chapter 10 product adaptation
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0. Chapter 10 Product Adaptation. Product Variables. 0. A product or service is a complex combination of tangible and intangible elements that distinguishes it from other entities in the marketplace. Exhibit 10.1 - Elements of a Product. 0. Product Variables. 0. - PowerPoint PPT PresentationTRANSCRIPT
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Chapter 10
Product Adaptation
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Product Variables
• A product or service is a complex combination of tangible and intangible elements that distinguishes it from other entities in the marketplace.
•
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Exhibit 10.1 - Elements of a Product
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Product Variables
• Standardization versus adaptation– Basic alternatives for approaching international
markets are:• • Modify the product for different countries or regions.• • Incorporate all differences into one flexible product
design and introduce it globally.
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Exhibit 10.2 - Standardization versus Adaptation
Factors encouraging standardization–
– Economies in product R&D
– – “Shrinking” of the world
marketplace/economic integration
–
Factors encouraging adaptation– – Government and
regulatory influences–
– Local competition–
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Exhibit 10.3 - Strategic Adaptation to Foreign Markets
Low
High
Industrial/ Technology Intensive Consumer
Need for Adaptation
Degree of Cultural Grounding
Nature of Product
Source: Adapted from W. Chan Kim and R. A. Mauborgne, “Cross-Cultural Strategies,” Journal of Business Strategy 7 (Spring 1987): 31; and John A. Quelch and Edward J. Hoff, “Customizing Global Marketing,” Harvard Business Review 64 (May-June 1986): 92-101.
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Product Variables
• Factors affecting adaptation– Firms consider three factors in deciding the form in
which the product is to be marketed abroad: • • •
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Exhibit 10.4 - Factors Affecting Product Adaptation
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The Market Environment
• Government regulations– Political agendas often dictate government regulatory
requirements.
–
– Economic integration reduces discretionary governmental regulations to some extent.
• Nontariff barriers–
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The Market Environment
• Customer characteristics, expectations, and preferences–
– Consumption patterns, psychosocial characteristics, and general cultural criteria determine cultural and psychological specificity in relation to products and services.
– Product positioning -
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The Market Environment
• Economic development– Affects demand characteristics and helps determine
potentials for selling certain kinds of products and services.
–
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The Market Environment
• Competitive offerings -
• Climate and geography -
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Product Characteristics
• The inherent features of the product offering, whether actual or perceived.–
– Branding
–
– Appearance
–
– Quality
–
– Country-of-origin effects
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Product Characteristics
• Product constituents and content–
• Appearance–
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Product Characteristics
• Branding– Brand -
– Allows further standardization of other marketing elements such as promotional items.
– Trademark -
– Brand loyalty translates into profits even though favored brands may not be superior by any tangible measure.
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Product Characteristics
• The following approach has been suggested for avoiding problems with brand names in foreign markets:–
–
–
–
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Product Characteristics
• Packaging – Serves three major functions—
– Varies as a function of transportation mode, transit conditions, and length of time in transit.
–
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Product Characteristics
• Packaging – User convenience is a priority in packaging decisions;
Containers must withstand logistics challenge, and yet must be easy for customers to open.
–
– Package size varies according to purchasing patterns and market conditions.
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Product Characteristics
• Method of operation or usage– The product that is operable in the domestic market
may not be operable in the foreign market.
–
– Products that rely heavily on written or spoken language have to be adapted for better penetration of the market.
–
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Product Characteristics
• Quality– Quality is essential to marketing products
internationally, especially in markets where price is not the sole competitive factor.
–
– Marketers seek endorsement of their efforts from governmental or consumer organizations.
–
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Product Characteristics
• Service–
– Product warranties provide instructions to customers about what to do if the product fails within a specified period of time.
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Product Characteristics
• Country-of-Origin effects– The origin of a product may have a strong effect on
consumer perceptions and biases about foreign products.
– This effect reduces as:• •
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Company Considerations
• Product adaption depends on:– The firm’s ability to control costs, correctly estimate
market potential, and secure profitability in the long term.
–
– The firm’s ability to maintain consistency in their marketing efforts.
–
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Product Counterfeiting
• Counterfeit goods –
• The European Union estimates that trade in counterfeit goods accounts for 2 percent of total world trade.
• The largest number of counterfeit goods are sourced from:
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Product Counterfeiting
• Counterfeiting is a pervasive problem not only in terms of geographic reach but also the ability of counterfeiters to deliver products, and the market’s willingness to buy them.
•
• After securing valuable intellectual property rights, the international marketer must act to enforce these rights.
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Exhibit 10.8: Measures to Combat Counterfeiting
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Product Counterfeiting
• Few acts, agreements, and alliances that help combat counterfeiting include:–
– The Trademark Counterfeiting Act of 1984
–
– The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement
–
– Counterfeit Intelligence and Investigating Bureau