Imm unit-05 (product planning & development)

07/06/10 1
IILM-GSM
Global Marketing Management Product Planning & Development

07/05/10 2
Some product can not be sold at all in a
foreign markets without modification; others
may be sold as is, but their acceptance is
greatly enhanced when tailored specifically to
market needs.
In a competitive struggle, quality products and
services that meets the needs and wants of the
consumers at an affordable price should be the goal
of any marketing firm.
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07/05/10 3
Contents
• Components of a Product
• Product Adaptation Vs Product Standardization
• Approaches to New Product launch
 Waterfall Approach
 Sprinkler Approach
• Case: Delving Deep into Users Mind in Indian Market
• Case of Chevrolet Spark: Adaptation for Indian Market
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Components of a Product
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Developing Products for the
International markets
Whether a single standardized product can be offered
worldwide 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.
Generally, industrial products and services are
insensitive to cross-country preferences and may be
marketed as standardized products, whereas foods,
fads, fashions and styles are highly sensitive, such
require a much higher level of customization.
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McDonald’s Customized Product in
International Markets
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Maharaja Mac- India Hamburger- US McAloo Tikki- India
Bulgogi Burger- Korea Kahuna Burger- AustraliaChicken- Japan

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Product Standardization
It refers to the process of marketing a product in
overseas markets with little change except for
some domestic changes, such as modified
packaging and labeling.
The benefits associated with using standardized products:
1. Cost Saving in terms of economies of scale
2. Catering to customer globally
3. Designing and monitoring components of
marketing-mix economically
4. Development of a product as a global brand
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Major Factors favor Product
Standardization
Major factors that favor product standardization for
international markets include:
1. High level of technology intensity
2. Formidable adaptation costs
3. Convergence of customer needs worldwide
4. The country of origin impact
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Standardization
High level of technology intensity
• Product with high technology content are marketed as
standardized products to maintain uniform international
standards and reduce confusion across international
markets.
For instance, computer servers, micro and macro
processor, VAN etc are marketed worldwide as
standard products.
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Standardization
Formidable adaptation costs
• Nature of product and market size determines the cost of
adaptation, which may be too high to recover.
A number of foreign books and motion pictures are sold
as standardized products world-wide. Only a few
books written in a foreign context are adapted, whose
costs are difficult to recover.
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Standardization
Convergence of customer needs worldwide
• Customers in diverse country markets increasingly exhibit
convergence of their needs and preferences resulting in
growing psychographic market segments across the
borders.
• It has resulted in an increase in demand for similar goods
across the border.
Levi’s jeans, MTV, McDonald’s have gained popularity
among international consumers due to growing
convergence of customer needs world-wide.
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Standardization
The country of origin impact
• Customer’s perception of products differs on the basis of
his/her country of origin.
For instance, the consumer electronics from Japan, fashion
design from Italy, fragrances from France, Instruments
from Germany, computer software from India and herbal
products from China and India are considered superior in
quality and fetch a premium price and demand in
international markets.
• Hence, the firms attempt to retain the image of the product
as in the country of origin and market with little
customization.
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Product Adaptation or Customization
Making changes in the product in response to the
needs of the target market. A thorough market
research needs to be conducted so as to identify
the customers’ requirements in the target market.
The benefits associated with using customizing products:
1. It enables a firm to tap markets, which are not
accessible due to mandatory requirements.
2. It fulfils the needs and expectations of customers in
varies cultures and environments.
3. It helps in gaining market share.
4. It increases sales leading to economies of scale.
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07/05/10 14
Mandatory Factors Influencing
Product Customization / Adaptation
A firm has to carry out modification in international
markets not as a matter of choice but as a compulsion.
Major factors that favor product customization for
international markets include:
1. Government Regulations
2. Standards for electric current
3. Operating systems
4. Measurement systems
5. Packaging and labeling regulations
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Government Regulation:
• Different quality norms and marketers are required to
follow them, like approval by FDA is needed for marketing
a food or pharmaceutical products in the US.
• It is mandatory for a marketer to follow the codex
standards for marketing such products in the EU.
The ban on the use of azo dyes in Europe
requires the use of natural dyes in all the
products for such market.
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07/05/10 16
Government Regulation:
• Product standards in the target markets have caused
Indian exporters to modify their production process to
meet regulatory requirements.
A ban on PCP, a fungicide used by the leather industry
that was initiated by Germany, resulted in a short-term
setback for India lather exports. The Indian leather
industry had to go through dramatic alternations in its
changeover to substitute chemicals, and these PCP
substitutes were roughly 10 times costlier.
India’s tea exports have been affected by concerns from
importing countries regarding the pesticide residue
levels in Indian tea.
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Standards for electric systems:
• The electrical current standards also vary from country to
country.
• In India, electric current of 220volts at a frequency of 50
Hz is used, while in the US it is 110-120 volts at a
frequency of 60 Hz. Therefore, electric equipment should
be modified for use in the target market depending on the
country’s electricity standards.
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Operating systems:
• Differences in operating systems affect product design.
• In India, China, UK, Singapore and UAE, TV operates on
phone alternating lines (PAL) while in US, Japan and
Korea they work on national television system committee
(NTSC).
• Therefore, a TV operating on PAL in India is unsuitable for
countries with different operating system.
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07/05/10 19
Measurement Regulation:
• Different systems of measurement also affect product
design.
India follows the metric system with kilograms, meter
and liter as measurement units.US follows the
imperial system using pound, feet and gallon.
• Therefore, the packaging size, weights and measures of
products need to be modified depending upon the
measurement system followed in the target market.
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07/05/10 20
Packaging and labeling regulations:
• Most countries in the middle East emphasize the use of
Arabic.
• Due to the sensitive vegetarianism issue, regulation in
India require food packages to exhibit a mark, i.e. veg or
non-veg.
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07/05/10 21
Voluntary Factors Influencing
Such modifications are not compulsory and are based
on the international marketer’s own decision to meet
marketing challenges competitively. These factors are:
1. Consumer Demographics
2. Culture
3. Local Customs and Traditions
4. Condition of Use
5. Price
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Voluntary Factors Influencing
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Consumer Demographics:
• The physical attributes of the consumers also require
product modification.
• The Chinese and most East Asians are smaller in size
while European and Germans are generally taller. The
features and attributes of the consumer products such as
readymade garments, beds & bed-sheets differ.
• Mattel has adapted its Barbie dolls for 45 different
nationalities.

