INTERNATIONAL PRODUCT POLICY & PLANNING INTERNATIONAL PRODUCT MIX

INTRODUCTION
A product is anything that can be offered to a market to satisfy a want or need. Products that are marketed include physical goods, services, experiences, events, persons, places, ideas etc. The following components are an integral part of a product: Core component Packaging component Augmented component

Basic mistakes done by transnational food companies like KELLOGS, MCDONALDS, PIZZA HUT, DOMINOSS PIZZA
Gross overestimation of spending patterns of Indian consumers: The customers of South Asia are very conscious while spending. They look for value for money more than their western counterparts. Gross overestimation of the strength of their transnational brands. Gross underestimation of the strength of ethnic Indian products.

PRODUCT STANDARDIZATION
It refers to the process of marketing a product in overseas markets with little change except for some cosmetic and ornamental changes in packaging and labelling. For e.g.: Pepsi and Coca-cola are globally standardised products even though their taste may be altered a little to suit different cultural variations of taste. As Coca- Cola may be a little sweeter when it is marketed in Middle East.

ADVANTAGES OF STANDARDISATION

Builds up a global brand and product image. Economies of large-scale production help achieve an economic cost. Global marketing mix can be developed at an optimum cost.

FACTORS THAT FAVOR STANDARDIZATION

High technology intensive industry: Industrial capital equipments, processors and computer hardware. Prohibitive adaptation cost Emergence of global customers: Levis Jeans, Mc Donalds, Pizza Hut, KFC, CCD. Country of origin impact: Consumer Electronic Durables-JAPAN Fashion designs-ITALY Heavy machinery-GERMANY Wine, fragrances-FRANCE Computer software-INDIA Herbal products-CHINA AND INDIA

PRODUCT ADAPTATION/CUSTOMIZATION

Making changes in a product in response to the needs of the target market. For e.g.: When Mattel Toys launched in India, it is carried only the American version of the Barbie Doll. Today, however in order to lure Indian children, the American Toy maker offers dolls that are replicas of Indian Brides. Similarly , when Barbie was introduced in Japan, there was not much response to American Barbie. When it was modified to look like an Oriental girl, sales of Barbie increase.

FACTORS INFLUENCING ADAPTATION

Global variations in physical conditions, such as geography, weather, climatic conditions, per capita income & standards of living of the inhabitants of the country. Varying cultural manifestations, consumer tastes & perceptions, usages, purchasing patterns, consumption & satisfaction drivers. For e.g. Mc Donalds (adapted with different needs), Haldiram & MTR (only vegetarian segment) Cholle bhature - Punjab Kachori & jalebi-UP Dhokla, phapda & Khari Gujarat Idli, dosa, uthapam-southern states Poha & Shrikhand- MP KELLOGS WAS FAILURE Dark & lovely Brand in African Market Fair & Lovely Brand for India

Contd.
Various levels of competition and the competitive strategies adopted by the other international marketing firms around the globe. Government regulations: Approval by Food & Drug Administration (FDA) is needed for marketing food & pharmaceutical product in the US. Follow codex standards for such products in EU. Regulations in Canada & Brazil require the use of shock graphics warnings on cigarette packs. EU has unveiled a library of 42 shocking pictures of blackened lungs, rotten teeth, throat tumors, corpses in hospital morgues to be used on cigarette packs. Standards for electric current: Electric equipment modification like in US (110-120 volts at a frequency of 60 Hz) while in India( 220 volts at a frequency of 50 Hz).

Contd..
Operating system: Televisions operate on Phone Alternating Lines( PAL) in India, China, UK, Singapore, Pakistan, UAE, Tanzania National television system committee( NTSC)- US, Japan, Phillipines & South Korea. System electric pour couleur avec memoire (SECAM)France, Vietnam, Russia & Mauratius. Measurement system: Metric system with kilogram, metre, litre India Imperial System with pound, feet, gallon-US Packaging & Labelling requirement: Food Packages to exhibit a mark i.e. Veg. or Non-veg.

