Internation

al Product
Planning
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Product Decisions
 Product decisions are crucial to a firms success in
international markets.
 In order gain significant percentage of market share, a
firm should address an satisfy customers needs and
expectations of overseas market.
 A firm operating in international markets should not only
identify the products for various markets but should also
evolve suitable marketing strategies for developing such
products.
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Product Decisions
 Whether a single standardized product can
be offered world wide or a customized
product needs to be developed for each
market is the most significant product
decision that a firm, has to make while
operating in international markets.
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Types of Product Decisions

 Market segment decision
 Product mix decision
 Product specification
 Positioning and communications decisions
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Global Product Strategies

 Companies can pursue three global strategies
to penetrate foreign markets.
1. Companies can Extend their domestic product
or communication strategies to their foreign
markets.
2. Companies can Adapt their strategy to the local
market place.
3. Companies can follow invention strategy,
where products are designed for global market.
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1. Product and Communication

Extension
 A company can enter into a market with standardized
product using a uniform communications strategy.
 Early entrants in the global arena will often opt for this
approach.
 Small companies, with few resources typically prefer this
option.
 A standardized product pricing coupled with a uniform
communication strategy offers substantial savings
coming from economies of scale.
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2. Product Extension -
Communication Adaptation
 Due to the gaps between the foreign and
home market, drive companies to market
the same product using customized
advertising campaigns.
 It retains the scale economies on the
manufacturing side.
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3. Product Adaptation -
Communication Extension
 In this case firms adapt their product but
market it using a standardized
communication strategy.
 Local market circumstances favor the case
of product adaptation.
 Many companies add brands to their
product portfolio by acquisitions of local
companies.
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4. Product and Communication

Adaptation
 Differences in the both the cultural and
environments in different countries call for
a dual adaptation strategy.
 Under such circumstances, adaptation of
the company’s product and communication
strategy is most viable option for
international expansion
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5. Product Invention
 Company which adopts the product
invention aims at bring out new products
that cater to common needs and
opportunities around world.
 In this option companies try to figure out
how to create products with a global scope
rather than just for a single country.
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Standardization V/s Adaptation

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Product Standardization
 Process of marketing a product in overseas
markets with little change except for some
changes such as modified packaging and
labeling.
 Benefits
 Projecting global market image.
 Catering to customers globally
 Cost savings in-terms of economies of scale.
 Facilitating the development of a product as
a global brand.
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Product Standardization
 The major factors that favour product
standardization for international market
include-
 High level of technological intensity
 High adaptation costs
 Convergence of customers needs
 The country of origin impact
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Product Adaptation (Customization)

 Making changes in a product response to the needs of the

target market.
 Adaptation of product may vary form major modifications in
the product, packaging, logo or brand name.
 Benefits
 It helps in gaining market share
 It fulfils needs and expectations of customers in varied
cultures and environments.
 It increases sales, leading to economies of scale.
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Product Adaptation (Customization)

 The major factors that favour product adaptation for

international markets include-
 Government regulations
 Operating system
 Measurement system
 Environmental changes
 Packing & labeling regulations
 Price sensitivity.
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Developing New Products for Global

Markets
 If a company find that good opportunity exists for
products it does not manufacture now, to exploit
that opportunity new product development becomes
essential.
 The steps to be followed in the global new product
development process are, by and large similar to
domestic marketing situations – but innovation
efforts are implemented on a global scope
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New Product Development

Process
Marketing Business
Strategy Analysis
Development
Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
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Idea Generation

Company Employees

Customers

Competitors

Distributors

Suppliers
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Idea Screening

 Process to spot good ideas and drop poor

ones.
 Develop system to estimate: market size,
product price, development time and costs,
manufacturing costs, and rate of return.
 Evaluate these findings against set of
company criteria for new products.
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Concept Development and Testing

 Product Idea: idea for a possible product that

the company can see itself offering.
 Product Concept: detailed version of the idea
stated in meaningful consumer terms.
 Product Image: the way consumers perceive
an actual or potential product.
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Marketing Strategy Development

Part
Part One
One Describes:
Describes:
The
The Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales,
Sales, Market
Market Share,
Share, && Profit
Profit Goals
Goals

Part
Part Two
Two Outlines
Outlines the
the First-Year’s:
First-Year’s:
Product’s
Product’s Planned
Planned Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget

Part
Part Three
Three Describes
Describes Long-Run:
Long-Run:
Sales
Sales &
& Profit
Profit Goals
Goals
Marketing
Marketing Mix
Mix Strategy
Strategy
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Business Analysis
 Involves a review of
the sales, costs,
Competition,
investment and profit
projections to assess fit
with company
objectives.
 If yes, move to the
product development
phase.
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Product Development
 Develop concept into
physical product
 Calls for large jump in
investment
 Prototypes are made
 Prototype must have
correct physical features
and convey psychological
characteristics
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Test Marketing
 Product and program introduced in more
realistic market setting.
 Not needed for all products.
 Can be expensive and time consuming, but
better than making major marketing mistake.
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Test Marketing

Nokia test-marketed its new cell phone/mobile game player

extensively before introducing it worldwide.
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Commercialization
 Must decide on timing (i.e., when to introduce
the product).
 Must decide on where to introduce the
product (e.g., single location, state, region,
nationally, internationally).
 Must develop a market rollout plan.
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Product Life Cycle in International

Market
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Product Life Cycle in International

Market
 International markets follow a cyclical pattern over a
period of time due to a variety of factors.
 Factors like level of innovations and technology,
resources, size of market and competitive structure
influence the market patterns.
 In addition, the ability of the customers in international
markets also determines the stage of international
product life cycle.
 The PLC four international markets has the following four
identifiable stage
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1. Introduction
 A majority of new product inventions are made in
highly industrialized and developed countries.
 In the initial stages, the price of a new product is
relatively high.
 There fore , a firm find markets for new products
only in developed countries.
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2. Growth
 The demand in the international markets exhibits an increasing
trend and an innovating firms gets better opportunities for
exports.
 Markets begin to mature in the developed countries, an
innovating firm faces increased international competition in the
target market.
 In order to defend its position in the international markets, the
firm establishes its production locations in the developed
countries.
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3. Maturity
 As the technical know-how of an innovative
process becomes widely known, a firm begins to
establish its operations in middle and low-in-
come countries in order to take advantage of
resources available at competitive prices.
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4. Decline
 The major thrust of the marketing strategy at this stage
shifts to price and cost competitiveness, as technical
know-how and skills become widely available
 There fore, the emphasis of a firm is most on the cost –
effective locations.
 Besides developing countries, production also intensifies in
least developed countries.
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4. Decline
 As a result, it has been observed that the
innovating country begins to import such
goods from other developing countries.
Rather than manufacturing them itself.
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Product life cycle theory

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Branding Decisions
 To brand or not to brand
 A firm has to make an initial decision whether, it
should sell the product as an undifferentiated generic
commodity or sell it in branded form.
 Selling an unbranded product reduces the cost of
production, packaging and legal costs.
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Branding Decisions
 Manufacturers brand or private brand
 A manufacturer may use for his products his own
or private brand.
 Many Indian firms are manufacturing products
for private brands of the foreign sellers.
 It will be very difficult for the small exporter to
sell their products abroad under his own
unknown brand name
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Branding Decisions
 Same Brand or different brand
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Global Branding Strategies

 Global Brand
 Local Brand
 Private label Branding ( Store Brands)
 Umbrella Branding (Corporate brands)