Management Orientation of Companies Ethnocentric – Rocks on the domestic market – Relies heavily on home knowledge base and develops – Seeks similarity internationally as per home knowledge Polycentric – Every country is different market – Federal structure with profit centre heads Regiocentric – World is broken into regions with region hubs – Polycentric with shared knowledge of regions Geocentric – Extremely worldwide view of market – Shared knowledge base with integrated management
Develpoment Stages of Companies Domestic – Markets product in home country – Ethnocentric – Single layer organisation structure Multinational/Multi Regional – Multiple Office organisation with matrix structure – Ethnocentric and Polycentric Global/Transnational – Federal Structure – Typically geocentric organisations
Product Variables The Core Product • a product or services that is essentially the same as that of competitors The Tangible Product • a product or service that is differentiated composition, origin, or tangible features from competing products The Augmented Product • a product or service which is serviced after the sale and carries a warrantee from the producer, producing a continuing relationship with the seller.
Product Variables Augmented Product Installation Tangible Packaging Product Core Core Product Delivery Brand Benefit or Styling After Name and Service Sale Credit Service Quality Features Warranty
Standardization versus Adaptation The fundamental international product decision after the decision to internationalize. International market approach alternatives to adaptation • Sell the product as it is internationally. • Modify product for different countries or regions. • Design new products for foreign markets. • Incorporate all differences into one product and introduce it globally.
Factors Encouraging Standardization Economies of scale in production Economies in product R&D Economies in marketing “Shrinking” of the world marketplace and increasing economic integration Global competition
Factors Encouraging Adaptation Differing use conditions Government and regulatory influences Differing consumer behavior patterns Local competition True to the marketing concept
Strategic Alternatives Different Product extension, Dual Adaptation Differentiated brandingCommunication Dual Extension Communication Extension, Product Adaptation Same Same Different Product
Factors Affecting Adaptation Market Product Company Environment Characteristics Considerations Decision to Alter the Domestic Product
The Market Environment Government Regulations • Political and social agendas often dictate regulatory requirements Nontariff Barriers • Product standards, testing, subsidized local products Customer Characteristics, Expectations, and Preferences • Physical size, local behaviors, tastes, attitudes, and traditions • Consumption patterns, psychosocial characteristics, and general cultural criteria
The Market Environment Economic Development • The stage of economic development affects the market size and demand characteristics. Competitive offerings • Monitoring competing local products is critical in adjusting the product for competitive advantage. Climate and geography • Local climatic conditions and terrain features can make products vulnerable to damage.
Product Characteristics Product Constituents Branding Packaging Appearance Method of Operation or Usage Quality Service Country-of-Origin Effects
Product Constituents and Branding Product ingredients must not violate local legal regulations and social or religious customs Care must be taken that the brand in name. term, symbol, sign, or design does not offend the local customer. Trademarks are especially vulnerable to counterfeiters. Selecting the global brand name • Translation • Transliteration • Transparency • Transculture
Packaging and Appearance Packaging serves three major functions: • Protection – Improper handling and pilferage • Promotion – Language and symbols • User convenience – Packaging aesthetics- color and shape, overall size, and purchase quantity Adaptations in styling, color, size, and other appearance features play an importance role in how a consumer perceives a product.
Method of Operation or Usage Physical Operability of product as per markets Electrical voltages and connectors vary around the world. English and metric standards are not comparable. Software may have to be translated into the local language.Quality and Service Quality is essential to marketing products internationally, especially in markets where price is an important competitive factor. International Certifications may be required by buyers. (ISO/CE etc) Servicing products in international markets requires producers to develop local repair staffs.
Country-of-Origin Effects The origin of a product may have a strong effect on consumer perceptions and biases about foreign products.a) COO effects are not stable; perceptions change over timeb) In general, consumers prefer domestic products over importsc) place of manufacture v/s company’s headquarterse) COO effects depend on the product category France Swiss
ROLE OF BRANDS: CULTURAL DIFFERENCESJAPAN US EUROPEIMAGE RISK REDUCTION RECOGNITION/ENVY“FEEL GOOD” TIME SAVER ACHIEVEMENTEMOTIONAL PEER DOMINATION HIGH ASPIRATIONS“BELONGING” DISTINCT INDIVIDUALPEER RECOGNITION
Company Considerations Organizational capabilities? Is it worth it? Can we afford not to do it? Can a specific return-on-investment (ROI) be attained? Warranties? Managerial talent?
Product Counterfeiting Costs U.S. firms over $60 billion a year Counterfeiting is estimated at 2% to 5% of total world trade annually. The largest number of counterfeit goods come from: • Brazil • Taiwan • Korea • India