PRODUCT-PROMOTION STRATEGIES
PRODUCT
Don't Change Adapt
Develop New Product

PROMOTION

Don't Straight Extension Product Adaptation Or Change Or Dual Extension Communication Extension
Promotion Adaptation, Product Extension Product Invention Dual Adaptation

Adapt

Contd.
Dual extension: Pepsi and Coca-Cola, Lux, Heineken(Beer brand) Product extension/communication adaptation:
Motorcycle
Three-wheeled Auto rickshaws

Personal Means of Transport in India

Commercial Transport Vehicle in India

An item of Sports & Recreation in US

Converted the Same into Proud Personal Possession Like a Car in Sri Lanka

Refrigerators

Food Storage Purposes Also viewed as a Status Symbol in Third

World Countries

Contd..
Product adaptation/communication extension:
Clothing may serve the same purpose of fashion everywhere, yet the fashion designer will have to design clothes to fit different body types of countries. Color preferences and other style fits may also differ from country to country. Various cars exported & marketed abroad by Indian Manufacturers will have to redesign their engine emissions & steering systems to suit the needs of left hand drive & pollution control laws. Advertising messages about luxury drive, fuel efficiency & customer safety will be the same.

TV (Different Operating System)

CONTD.

DUAL ADAPTATION: Clothing in low-income countries serves the purpose of physical protection but in highincome countries as a status and reflects personality. Deep freezer for Americans.

INTERNATIONAL PRODUCT STRATEGY

Product Strength

High

Barons Commoners

Kings Crusaders
High

Low

Low

Geographical Coverage

STRATEGIES FOR NEW PRODUCT LAUNCH

Waterfall approach:
Country A

MARKET

Country B

Country C

TIME

CONTD

Sprinkler Approach:
NEW PRODUCT

COUNTRY A

COUNTRY B

COUNTRY C

INTERNATIONAL PRODUCT LIFE CYCLE(IPLC)

Innovating Country Stage

Other Developed Countries Or Middle Income Countries

Less Developed Countries

Production
Exports Imports

Early Imports
Production Exports (Large volume declining to small volume)

Late Imports
Production Exports (Small volume rising to large volume)

CONTD.
Terpstra and Sarathy have identified four phases in the international product life cycle: 1. Export strength is evident by innovator country 2. Foreign production starts 3. Foreign production becomes competitive in export market 4. Import Competition begins

PRODUCT PLANNING IN INTERNATIONAL MARKETS

It basically refers to the process of determining the length and depth of the product line to be offered in the target international market. The length will specify the number of products to be offered and the depth will relate to the various shades to be adopted for the same product in different international markets. Local products: MTR spices in southern India.

National products: Campa-Cola, Dabur India offers Real Fruit Juices and Godrej markets Appy in the Indian Market.
International Products: Suzuki, Honda, Hyundai, Mittal Steel become global after acquisitions of Arcellar & achieved the status of No. 1 steel manufacturer in the world. Global Products: Pepsi, Coke, Sony, National Panasonic, Philips, Cadburys, BMW, Renault, Mercedes, Kodak & Xerox.

NEW PRODUCT DEVELOPMENT (NPD)

Blue Ocean Strategy:

Providing value addition to the customers & the entrepreneurs by the way of value innovation to the already crowded product mix. (VALUE-COST TRADE-OFF)

COSTS
VALUE INNOVATION

BUYER VALUE

CONTD.

For e.g.: 1. The introduction of Maruti Cars by the Indo Japanese joint-venture Maruti Suzuki can be cited as the best example of value innovation i.e. introduction of 800cc cars.
2. Hondas 100cc bikes in the Indian market, in collaboration with the Hero group. 3. Sunlight, washing powder of HUL as an alternative to surf range of detergents at a reduced price yet enhanced value to the customers of developing countries.

PROCESS OF NPD

PRODUCT SPREAD IN INTERNATIONAL MARKETS (DIFFUSION PROCESS)

The speed at which customers adopt a new product or idea. Product features: A unique advantage offered by a product. E.g. when Nestle has launched Maggi Noodles new flavors in India, the firm had put up stalls serving small helpings of cooked noodles at retail stores & supermarkets & at various places to offer a trial taste to the customers. Country culture features: High context culture/ Fast Diffusion-South-East Asia, Japan Low Context Culture/ Slow Diffusion- UK, Europe Lead Countries: Where international marketing firm introduces its new product first. Lag Countries: The countries that take to the new product after it has been accepted in the lead countries.

GLOCALIZATION
Think globally but act Locally. Roland Robertson, who is credited with popularizing the term. A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market. This means that the product or service may be tailored to conform with local laws, customs or consumer preferences.
The increasing presence of McDonald's restaurants worldwide is an example of globalization, while the restaurant chain's menu changes in an attempt to appeal to local palates are an example of glocalization. For promotions in France, the restaurant chain recently chose to replace its familiar Ronald McDonald mascot with Asterix the Gaul, a popular French cartoon character.

