This document discusses international product strategies. It covers the stages of the international product lifecycle, including introduction, growth, maturity, and decline. It also discusses dimensions of the international product mix, the new product development process, degrees of product newness, and product diffusion in international markets. The chapter evaluates key aspects of developing and marketing products globally.
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2. International Product and Service
Strategies
Dana-Nicoleta Lascu
Chapter 10
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3. 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
address international diffusion processes
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4. 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
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5. International Product Life Cycle,
continued
• The Product Introduction Stage
Products are developed and marketed in developed
countries
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6. 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
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7. 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
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8. 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
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9. 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
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10. 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
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11. 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
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12. Product Ideas
• Consumers
• Competitive Analyses
• Channel Members
• Employees
• Top Management
• Inventors
• Consultants
• University Research
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13. 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
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14. Developing and Evaluating Product
Concepts
• Develop detailed description of product
• Ask consumers to evaluate and indicate
willingness to buy
• Use:
Focus Groups
Conjoint Analysis
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15. Product Business Analysis
• Estimate:
Project costs
Return on investment
Cash flow
Fixed/variable costs
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16. Product Development
• Create prototypes
• Create brand identity and marketing mix
• Coordinate strategy across international subsidiaries
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17. 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
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18. 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
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19. 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
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20. International Launch Decisions
• Timing of launch
• Consumers and countries
• Marketing mix decisions
Product mix
Place
Price
Promotion
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21. 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
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22. 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
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23. 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
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24. 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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25. Chapter Summary
• Evaluated stages of the international product lifecycle
• Identified focus of operations and target markets at
each stage
• Identified the different dimensions of the international
product mix
• Examined the new product development process
• Examined degrees of product newness and
addressed the international diffusion processes
Copyright Atomic Dog Publishing, 2002