Chapter 5

Developing a Product for the International Market

The market perception and conceptualization of what a product is, should be

considered by the manufacturers. The fact that we make money by banking on the needs and
wants of out customers, we must take into consideration their ideas of what a product is, the
manufacturers a product is mainly the goods made in their factories and sold in the market,
while for the consumers, it is a combination of elements, both physical and non – physical
which are include in the purchase.

ELEMENTS OF A PRODUCT

1. Physical core
2. Packaging
3. Support Services
4. Brand Names
5. Product and Company Image

EVALUATING THE EXPORT POTENTIAL OF YOUR PRODUCT

There are several ways to determine if your products and services have a potential in
the international market:

1. How successful are your products domestically?

* If you are successful at home, then chances are you are successful abroad.
* If similar needs and condition exist overseas.

2. What are the unique features of your products?

*If these features are hard to duplicate overseas, then chances are you be successful
abroad.
* Competition may be little or non-existent.

3. Are you losing market share to more technically advanced products?

*Other countries may not need state-of-the-art technology.

*Other countries may be unable to afford the most sophisticated and expensive
products.

PREPARING PRODUCTS FOR EXPORT

Selecting and preparing a product for export requires not only product knowledge or
the unique characteristics of each market being targeted. However, before the sale can occur,
the exporter may need to modify particular products to satisfy buyer taste or needs in foreign
markets.

The extent to which the exporter will modify products sold in international markets is a
key policy issue to be addressed by management. Some exporters believe the domestic
product can be exported without significant changes. Other seek to consciously develop
uniform products that are acceptable in all export markets

If the exporter deals with more than one product or offers many models of a single
product it should start with the one best suited to the target market. Ideally, the firm chooses
one or two products that fit the market without major design or engineering modifications
doing so is possible when the exporter:

Deals with international customers with the same demographic characters or with the
same specifications for manufactured goods,

Supplies products locally that are exported to foreign countries without modifications,
produces a unique product that is sold on the basis of its status or foreign appeal, or produces
a product that has few or no distinguishing features and that is sold almost exclusively on a
commodity or price basis

PRODUCT PREPARATION CONSIDERATIONS

There are several factors that an exporter has to consider in preparing a product for the
foreign market:

1. What foreign needs does the product satisfy?

2. Should the firm modify its domestic-market product for sales abroad? Should it
develop a new product for the foreign market?
3. What product should the firm offer abroad?
4. What specific features-design, color, size, packaging, brand, warranty, and so on
should the product have?
5. What specific services are necessary abroad at the pre – sale and post sale stages?
6. Are the firm’s service and repair facilities adequate?

PRODUCT ADAPTATION

To enter foreign market successfully, a company may have to modify its product to
conform to government regulations geographic and climatic conditions, buyer preferences, or
standing of living. The company may also need to modify its product to facilitate shipment or
to compensate for possible differences in engineering or design standards. Foreign
government product regulations are common in international trade and are expected to
expand in the future.

It is often necessary for a company to adapt its product to account for geographic and
climatic conditions as will as for availability of sources. Factors such as topography, humidity,
and energy costs can affect the performance of a product or even define its use. The cost of
petroleum products along with a country’s infrastructure, for example, may indicate the
demand for a company’s energy consuming products.

Buyer preferences in a foreign market may also lead a manufacturer to modify its
product. Local customs, such as religion or the use of leisure time, often determine whether a
product will sell. The sensory impact of a product, such as taste or visual impact, may also be
critical factor. The Japanese desire for a beautiful packaging for example or example, has led
many companies to redesign cartons and packages specifically for this market.

A country’s standard of living can also determine whether a company needs to modify
a product the level of income, the level of education, and the availability of energy are all
factors that help predict the acceptance of a product in a foreign market. If a country’s
standard of living is lower than that of the foreign market, a manufacturer may find a market or
less sophisticated product models that have a become obsolete in the local market. Certain
high – technology products are inappropriate in some countries not only because of their cost,
but also because their function. For example, a computerized industrial washing machine
might replace workers in a country where employment is a high priority. In a addition, these
product may need a level of servicing that is unavailable ins some country.