Yahoo! is an example of a company that practices glocalization. It markets a portal that is viewed worldwide and offers different versions of its website (and related services) for different users. For example, it provides content and language variations in some 25 countries including China, Russia and Canada. It also customizes content to appeal to individuals in those locations.

ASTERIX THE GAUL

INTERNATIONAL PACKAGING
Much like the brand name, it is another integral part of a product. It serves two primary purposes:

Functional

Promotional

(capable of protecting the product at minimum cost). Time and distance involved Countrys Adverse environment: when moisture is a problem, a company have to wrap pills in foil, or put food in tin boxes or vaccum-sealed cans.

Contd.
Package should be economical: For e.g. in Mexico, where most consumers cannot afford to buy detergents in large packages, detergents suppliers found it necessary to use plastic bags for small packages because card-board would be too expensive for that purpose. Promotional function: e.g. To satisfy the Japanese preference for beautiful packaging, Avon upgraded its inexpensive plastic packaging to crystalline glass. Novel shapes & designs can be used to stimulate interest & create excitement. The successful campaign for

Baileys Irish cream ( Irish whiskey and cream based liqueur, made by Gilbeys of Ireland) in the US included a fancy gold foil box package that
promotes this whiskey-based drinks upscale image.

CONSIDERATIONS IN INTERNATIONAL PRODUCT PACKAGING

Importer specific instructions Cultural factors Point-of-Purchase Features.( Attractive) Environmental features After use disposability

LABELLING A label is a part of the product which carries verbal information about the product or the sellers (manufacturers or middlemen). A label may be a part of the package or it may be tag attached directly to the product. It carries information regarding : Ingredients, usage, precautions, expiry, retail price, weight etc. Types of labels: Brand label, Grade label, Descriptive label, Combination label.

INTERNATIONAL BRANDING
According to AMA, Brand can be defined as a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or a group of sellers and to differentiate them from those of competitors. Branding a product adds an emotional dimension to the productconsumer relationship & creates a bond between the two. For e.g. Jeans as a product were historically used by mining labourers because of its inherent product qualities such as ruggedness, durability & low cost of maintenance. Branding the jeans as Levis added intangible benefits to the product & convert it into highly desirable product among the youth.

In the automotive industry, brands were originally called marques.

GLOBAL BRAND
A global brand is one which is perceived to reflect the same set of values around the world. Global brand variables: Corporate slogan Products and services Product names Product features Positioning Marketing mixes (including pricing, distribution, media and advertising execution)

CONTD..
These differences will depend upon: Language differences Different styles of communication Other cultural differences(e.g. In 1920, Coca-Cola entered the chinese market as Coca-Cola which is pronounced as KOUKE-KOU-LA. In Chinese this translates as a thirsty mouth & full of candle wax or bite the wax tadpole that was not accepted. Subsequently Coke has to change the brand name to KE-KOU-KE-LE that means a joyful taste & happiness or happiness in the mouth. Different consumption patterns Different competitive sets and marketplace conditions Different legal and regulatory environments Different national approaches to marketing (media, pricing, distribution, etc.)

TOP GLOBAL BRANDS 2012

COMPARISON

BENEFITS OF GLOBAL BRANDING

Economies of scale (production and distribution) Lower marketing costs Laying the groundwork for future extensions worldwide Maintaining consistent brand imagery Quicker identification and integration of innovations (discovered worldwide) Preempting international competitors from entering domestic markets or locking you out of other geographic markets Increasing international media reach (especially with the explosion of the Internet) is an enabler Increases in international business and tourism are also enablers known throughout the world People can buy product anywhere in the world, so if they travel, they still can get their product

GLOBAL BRAND NAME DISADVANTAGE

Expensive - you need to build the brand image everywhere The benefits of your brand don't necessarily work everywhere. For example, a global beer brand won't play well in Muslim countries, where alcohol is forbidden.

PRODUCT WARRANTY & SERVICES

It defines the manufacturer liability in case of nonperformance or under-performance of the product. It constitute an integral part of the added value of the product offered in international market.

Customer service means enhancing efficiency of the product as well as that of the customer.
If the host countrys service infrastructure is found to be at satisfactory level, international marketers (GM and TELCO) have preferred to have tie-ups with local services for provision of services and have supported them with regular supply of spares, manuals, drawings and the training of their personnel.