International Product Decisions

Chapter 9

International Product Decisions

International Marketing Chapter-9 International Product

Decision

ObjectivesWhat are the important product decisions in IM managementWhat is the definition of product and what are the components of productWhat is product mixWhat stages constitute the life cycle of a productWhat are the types of new products and what are their opportunities


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What is brandingWhat are the functions and importance of packaging and labelingWhat is business environmentWhat are the product strategiesWhat are product-communication strategiesWhat is the difference between globalization and localization


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Introduction

Product strategy involves the managerial decisions about the product mix and the positioning and communicationProduct planning is used in a broad sense, involves not only the product strategy described above but also the product development measures


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Product management refers to the managerial decisions pertaining to product development and the product strategies through the different stages of the product life cycle


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Product Decision

1. Market segment decision2. Product mix decision3. Product specifications4. Positioning and communications

decisions


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Product

Philip Kotler defines a product as anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need, includes physical objects, services, persons, places, organizations and ideas.


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Components And Levels of Product

1. Core product2. Tangible product 3. Augmented product


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Core ProductCore product refers to the core benefit the consumer derives from the product.In some cases the basic physical product remains the same, the core product differs between markets because the purpose for which product is used is different in these different markets.This is called modification of product design, positioning and communication strategies.


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Tangible Product

Tangible product is the actual form with all its attributes, in which the product is offered to the consumer.It has certain characteristics like a quality level, features, styling, a brand name and packaging.


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Augmented ProductAugmented product refers to certain additional services or benefits offered with the product such as installation, delivery and credit facilities, after sales service and warranty.Product augmentation may not be very important in a seller’s market but they are very important in the competitive markets which are buyer’s marketInternational Marketing

Chapter-9 International Product Decision

Product Mix

The product mix is the full list of all the products offered for sale by a company.The product mix has certain width, depth and consistency.The width refers to the number of different product lines in the product mix.


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The depth refers to the average no. of items offered by the company within each product line.The consistency refers to the extent to which the various product lines are closely related in end use, production requirements, distribution channels, or in some other ways.


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Product Life Cycle

1. Introduction2. Growth3. Maturity4. decline


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Introduction1. Low sales because it generally takes some

time for a new product to get wide acceptance by consumers and it also takes time to expand the marketing of the product

2. High costs per unit because of the low sales and high promotional expenditure

3. Absence of or low competition if the product is entirely new.

4. Loss or negligible profits because of low sales and high costs.International Marketing


Growth1. Fast growth in sales because of

increasing consumer acceptance and expansion of marketing

2. Growing profits because of growing sales and fall in the incidence of fixed production cost and marketing cost per unit.

3. Increasing competition4. Market segmentation and the introduction

of different versions of the product.International Marketing


Maturity

1. Saturation of sales2. Intense competition3. Falling profits because of high

promotional expenditure and falling margins.


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Decline

Entry of new products which compete with the productDecline in salesDecline in profits: profits may even become negativeExit of some of the firms


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PLC And International Marketing

International marketing may enable a firm to alter the shape of the PLC.It is also a fact that in several cases technologies/products are introduced in developing countries when they have become obsolete in the advanced countries.There is often a time leg between countries in the adoption and diffusion of technologies. International Marketing


New Product Development

1. Innovative product2. Significantly modified product3. Copy of the existing product


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Steps In New Product Development

1. Idea generation2. Evaluation and selection3. Concept testing4. Business analysis5. Product development6. Market testing7. commercialization


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BrandingA brand is a name, term, sign, symbol, or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of others.The part of the brand which can be vocalized-the utterable-is known as the brand name.The part of the brand that is given legal protection for exclusive use by a seller is known as the trade mark.


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Branding Decisions

1. To brand or not to brand2. Manufacturer’s brand or private brand3. Same brands or different brands


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Global Brands

1. It makes market entry easy- for example, Pepsi is well known in India even before it came to India

2. It reduces the promotional expenditure as the brand is well known.

3. It helps to generate good sales since the very beginning.


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Branding Problems In International Marketing1. It is very difficult for a small firm to

promote its brand in foreign markets because of the heavy cost of brand promotion.

2. Established foreign importers and distributors discourage use of exporter brand because they prefer to sell the products under their own brand name.

3. The cultural and other factors make branding decision complicated in IM.


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4. One problem faced by some multinational companies when they wanted to market their products in some countries is that they found that their world renowned brands had been registered in these countries by somebody else with the result that these firms had to pay fee to the registered holders of these brands in these countries for permission to use these brands.

5. In some countries, there are restrictions on use of foreign brands


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Scope For Use Of Indian Brands

1. Indian brand names may be used when niche marketing strategy is employed.

2. Indian brand names may be used when the export is made to foreign firms who do not have their own brands or when goods are sold by distributors who do not have their own brand names.

3. After gaining credibility and gaining experience in export business by being suppliers to foreign firms, the Indian exporter may start selling under its own brand name. International Marketing


4. An Indian firm may buy a foreign brand or take over a foreign firm with established brand name.

5. The Indian firms having reputation in foreign countries may promote their brands in the foreign markets.

6. Indian companies may also use mixed brands.7. Several firms may jointly promote a common

brand-consortium approach.8. Promotion of a logo by export promotion agencies

and permission to use this logo along with the brands of firms who will strictly adhere to the quality and other norms.


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Packaging And LabelingThis terms are distinct in the marketing parlance.In export marketing, packaging, including packing, is a factor which demands very careful attention.Packaging in IM is a much more serious problem than in domestic marketing because of the varying physical conditions and situations the cargo is exposed to and subjected to; difference in the tastes, preferences and practices; differences and peculiarities in packaging requirements and regulations.


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Functions And Importance Of Packaging

Functions1. Protection2. Preservation3. Presentation

Importance1. Self service2. Consumer affuence3. Integrated marketing concept


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Factors Influencing Packaging Decision

1. Physical characteristics2. Physio-chemical characteristics3. Economy4. Convenience5. Miscellaneous factors


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Special Consideration in IM

Regulations in the foreign countriesBuyer’s specificationSocio-cultural factorsRetailing characteristicsEnvironmental factorsDisposability


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Importance And Requirement Of Export Packaging

1. It should be capable of withstanding the hazards of handling and transport.

2. It should be easy to handle.3. It should be amenable to quick

examination of contents.4. It should be easy to identify5. It should be adequately marked.


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6. Unless it is necessary, contents shall not be disclosed

7. It should be easy to dispose of8. Packaging must conform to the buyer’s

specifications.


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Business EnvironmentBusiness environment is a very important factor which influences the marketing mix strategySome times a company may find the introduction of a better material a problem because of certain peculiar convictions of the consumers.There are many instances of national regulations prohibiting the marketing of certain products.


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Product Communication StrategiesIn IM product and communication strategies are

usually considered together because the need satisfaction, purpose of product use or usage occasion and the product communication are rather inseparable.

1. Straight extension2. Product extension, communications adaptation strategy3. Product adaptation, communications extension strategy4. Dual adaptation5. Product invention


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Developments tend to favourGlobalization

1. Technological advance2. Travel and communication3. Product image4. International standards


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SummaryProduct decisions in IM management includes; market segment decision, product specifications and positioning and communication decisions.All the categories of products enjoy the opportunities of copying, product modification and innovation.The term product decision include product strategy, product planning and product management.


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Education

International Product Decisions