positive acting printing plates with presensitised negative subtractive printing plates, which are very popular in United States It failed to convert foreign printers because the sales and technical service costs of changing printers’ beliefs were far too expensive Computers are also complex but have been gaining gradually more and more acceptance 7.4.2 Standardisation The strength of standardisation in the production and distribution of products and services is in its simplicity and cost It is an easy process for executives to understand and implement and it also is cost effective If cost is the only factor being considered, than standardisation is clearly a logical choice because economies of scale can operate to reduce production costs Yet minimising production cost does not necessarily mean that profit increases will follow Simplicity is not always beneficial and costs are often confused with profits Cost reductions not automatically lead to profit improvement and in fact the reverse may apply By trying to control production costs through standardisation, the product may become unsuitable for alternative markets The result may be that demand abroad will decline which leads to profit reduction In some situations, cost control can be achieved but at the expense of overall profits It is, therefore, prudent to remember that cost should not be overemphasised The main marketing goal is to maximise profits and production cost reductions should be considered as a secondary objective When a consistent company or product image is needed, product uniformity is required The worldwide success of McDonalds is based on consistent product quality and services Hamburger meat, buns, fruit pies, channa bhaturas, fruit chat and meat products from ‘rehris’ must meet strict specifications This obsession with quality necessitates the costly export of French fries from Canada to Europe to European franchises because the required kind of potatoes are not grown in Europe With regard to high technology products, both users and manufacturers may find it desirable to reduce confusion and promote compatibility by introducing industry’s specifications that make standardisation possible In the case of Japanese post and telecommunication ministry’s proposal that all Value Added Networks (VANS) in Japan comply with an international standard known as X.75, the specification has been approved by International Telecommunication Union and is widely used in many public data networks including those of most European countries Because most private networks supplied by US suppliers not comply with X.75, they lamely accuse Japan of utilising the standards to hurt the sale of their products 7.5 INTERNATIONAL PRODUCT MARKETING Product standardisation and modification may give the impression that a marketer must choose between the two processes and that one approach is better than the other In many instances, a compromise between the two is more practical and for superior that in selecting either processor exclusively Black and Decker have stopped customising products for every country in favour of a few global products that can be sold everywhere Similarly US publishers Prentice Hall and Harper Collins have adopted the “World Book” concept, which makes it possible for English language books to have world copywrites Publishers change, if necessary, only the title page cover and the jacket World product and standardised product may, at times, be confused with each other A world product is designed for the international market A standardized product is a product developed for one national market and then exported with no change to the international market Zenith and RCA TV sets are standardised products whereas German subsidiaries of ITT make a world product by producing a “world class chassis” for its TV sets This world chassis allows assemblage of TV sets for all three colours TV systems of the world without changing the circuitry of various models A move towards a world product by a company is a logical and healthy move If a company has to adapt a product for each market, this can be a very expensive proposition 113 Product Mix Planning 114 International Marketing Management But without necessary adaptation, a product might not sell at all Committing to the design of a world product can provide the solution to these two major concern faced by most firms dealing with the international marketplace GE, for example, produces a numerical control system suitable in both Metric and English measure In addition, it has designed its machines to operate under wide differences in voltage among different European countries GE refrigerators are built in such a way that they can be used regardless of whether the frequency is 50 Hz or 60 Hz This emerging trend towards world products is also attractive for items with an international appeal or for those items purchased by international travellers Whirlpool refrigerators are the only ones that are eco-friendly which means that they are free from CFC and frost-free too Besides this they have an in-built voltage stabilizer which can control voltage fluctuations effectively Electrical shavers made by Norelco and portable stereo radios made by Sony and Crown are produced with universal voltage features It is a misnomer to think that a world product would be more expensive than a national or a local product since the world product may need multipurpose parts Actually, the world product should result in greater savings for two reasons First, costly downtime in production is not needed to adjust or convert equipment to produce different national versions Second, a world product greatly simplifies inventory control because only one universal part, not many individual parts, have to be stopped A world product may also be able to lower certain production costs by anticipating necessary local adaptation As an example, the Japanese ministry requires 32 changes on most US built cars and the changes include replacing of