The document discusses the international product life cycle and new product development process. It describes the stages of the product life cycle as introduction, growth, maturity, and decline. As a product moves through the cycle, manufacturing often shifts to developing countries for lower costs. The document also outlines the process for developing new products, from generating ideas to testing and launch.

1. Product and Service
Strategies

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. The International Product Life
Cycle
Introduction Early Late Decline
and Growth Maturity: Maturity
Stages:
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
Imports
Sales
Time

4. International Product Life Cycle,
continued
 The Product Introduction Stage
 Products are developed and marketed in developed countries

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. 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. 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. 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. 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. 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. Product Ideas
 Consumers
 Competitive Analyses
 Channel Members
 Employees
 Top Management
 Inventors
 Consultants
 University Research

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. 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. Product Business Analysis
 Estimate:
 Project costs
 Return on investment
 Cash flow
 Fixed/variable costs

15. Product Development
 Create prototypes
 Create brand identity and marketing mix
 Coordinate strategy across international
subsidiaries

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. 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. 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. International Launch Decisions
 Timing of launch
 Consumers and countries
 Marketing mix decisions
 Product mix
 Place
 Price
 Promotion

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. 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. 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. 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