Market potential must be large enough to justify the direct and indirect costs involved
in product adaptation. The firm should asses the costs to be incurred and the increased
revenues expected from the adaptation (they may be difficult to determine). The decision to
adapt a product is based in a part on the degree of commitment to the specific foreign market:
to firms one with short-term goals and the other with long term goals may have different
perspectives.

ENGENEERING AND REDESIGN

On adaptations related to cultural and consumer preferences, the exporter should be

aware that even fundamentals aspects of its products may require changing. For example,
electrical standards, in many foreign countries differ from local electrical standards. It is not
unusual to find phases, cycles or voltages (both in home and commercial use) that would
damage or impair the operating efficiency of equipment design for use in the local market.

These electrical standards sometimes vary even the same country knowing this
requirement the manufacturer can determine whether a special motor must be substitute or
arrange for a different drive ratio to achieve the desired operating revolutions per minute.

Similarly, many kinds of equipment must be engineered in the metric system for
integration with other pieces of equipment or for compliance with the standards of a given
country.

Since freight charges are usually assessed by weight or volume (whichever provides
the greater revenue for the carrier), a company should give some consideration to shipping an
item unassembled to reduce delivery cost. Shipping unassembled products also facilitates
movement on narrow roads or through doorways and elevators.

BRANDING, LABELING PACKAGING

Consumers are concerned with both the product itself and the product’s
supplementary features, such as packaging, warranties and services. Branding and labeling of
a product in foreign markets has raise new considerations for the exporter:

1. Are international brand names important to promote and distinguish a

product? Conversely, should local brands or private labels be employed to
heighten local interest?
 2. Are the colors used on labels and packages offensive or attractive to the foreign
buyer? In some countries, certain colors are associated with death, national flags,
or other cultural factors.
3. Can labels be produced in official or customary languages if required by the low of
practice?
4. Those information on product content and country of origin have to be provided?
5. Are weights and measures stated in the local unit?
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6. Must each item be labeled individually?
7. Are local tastes and knowledge considered? A dry cereal box picturing a local
athlete may not be as attractive to overseas

A company may find that building international recognition or a brand is expensive.

Protection for a brand names varies from one country to another, and in some developing
countries, barriers to the use of foreign brands or trademark may exist. In other countries
piracy of a company’s brand names and counterfeiting of its products are widespread. To
protect its products and products and brand names, a company must company with the local
laws o patent copyrights, and trademark. A local firm may find it useful to obtain the advice of
local lawyers and consultants where appropriate.

INSTALLATION
Another element o a product preparation that a company should consider is the ease
of installing that product overseas. If technicians or engineer are needed overseas to assist in
installation, the company should provide if possible. The company may also wish to pre-
assemble or pre-test the product before shipping. Disassembling abroad may be considered
by the company because of the big savings in shipping cost. But it may add to delay in
payment if the sale is made on an assembled product. Even if trained personnel do not have
to be sent the company should be careful to provide all the product information such as
training manuals, installation, instruction, and parts lists, in the local language.

WARRANTIES
The company should include a warranty on the product since the buyer expects a
specific level o performance and a guarantee that it will be achieve levels of expectation for a
warranty vary from country to country depending on its level of development, competitive
practices, the activism of o consumer groups, local standards of production of quality, and
other similar factors.

A company may use warranties for advertising purpose to distinguish its product from
its competition. Strong warranties may be required to break into a new market especially if the
company is an unknown suppliers. In some cases, warranties may be instrumental in making
the sales and may be a major element of negotiation. In other cases, however, warranties
similar to those in the local market are not expected. By providing an unnecessary warranty,
the company may raise the costs of the product higher than the competitor’s costs. When
considering this point, exporters should keep in mind that servicing warranties will probably be
more expensive and troublesome in foreign markets. It is desirable to arrange warranty
service locally with the assistance of a representatives or distributors.

SERVICING

Of special concern to foreign consumers is the service the exporter provides or its
product. Service after the sales is critical for some products: generally, the more complex the
product technology, the greater the demand for pre-sales and post sales service. There is
therefore, pressure I some firms to offer simpler, much better products overseas to reduce the
need for maintenance and repairs. Exporters who rely on a foreign distributor or agent to
provide service backup must take steps to ensure an adequate level of service. These steps
include training, periodically checking service quality, and monitoring inventories of spare
parts.