headlamps, that, because of left hand drive, dip in the wrong direction; changing sharp edged door handles; replacing outside rearview mirror, and filling the space between the body and the rear bumper to prevent catching the sleeves of Kimono-clad women World products have some inherent problems also A large number of manufacturers of cars in India not have Euro-I and Euro-II modifications to check pollution Hence, the cars, which are not having these modifications, cannot be registered in New Delhi (NCR) Similarly, the Ford Escort car was designed in Europe as Ford’s world car The country’s American executives proceeded to redesign for the US Market Therefore, corporate commitment is necessary There must be a mechanism to take care of conflicting views of the executives working in different countries For example, Opel and Cadillac have fought on the first joint transatlantic project involving Omega and its modified version (Cadillac Catera) for the US market The disputes ranged from styling to acceleration German engineers, appreciating the European obsession with fuel economy, resisted a request to make changes to accommodate American drivers’ desire for more power when pulling away from a stop And ultimately, they produced lower gearing for more power 7.6 MARKETING OF SERVICES Internationally, invisible trade is responsible for one fifth of the value of exports The share of commercial services in world trade has risen from 17 per cent in 1980 to about 22 per cent in 1993 Between 1980 and 1993, the average annual growth in trade in commercial services was 7.7 per cent, outpacing merchandise trade Due to information technology, communication costs will further decline As a result, trade in services is very likely to continue to expand rapidly 7.6.1 Importance of Services The services sector has become very important In today’s service-oriented society, it represents almost 60-70 per cent of the GNP and employs about 70-75 per cent labour force The United States is the worlds, leading producer and exporter of services Services account for half of US production as well as about 80 per cent of non-firm private employment US export of services have incrseased significantly from $86 billion in 1987 to $173 billion in 1993 The top services in exports are: tourism, transportation, finance, education and training, business, telecommunication, equipment (installation, maintenance and repair), entertainment, information and health care Conceptual framework of market entry strategies is given in Figure 7.2 Capital Intensity (–) Asset Specificity Cultural Distance Inseparability (–) (–) (–) Propensity to Share Control (+) Country Risk (–) Firm Size Figure 7.2 In this, a service firm’s unique characteristics (e.g., low capital intensity and the inseparability of production and consumption) may have some impact on entry mode choice In general, service firms prefer full control modes But firms with low asset specificity in responding to the rising costs of integration or the diminishing ability to integrate may have to relinquish control and seek shared control avenues In practice, service firms can use virtually all market entry strategies when they are appropriate In the financial services industry, American firms have entered into partnerships and joint venture agreements with European and Japanese firms Wells, Fargo and Nikko Securities have formed a joint venture to operate a global investment management firm Merrill Lynch and Societe Generale have discussed a partnership to develop a French asset backed securities market The Toronto based Four Seasons Hotel Inc was relatively unknown in Asia even though it manages Inn on the Park in Europe and The Pierre and The Ritz-Carlton in North America To quickly become a dominant hotelier worldwide, Four Seasons paid $ 122 million for a 25 per cent stake in the Hong Kong based Regent International Hotels Ltd As part of the deal, Four Seasons also gained the right to manage the luxury chain, thus managing 43 hotels in 17 countries This acquisition strategy, coupled with the management contract strategy, has made it possible for Four Seasons to gain an exposure in Asia that otherwise would have taken years to develop on its own 7.7 INTERNATIONAL BRANDING AND PACKAGING DECISIONS An important element of a firm's international marketing strategy is its branding policy Strong brands help to establish the firm's identity in the market place, and develop a solid customer franchise (Aaker 1996, Keller 1998, Kapferer 1997) as well as providing a weapon to counter growing retailer power (Barwise and Robertson 1992) They can also provide the basis for brand extensions, which further strengthen the firm's position and enhance value (Aaker and Keller 1990) In international markets, an important issue 115 Product Mix Planning 116 International Marketing Management for the firm is whether to use the same brand name in different countries, leveraging brand strength across boundaries, or whether to maintain local brands responding to local customer preferences A related issue is what level of branding to emphasize, i.e corporate/house or product-level brands or some combination of both The significance of the various issues depends to a substantial degree on how a firm has expanded internationally, and how its international operations are organized Some firms, such as P&G and Coca-Cola, have expanded through leveraging their domestic "power" brands in international markets Consequently, as they seek to expand further, they have to consider whether to develop brands geared to specific regional or national preferences Others such as Nestlé and Unilever have traditionally adopted country-centered strategies, building or acquiring a mix of national and international brands Such companies have to decide how far to move towards greater harmonization of brands and integration of their brand architecture across countries, and if so, how to so These issues are particularly critical in European markets where