Product and Service    Strategies
Chapter Objectives Evaluate the stages of the international  product life cycle identify locus of operations  and target ...
The International Product Life            CycleIntroduction             Early             Late              Declineand Gro...
International Product Life Cycle,             continued The Product Introduction Stage     Products are developed and ma...
International Product Life Cycle,             continued The Growth Stage     Increasing competition and rapid product ad...
International Product Life Cycle,             continued The Maturity Stage     Product is adopted by most target consume...
International Product Life Cycle,             continued The Decline Stage     Products are rapidly losing ground to new ...
Dimensions of the International          Product Mix Product length     Total number of brands Product width     Total...
New Product Development   Substantial risk and costs   Complex in international markets       Competition can appropria...
Generating New Product Ideas Most product and service firms are driven  by the marketing concept      Product developmen...
Product Ideas   Consumers   Competitive Analyses   Channel Members   Employees   Top Management   Inventors   Consu...
Screening Ideas Consider:     Fit with target consumers and the overall mission of the organization     The extent to w...
Developing and Evaluating Product            Concepts Develop detailed description of product Ask consumers to evaluate ...
Product Business Analysis Estimate:     Project costs     Return on investment     Cash flow     Fixed/variable costs
Product Development Create prototypes Create brand identity and marketing mix Coordinate strategy across international ...
Test Marketing Involves testing new product performance in  a limited area of a national or regional target  market Prov...
Types of Test Marketing   Simulated Test Marketing       Test marketing simulating purchase environment where samples of...
Launching Product Internationally Quality of launch     High service quality     On-time shipment     Appropriate prod...
International Launch Decisions Timing of launch Consumers and countries Marketing mix decisions     Product mix     P...
Degree of Product/Service               Newness   New product to existing market   New product to existing company   Ne...
Product Diffusion   Product Factors       Relative advantage compared to competitive products       Compatibility with ...
Adopters Innovators     Risk takers who can afford to pay a higher price during the      introduction stage (2.5% of the...
Adopters, continued   Early majority       Consumers who enjoy status of being among the first to purchase a        popu...
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Product and service ppt @ bec doms mba 2010

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Product and service ppt @ bec doms mba 2010

  1. 1. Product and Service Strategies
  2. 2. Chapter Objectives Evaluate the stages of the international product life cycle identify locus of operations and target markets at each stage Identify the different dimensions of the international product mix with company illustrations Examine the new product development process and the activities involved at each stage in international markets Examine degrees of product newness and
  3. 3. The International Product Life CycleIntroduction Early Late Declineand Growth Maturity: MaturityStages: MNC Manufactures MNC Moves Developing Developing Country Product in Developed Production to Country Markets Remain Viable Countries; Exports to Developing Competitor Target Markets for Developing Countries Country; Begins Exports Product MNC; MNC Home Importing to To MNC Home Country Market Is Home Country Country; Diminishing Competes with MNC ImportsSales Time
  4. 4. International Product Life Cycle, continued The Product Introduction Stage  Products are developed and marketed in developed countries
  5. 5. International Product Life Cycle, continued The Growth Stage  Increasing competition and rapid product adoption  Marketed primarily in developed countries  Product is exported to developing countries
  6. 6. International Product Life Cycle, continued The Maturity Stage  Product is adopted by most target consumers  Sales are leveling off  Profits decline due to intense competition  Manufacturing operations move to developing countries to take advantage of cheap labor  New competitors: firms from developing countries
  7. 7. International Product Life Cycle, continued The Decline Stage  Products are rapidly losing ground to new technologies and product alternatives  Decrease in sales and profits  Product lifecycle is extended through sales to consumers in developing countries
  8. 8. Dimensions of the International Product Mix Product length  Total number of brands Product width  Total number of product lines Product depth  Total number of different offerings for a product category
  9. 9. New Product Development Substantial risk and costs Complex in international markets  Competition can appropriate the product/service idea and deliver final product or service to the market more swiftly than the initial developer  International consumers might not respond as anticipated  Local and/or home-country government might impose restrictions on product testing  Technological infrastructure of individual markets may be substandard and unable to support the product
  10. 10. Generating New Product Ideas Most product and service firms are driven by the marketing concept  Product development decisions are based on identifying the needs, wants, and desires of consumers Technology firms focus on the products  Focus on research and development
  11. 11. Product Ideas Consumers Competitive Analyses Channel Members Employees Top Management Inventors Consultants University Research
  12. 12. Screening Ideas Consider:  Fit with target consumers and the overall mission of the organization  The extent to which product offers unique benefits  The extent to which target market is large and/or is likely to grow  Fit between new product requirements and resources, skills, experience of the firm
  13. 13. Developing and Evaluating Product Concepts Develop detailed description of product Ask consumers to evaluate and indicate willingness to buy Use:  Focus Groups  Conjoint Analysis
  14. 14. Product Business Analysis Estimate:  Project costs  Return on investment  Cash flow  Fixed/variable costs
  15. 15. Product Development Create prototypes Create brand identity and marketing mix Coordinate strategy across international subsidiaries
  16. 16. Test Marketing Involves testing new product performance in a limited area of a national or regional target market Provides estimate of product performance in the respective country or region Expensive Time consuming Open to competitive sabotage
  17. 17. Types of Test Marketing Simulated Test Marketing  Test marketing simulating purchase environment where samples of target consumers are observed during the decision-making process Controlled Test Marketing  Test marketing that involves offering a new product to a group of stores and evaluating market reaction Test Marketing  Full-blown test marketing  Focus on cities appropriate for the test; involves selecting distributors and the ancillary marketing infrastructure  Most costly  Leaves the company most exposed to competitive sabotage
  18. 18. Launching Product Internationally Quality of launch  High service quality  On-time shipment  Appropriate product availability  Quality sales force and support  Quality and amount of promotion
  19. 19. International Launch Decisions Timing of launch Consumers and countries Marketing mix decisions  Product mix  Place  Price  Promotion
  20. 20. Degree of Product/Service Newness New product to existing market New product to existing company New line New item in an existing product line Modification of an existing company product Innovation
  21. 21. Product Diffusion Product Factors  Relative advantage compared to competitive products  Compatibility with the needs of the consumers  Observability, or communicability to other consumers  Trialability – the ability of consumers to experience the product with only minimal effort Country (Market) Factors – the country may be a  Lead country – wealthy industrialized country where the product is adopted first  Lag country – developing country that adopts the product later
  22. 22. Adopters Innovators  Risk takers who can afford to pay a higher price during the introduction stage (2.5% of the total market)  Primarily consumers in developed countries Early adopters  Consumers who purchase the product early in the lifecycle stage and who tend to be opinion leaders in their community  (13.5% of the total market)  Primarily consumers in developed countries
  23. 23. Adopters, continued Early majority  Consumers who enjoy status of being among the first to purchase a popular product (34% of the total market)  Consumers are primarily from developed countries Late majority  Consumers who adopt popular products when the risk associated with them is minimal (34% of the total market)  Consumers are from both developed and developing countries Laggards  The last consumers to adopt a product; they are risk averse and conservative in their spending (16% of the total population)  Consumers are primarily from developing countries

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