International Product policy

Some additional Thoughts

An important question that multinational marketers tend to answer is whether the product approach successful at home will be equally successful in foreign markets. Standardization v/s customization

Standardization means offering a common product on a national/worldwide basis. Customization means adapting a product i.e to make appropriate changes in it to match local perspectives. International marketers must examine all the criteria in order to decide the extent to which products should vary from country to country.

Decision criteria 1)Nature of product : More standardization is feasible in the case of industrial goods than consumer goods. Among consumer goods , non durables require greater customization than durables , because nondurable consumer goods appeal to tastes, habits and customs.

2) Market development: Different national markets for a given product are in different stages of development. If a products foreign market is in a different stage of market development than in U.S market , appropriate changes in the product design becomes desirable in order to make an adequate product/ market match

e.g Polaroids swinger camera failed in France because the company pursued the same strategy there as in U.S at a time when then two markets were in different stages of development. The U.S market was in maturity stage whereas France was in introductory stage.

3) Cost /benefit Relationship: Product adaptation to match local conditions involves costs . These costs may relate to R& D , physical alteration of the products design , style, features or changes in packaging , brand name, performance guarantee etc.

In contrast with standardization the above is not required, hence huge saving in cost .

The only big cost that standardization may involve is opportunity cost. If a product is customized , presumably it may have a greater appeal to the mass market.

A cost/benefit analysis for customization is necessary to be carried out. The result of that analysis should then be compared with the same analysis applied to standardization. The net difference indicates the relative desirability of the two strategies.

4) Legal requirements: Different countries have different laws about product standards , patent laws and tariffs and taxes. These laws may require product adaptation. e.g Europe the 220 volt electrical system is used. As a result, European govt. set stringent safety standards for such products as irons-cord connections must be stoenger, radio interference must be shielded

5) Competition : In the absence of current or potential competition, a company can do well in overseas market without ever changing its standard product.

But with rising competition , product customization is essential if a company is to have any chance of maintaining market share. e.g Kodak used to sell a standard film globally. With competition from Fuji, Kodak began marketing films with ruddier flesh tones in Japan.

6) Support System : The support system refers to institutions and functions that are necessary to create , develop and service demand. These include retailers, wholesalers, sales agents, warehousing , transportation , creditors, media.

The availability, performance and cost of the support system profoundly affect the product design strategy.

E.G Frozen foods cannot be marketed in countries where retailers do not have facilities with freezers.

When Lever brothers attempted to introduce frozen vegetables in developing countries , the lack of refrigeration facilities at the retail level (as well as in homes) prevented implementation of the plan.

7) Physical environment : The physical conditions of a country (climate and resources) may also require product adaptation. E.g A/C in Middle east require additional features for satisfactory performance.

Differences in the size and configuration of homes in some countries affect product design for home appliances and home furnishings. European kitchens are usually smaller than U.S kitchens and European homes generally dont have basements.

Thus compactness of design in washers and dryers is a necessity , since they must be accommodated within a crowded area. GEs European washing machines are designed vertically to conserve water. P& Gs Tide and \Pantene shampoo ,packaged in small , low priced packets in India. Whirlpool markets light weight airconditioners in Asia.

8) Market conditions: Cultural differences, economic prosperity and customer perceptions in the foreign country should also be considered in deciding whether to adapt the product. E.g British prefer slightly more bitter taste in soup than Americans do. The taste difference required the Campbell soup to modify soup ingredients in Britain. To cater to local taste in Japan, Dominos offers pizza with such toppings as chicken teriyaki, apple, rice and corn.

Mcdonalds offers local appealbeer in Germany. Adding British Cadbury chocolate sticks to their icecream cones in England, Japan added a sandwich of fried chicken soaked in soy sauce to its menu. The new item called Chicken Tatsuta did exceedingly well. Also Mcdonalds offers burgers dipped in teriyaki sauce and buns made of rice. To bring products such as automobiles and appliances within the reach of the middle class in developing countries , the product must be appropriately modified to cut costs without reducing functional quality.