product market structures-traditionally centered around countries, are now becoming more interlinked (Caller 1996) This creates pressures for firms to integrate their brand strategies across markets within the EU 7.7.1 Perspectives on International Branding Most discussion and research on branding, whether domestic or international, focuses on the equity or value associated with a brand name and the factors which create or are the underlying source of value (Aaker 1996, Kapferer 1997, Keller 1998) Considerable attention has, for example, been devoted to examining how the value embodied in a brand and its equity can be extended to other products without resulting in dilution of value (Aaker and Keller 1990) This interest has been stimulated in part by the increasing market power and value associated with a strong brand and in part by the prohibitive costs of launching a successful new brand While this focus is appropriate for a relatively few high profile brands such as Nike or Coca-Cola, it ignores the issues faced by the vast majority of multinational firms who own a variety of local and international brands that differ in their strength, target market and their association Such firms have to determine how to develop a cohesive and effective brand structure, which brands to emphasize and build, whether to use the same brands across product groups and across countries, and how different brands at different levels of the organization should be interrelated so as to maximize their market impact and efficiency Such issues are particularly salient in markets outside the US, where the concept of "power" branding is relatively unknown (Court et al 1997) Markets are often fragmented, characterized by small-scale distribution, and lack the potential or size to warrant the use of heavy mass-media advertising needed to develop strong brands (Barwise and Robertson 1992) As these markets become more interlinked and integrated, companies operating in international markets need to identify opportunities for strengthening brand architecture by improved co-ordination and harmonization of brands across countries Relatively little attention has been paid to the question of brand structure or brand architecture Some authors have developed frameworks of branding structure or brand architecture, typically focused on identifying different levels related to the brand name and/or visual associations of the brand Olins (1989) has, for example, identified three branding structures: monolithic, i.e a corporation uses one name and identity worldwide, for example, Kellogg or Shell; endorsed, where the corporate name is used in association with a subsidiary or product brand, for example, Cadbury's Dairy Milk, and branded which emphasizes multiple product-level brands, for example, P&G with brands such as Tide, Camay, etc 7.7.2 Factors of International Branding Strategy Brand architecture is essentially fashioned by three major factors: firm-based characteristics, product market characteristics and underlying market dynamics While the firm's history shapes its brand architecture, market dynamics and the growth of economic and political integration as well as rising media costs create pressures to harmonize branding across country markets to achieve economies of scale and scope As a result, brand architecture, like any living organism, is continually changing, both shaped by and evolving in response to these drivers 7.7.3 Dynamics of International Brand Architecture As a result of rising media and promotional costs as well as the trend towards globalization, brand architecture is increasingly subject to pressures at both the corporate and product level Increasingly complex brand structures are beginning to emerge, characterized on the one hand, by corporate endorsement of product brands, and on the other, by extension of strong brands across countries and product businesses Corporate Endorsement: At the one end of the spectrum, international expansion and consumer needs for reassurance about product quality and reliability is resulting in a shift toward corporate endorsement of product brands This helps to forge a global corporate identity for the firm and gathers its products under a global umbrella, thus generating potential cost savings through promotion of the global corporate brand, rather than multiple independent product brands At the same time, endorsement by the corporate brand provides reassurance for the customer of a reliable corporate image and enhances visibility Corporate endorsement of product level brands is increasingly used as a mechanism to integrate brand structure across country markets, providing a unifying element across product offerings For example, Cadbury uses the Cadbury name on all its confectionery products, in conjunction with product brands such as Dairy Milk, Whispers, etc Equally, a house brand is sometimes used on a product business worldwide For example, Akzo Nobel places the Sikkens name on all its paint products The relative size of the corporate or house name and the brand name varies from one company to another In some cases, e.g Cadbury or Nestlé, the corporate brand has equal prominence to the product name In other cases, it is smaller and used primarily as an endorsement rather than an identifier In some cases, the prominence and role of the corporate brand or logo varies from country to country For example, Douwe Egbert uses the Friesen lady logo on its coffee in all countries, but the size of the lady and also the positioning statement vary from country to country In Spain, for example, the positioning emphasizes the richness of the coffee and the master brewer, while in the UK, its continental taste, and in Holland, the association with family and comfort are featured Brand Extension: At the other end of the spectrum, rising media costs, coupled with the importance of building high visibility and the need to obtain cost economies, create pressures to extend strong brands across product lines