Moving from International to Global
Strategy: A Case of
“US customers preferred large furniture kits and household
items. For example, Swedish beds were five inches
narrower than those US customers were used to, IKEA’s
kitchen cup boards were too narrow for the large dinner
plates typically used in the US, IKEA glasses were too
small for US customers who typically add ice to their drink
and hence require large glasses- it is said that US
customers bought flower vases thinking they were drinking
glasses- and bedroom chests of drawers were too shallow
for US consumers, who tend to store sweaters in them. ”.
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Moving from International to Global
Strategy: A Case of
“In addition, IKEA Swedish-sized curtains did not fit
American windows, a mistake about which a
senior IKEA manager jokes, Americans just
wouldn’t lower their ceilings to fit our curtains.”
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07/05/10 25
Approaches to New Product Launch
Depending upon the market and the product attributes,
a firm may adopt one of following strategies for
launching its products in international markets:
1. Waterfall Approach
2. Sprinkler Approach
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07/05/10 26
Waterfall Approach: New Product Launch
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Time
Market
Country A
Country B
Country C

07/05/10 27
Waterfall Approach: New Product Launch
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This strategy had long been followed in international
marketing. It took a long time for a number of firms,
which are now global, to launch their products in
international markets.
For instances, it took about 22 years for McDonald’s
to market outside US whereas Coca Cola took
about 20 years and Marlboro about 35 years to
market overseas.

07/05/10 28
Sprinkler Approach: New Product Launch
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New Product
Country A Country B Country C
Under this, a product is simultaneously launched in various country.

07/05/10 29
Sprinkler Approach: New Product Launch
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This strategy is preferred under following circumstances:
• If the competitive intensity of the market is very high
with strong and fierce competitors
• If the life cycle of the product is relatively short
• If the markets have high potential, such as
 Large market size
 Rapid growth
 Cost of entry is relatively less
• If a firm has large resources to manage
simultaneous product launches in multiple markets

07/05/10 30
Gillette: Product Life Cycle
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Product Year Introduced
Original Gillette blade 1903
Blue blade 1932
Thin blade 1938
Super blue blade 1960
Stainless steel blade 1963
Platinum-plus blade 1969
TRAC-II 1971
ATRA 1977
Good News Pivot 1983
ATRA Plus 1985
Sensor 1990
Sensor Excel 1994
Match3 1998

07/05/10 31
Gillette: Product Life Cycle
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• A closer look at the new product launch by Gillette revels
that the life cycles of its products have become increasingly
shorter.
• The original Gillette blade introduced in 1903 survived for
about 30 years.
• In 1990, Gillette launched Sensor, the razor with new
suspension system, to provide a cleaner, smoother and
safer shave.
• In 1998, Mach3 was introduced as a more
advanced shaving system.

Imm unit-05 (product planning & development)

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