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Product Strategies: Basic Decisions & Product Planning

This chapter outline discusses product strategies and planning including product definitions, new product development, market segmentation, product adoption, the international product life cycle theory and stages, and debates around product standardization versus adaptation. It also covers strategies for marketing services internationally and entering new markets.

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Jay Bhatia
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© Attribution Non-Commercial (BY-NC)
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Download as PPT, PDF, TXT or read online on Scribd
187 views

Product Strategies: Basic Decisions & Product Planning

This chapter outline discusses product strategies and planning including product definitions, new product development, market segmentation, product adoption, the international product life cycle theory and stages, and debates around product standardization versus adaptation. It also covers strategies for marketing services internationally and entering new markets.

Uploaded by

Jay Bhatia
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Chapter 10

Product Strategies:
Basic Decisions &
Product Planning
Chapter Outline

 What Is a Product?
 New Product Development
 Market Segmentation
 Product Adoption
Chapter Outline

 Theory of International Product Life Cycle


- Stages and Characteristics
- Validity of the IPLC
- Marketing Strategies
 Product Standardization vs. Product Adaptation

- Arguments for Standardization


- Arguments for Adaptation
Chapter Outline

 A Move Toward World Product: International or


National Product?
 Marketing of Services
- Importance of Services
- Types of Services
- The Economic and Legal Environment
- Marketing Mix and Adaptation
- Market Entry Strategies
Product

a bundle of utilities or satisfaction


Classification of Products in
International Marketing

 Local products- may be new products that a


company is introducing using a rollout strategy , or
a product that is distributed exclusively in that
region.
 National Products-offered in a single national
market. Sometimes national products appear when
a global company caters to the needs and
preferences of particular country markets.Pasturina
in Peru by Coca Cola to compete with Inca Cola
 International Products-offered in
multinational markets. Euro products for ex.
Offered in Europe but not in the rest of the
world. Renault earlier offering international
product, now turned to global product.
 Global Products-offered in global markets, in
every world region, and in countries at every
stage of development. Coca Cola
New Product Development

 generation of new product ideas


 screening of ideas
 business analysis
 product development
 test marketing
 full-scale commercialization
IPLC

 IPLC theory , developed and verified by


economists to explain trade in a context of
comparative advantage, describes the
diffusion process of an innovation across
national boundaries.
Theory of International Product
Life Cycle (IPLC)

 Stage 0--Local Innovation


 Stage 1--Overseas Innovation
 Stage 2--Maturity
 Stage 3--Worldwide Imitation
 Stage 4--Reversal
Local Innovation

 Innovations most likely in developed nations


as they have both technical know-how and
abundant capital to develop new products.
 Characteristics- no import/export, target
market-USA, few competitors , production
costs are initially high.
Overseas Innovation

 Pioneering or international introduction


stage.
 Countries with similar cultures and economic
conditions are perceived as less risky
 Characteristics-increasing export, target
market- US and advanced nations, few local
firms are competitors, production costs
declining due to economies of scale
Maturity

 Growing demand in advanced nations


provides an impetus for firms there to commit
themselves to starting local production.
 Characteristics-stable export,advanced
nations and LDC are targeted, advanced
nations are competitors,production costs are
stable
Worldwide Imitation

 This stage is tough for the ionnovating nation


because of continuous decline in exports.
There is no more new demand anywhere to
cultivate.
 Characteristics: declining exports,target
market-LDC, competitors are advanced
nations, production costs are increasing due
to lower economies of scale
Reversal

 The major functional characteristics of this stage are


product standardization and comparative
disadvantage. This disadvantage is brought about
because the product is no longer capital –intensive
or technology- intensive but has become labour-
intensive- a strong advantage possessed by LDCs.
 Characteristics- increasing import,target market-
USA,competitors –advanced nations and LDCs,
production costs increasing owing to comparative
disadvantage.
Marketing Strategies for IPLC

 Product Policy- the IPLC emphasizes the


importance of cost advantage. The
innovating firm should keep its product cost
competitive.
 To keep costs at a minimum , a US firm may
use local manufacturing in other countries as
an entry strategy.
 Assembly operations- a good entry strategy
 Once in the maturity stage , the innovators
comaprative advantage is gone, the firm
should switch from producing simple versions
to producing sophisticated models or new
technologies in order to avoid competition
Product Standardization vs.
Product Adaptation

 Arguments for Standardization


- simplicity and cost
- consistent company or product image
- musical recordings and works of art
- industry specifications
- cultural universals
Product Standardization vs.
Product Adaptation

 Arguments for Adaptation


- big-car syndrome
- left-hand-drive syndrome
Mandatory Product Modification

 Government regulations
 Electrical current standards
 Measurement systems
 Operating systems
Optional Product Modification

 Physical distribution
 Local use conditions
 Climatic conditions
 Space constraint
 Consumer demographics as related to physical
appearance
Optional Product Modification

 User's habits
 Environmental characteristics
 Price
 Limiting product movement across national
borders (gray marketing)
 Historical preference or local customs and
culture
International Product Strategies

 Standardized Product
- Domestic product introduced internationally, with
minor or no modification
 Localized Product

- Domestic product adapted for foreign markets


- Product designed specifically for foreign markets
International Product Strategies

 Global Product
- Product designed with international (not national)
markets in mind
- Product having universal features
- Product being adaptation-ready, when necessary

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