and country borders Increasingly, new products and variants are launched under existing brand names to take advantage of their strength and consumer awareness Mars, for example, has launched an ice-cream line as well as a soft drink under the Mars brand name Cadbury's Milk Tray brand has been extended to desserts, leveraging the brand's association with creaminess Strong international brands often have high visibility and are prime candidates for brand extensions, especially for entry into new and emerging markets such as Eastern Europe or China In some cases, a well-known 117 Product Mix Planning 118 International Marketing Management brand name is used on a product line which is marketed under another brand name elsewhere For example, Danone uses the Danone name to market biscuits in Eastern Europe, in order to leverage customer familiarity with the name Similarly, Nestlé's Maggi brand, used on sauces and seasonings, had high recognition in Eastern Europe and so was extended to frozen foods rather than the Findus brand used elsewhere in Europe 7.7.4 International Packaging In the present atmosphere of increasing global commerce, interest in environmental sustainability has mounted, as have the waste by-products of trade To address environmental concerns relating to packaging waste, many countries have implemented environmental packaging requirements to allocate and distribute waste management costs, shift responsibility onto product manufacturers, and to decrease the environmental impact of packaging Companies selling goods in foreign markets face an ever-growing range of international packaging regulations, including environmental design requirements and extensive packaging fee systems These requirements differ greatly from the current regulations in the United States, but their impact on US goods sold abroad cannot be ignored With packaging regulations in place in a growing number of markets, (including some US states, Canada, Western and Eastern Europe, South Africa, Australia, Brazil, China, Japan, Taiwan, Tunisia, and South Korea) and regulations pending in many more, understanding where responsibility lies is crucial to ensuring worldwide compliance and sustained economic edge In other words, awareness of international packaging fees and design requirements will improve the competitiveness of international marketer 7.7.5 Design Requirements around the Globe In addition to the cost and environmental impact associated with packaging waste, increased concern over consumer safety and protection has helped shape design and labeling requirements in different countries Many countries have adopted regulations relating to misleading advertising of products as "environmentally friendly," deceptive environmental labeling, and proper material coding As of February 2005, more than 30 countries have environmental packaging design requirements including regulations on toxics in packaging, empty space and source reduction, recycled content, environmental labeling, and packaging prevention planning Check Your Progress Distinguish between national and international products What you understand by international product planning? Define product adaptation 7.7.6 Future Direction and Application of Packaging Requirements In recent years, the number of countries to propose environmental packaging regulation has increased significantly The core ideas behind Extended Producer Responsibility (EPR) have grown in popularity, especially in Central and Eastern Europe With the addition of 10 new EU member states, new packaging requirements are expected to emerge in the near future Asia has also been a hotbed of regulatory activity, achieving some of the most complex packaging design requirements, with more on the way It is important for producers to stay informed on new packaging developments and to incorporate them into package engineering to guarantee success and compliance in the future The implementation of a packaging development protocol will ensure compliance, and will also highlight opportunities for reduction of packaging waste, fees, and environmental impact A packaging development protocol is one way for companies to establish a process for taking into account the Essential Requirements, material and recyclability issues, and fee structures during packaging design (or incorporate these considerations into their existing processes) Every possible attempt should be made to reduce packaging (or omit unnecessary packaging components) and to create resource efficient packaging, paying special attention to material and design choices By including certification and environmental checks in the design approval process, the protocol can also form the basis for documentation of compliance and a packaging "due diligence" program In other words, a successful and responsible producer not only remains wellinformed about international packaging requirements, but also strives to apply them in all packaging design decisions In the midst of such far-reaching and varied regulation, packaging engineers retain control over the design of their products Proactive awareness of worldwide packaging design and fee requirements proves to be beneficial in the long term In many cases, adherence to the requirements through innovative effort not only ensures worldwide compliance, but provides an opportunity for environmental improvement and cost savings 7.8 LET US SUM UP Intangible products are a significant part of the export market In many situations, both tangible and intangible products must be combined to create a single total product There are six distinct steps in new product development The first step is the generation of new product ideas The second step involves the screening of ideas The third step is business analysis, the fourth is product development Fifth step involves test marketing to determine potential marketing problems and the optimal marketing mix In the sixth step, assuming that things go well, the company is ready for full scale