Product adaptation


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  • Extension strategies are employed by companies in the international, global, and transnational stages of development. The critical difference is one of execution and mind-set. In an international company, for example, the extension strategy reflects an ethnocentric orientation and the assumption that all markets are alike. A global company such as Gillette does not fall victim to such assumptions; the company’s geocentric orientation allows it to thoroughly understand its markets and consciously take advantage of similarities in world markets. Likewise, a multinational company utilizes the adaptation strategy because of its polycentric orientation and the assumptionthat all markets are different. By contrast, the geocentric orientation of managers and executives in a global company has sensitized them to actual, rather than assumed, differences between markets.Strategy 1: common for B2BStrategy 2: low-cost because the product is unchanged, communication is adaptedStrategy 3: Cadillac wants to sell 20,000 autos outside the United States by 2010; will adapt to local market requirementsStrategy 4: Combines local market conditions recognized in Strategies 2 and 3
  • Product adaptation

    1. 1. 3 elements of the product or service Benefits Attributes The core product benefit or service Image Perceived value Brand name Quality Features Packaging Size and colour variants Design After-sales service Guarantees Delivery Installation Performance Marketing support services Standardisation Adaptation Adaptation
    2. 2. Fundamental Questions  To what extent are our products suitable for international markets?  If we must change the product, what should these changes be?
    3. 3. International product life cycle Market D Domestic market Sales Time Market AMarket B Market C
    4. 4. International product strategies (Van Mesdag)  Sell What You have Got (SWYG)  Sell What people Actually Buy (SWAB)  Sell the same thing globally, disregarding national frontiers (GLOB)
    5. 5. Global Product Strategies  Extension—offering product virtually unchanged in markets outside of home country  Adaptation—changing elements of design, function, and packaging according to needs of different country markets • Invention—developing new products for the world market
    6. 6. Product/communication strategies Promotion Product Standard Adapt NewAdaptStandard Straight Extension One product, one message Promotion Adaptation only Product Adaptation only Dual adaptation Product invention Source: Source: adapted from Keegan, 1995.
    7. 7. STRATEGIC ALTERNATIVES AVAILABLE  One product, One message worldwide  Product Extension-Communications Adaptation  Product Adaptation-Communications Extension  Dual Adaptation  Product Invention
    8. 8.  Standardized product with same communications strategy across the globe. i.e Product Extension  This strategy is Cost effective  Allows for greater economies of scale  Rarely used for consumer type products except soft drink and some luxury type goods  Used mainly for industrial type products
    9. 9. 2.Product Extension-Communications Adaptation  Use conditions are similar or identical but the product fulfills a different need or serves a different function.  Cost effective because communications adaptation is less expensive than the tailoring product to a local market.  Can be used for consumer type products E.g Motorcycles & Bicycles  Serve the purpose of recreation in U.S but provide basic transportation in many foreign countries.
    10. 10.  3.Product Adaptation-Communications Extension  Changes made to the product, same communications strategy across the globe  To extend without changing the basic communication strategy developed for home market.  Assumes that the product will serve the same function in foreign markets under different use conditions.  Product formulations are changed without consumers knowing it  Electrical Appliances, Detergents
    11. 11.  4. Dual Adaptation - Changes made to the product, changes made to communications strategy  When there is difference in environmental conditions of use and in the function which a product serves  Combination of marketing conditions of strategies 2and 3.
    12. 12. *Kellogg’s ‘dual adaptation’ for Indian market
    13. 13.  5. Invention - Usually redesigning of an original product at a lower level of complexity. Recognizes the socio-cultural and economic differences from country to country  Leads to more purchases as a result of the reinvention of the product
    14. 14. Standardization versus Adaptation  Global Standardization: standardization of products across markets and standardization of the marketing mix worldwide  Addresses needs of global consumers (homogeneous consumer groups sharing similar interests and product/ brand preferences)  Allows for global branding – using the same brand name, logo, image, and positioning everywhere in the world
    15. 15. Standardization versus Adaptation,  Mandatory Adaptation:  Adapting products to local requirements so that they can legally and physically operate in the respective countries – for example: Left-hand driving in the United Kingdom  Local Non-Mandatory Adaptation:  Adapting a product to better meet the needs of the local market, or developing new brands for individual local markets, even though such adaptation is not required
    16. 16. Factors encouraging standardisation  Economies of scale  production  R&D  Marketing  Reduced inventory costs  Reduced component costs  Cost of investment  Reducing trade barriers  Where ‘made in’/‘designed by’ is important
    17. 17. Reasons for adaptation  Cultural factors  Usage factors  Differing consumer purchasing power  Level of local technical skills  Local taxation policies  Effect of different market entry methods  Legal standards  Tariffs  Technical Specifications  Climate
    18. 18. How to Choose a Strategy  Two errors that management makes in choosing a strategy  NIH (not invented here) syndrome means managers ignore the advancements of subsidiaries overseas  Managers impose policies upon subsidiaries because they assume what is right for customers in one market is right in every market 10-18
    19. 19. Failure of New Product Development • Tariff and non-tariff barriers • Subsidies given to local competitors • Cultural insensitivity • Poor planning • Lack of unique selling proposition • Product deficiencies • Top management approach