commercialisation by actually going through with full scale production and marketing It may be pointed out here that not all the six steps in new product development will be applicable to all products and countries The product cannot be marketed in a big way without product segmentation Starting at the low end of product spectrum, a Japanese firm establishes a reputation for product excellence and eventually gets customers to trade up over time Product positioning is a marketing strategy that attempts to occupy an appealing space in consumers’ mind in relation to the spaces occupied by other competitive products A product must be positioned carefully For example, British firms emphasize traditional brand names while American firms emphasise product range and technology and are less likely to adapt to local market conditions In the final analysis, consumer needs must determine how products are to be positioned 119 Product Mix Planning 120 International Marketing Management Before breaking into the foreign market, marketers must consider factors that influence product adaptation Wool coats are not needed in a hot country and products reducing static cling (cling free) are useless in a humid country If a new product requires replacement of those other items that are still usable, product adoption becomes a costly preposition Complexity of a product or difficulty in understanding the product’s quality tends to slow its market acceptance By trying to control production costs through standardisation, the product may become unsuitable for alternative markets When a consistent company or product image is needed, product uniformity is required The world-wide success of McDonalds is based on consistent product quality and services Other products that have gone through a complete international life cycle are synthetic fibres, petrochemicals, leather goods, rubber products and paper Black and Decker have stopped customising products for every country in favour of a few global products that can be sold everywhere World products and standardised products may sometimes be confused with each other A world product is designed for the international market A standardised product is a product develop for one national market and then exported with no change to international market It is a misnomer to think that a world product would be more expensive than a national or a local product since the world product may need multipurpose parts Actually, the world product should result in greater savings, it may be able to lower certain production costs by anticipating necessary local adaptation World products have some inherent problems 7.9 LESSON END ACTIVITY Conduct a secondary data analysis and find out how changing levels of competitions have contributed towards repositioning of brands in the European market Bring out cases of at least five brands, which have been repositioned due to changes in the competitior’s decisions 7.10 KEYWORDS Product: Anything which is offered to the market to satisfy consumers needs and wants National Product: A national product is one that, in the context of a particular company, is offered in a single national market International Brands: An international brand, like a national brand, is a symbol about which customers have beliefs or perceptions Product Adaptation: Marketing strategy whereby new products are based on modification or some improvement on existing or competing products and not on pioneering innovations 7.11 QUESTIONS FOR DISCUSSION By marketing in a foreign country, must a firm automatically utilise geographic segmentation or some other segmentation basis? Explain the “least dependent person” hypothesis and its branding implications Describe briefly the IPLC theory and its marketing implications What are the factors that make it feasible to offer a standardised product? Offer your comments for product adaptation Distinguish colourable imitation from counterfeit trademark Check Your Progress: Model Answers CYP 1 Product positioning is a marketing strategy that attempts to occupy an appealing space in consumer’s mind in relation to the spaces occupied by other competitive products Market segmentation is an acceptable concept to which marketers and academics all over the world like to pay great deal of attention CYP National vs International Product: A national product is one that is offered in a single national market Sometimes national products appear when a global company caters to the needs a preferences of particular country markets International products are offered in international markets They are international and multi-regional A true international product is offered in the Triad, in every world region and in countries at every stage of development International Product Planning: International product planning involves determining which product to introduce into which countries, what modifications to make in the products, what new products to add, etc Product Adaptation: It is a kind of marketing strategy whereby new products are based on modification or some improvement on existing or competing products and not on pioneering innovations 7.12 SUGGESTED READINGS PKVasudeva, International Marketing, Excel Books, New Delhi, 2006 Shyam Shukla, International Business, Excel Books, New Delhi, 2008 Philip R Catero, International Marketing Keegan, Global Marketing Management 121 Product Mix Planning ... International Marketing, Excel Books, New Delhi, 2006 Shyam Shukla, International Business, Excel Books, New Delhi, 2008 Philip R Catero, International Marketing Keegan, Global Marketing Management. .. is clearly an international product; however, unlike the Toyota, for example, it is not a international product International products are offered in international markets They are international. .. Time Source: International Business, A Strategic Management Approach; Alan M Rugman, Richard M Hodgetts Figure 7.1: International Product Life Cycles 7.3.3 New Products in International Marketing