Copyright? 2001 by Harcourt,Inc.,All rights reserved,Requests for permissions to make copies of any part of the work should be mailed to
the following address,Permissions Department,Harcourt,Inc.,6277 Sea Harbor Drive,Orlando,Florida 32887-6777.
INTERNATIONAL MARKETING 6e
Production Adaptation
Chapter 10
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-2
Production Adaptation
Marketing and Materialism
Marketing actions are basically undertaken in the
belief that more and better goods will bring an
increase in consumers’ standards of living,an
increase in their satisfaction,and perhaps even
more happiness
When anticipating customers’ reactions to new
products and increased product choices,it is
important to note the limits on the causal
relationship between material affluence and
personal happiness
The psychologically effective impact of risking
income is that of the relative income,not the
absolute income
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-3
Defining International Product
The difference between domestic and
international product = the difference between
physical and total product
Total Product,
The Core Product
The Tangible Product
The Augmented Product
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-4
Product Variables (components)
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-5
Product Variables
Core
Product
Tangible
Product
Augmented
Product
Installation
Brand
Name After Sale
Service
Delivery
and
Credit
Warranty
Features
Packaging
Styling
Core
Benefit
or
Service
Quality
Source,Adapted from Phillip Kotler,Marketing Management,
10th edition,2000 p,395,Reprinted by permission of Prentice-
Hall,Inc.,Englewood Cliffs,New Jersey.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-6
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-7
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
Global market (taste)
Global advertisement (MTV)
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-8
Factors Encouraging Adaptation
Differing use conditions
Government and regulatory influences
Differing consumer behavior patterns
Local competition
True to the marketing concept
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-9
Strategic Adaptation to Foreign Markets
Low
High
Industrial/ Technology Intensive Consumer
Need for
Adaptation
Degree of
Cultural
Grounding
Nature of Product
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-10
Strategic Adaptation to Foreign Markets
Low
quality
High
quality Need for
Adaptation
Type of
product
Adaptation
process
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-11
Regional,
Country,or Local
Characteristics
Product
Characteristics
Company
Considerations
Decision to Alter the Domestic Product
Factors Affecting Adaptation
Source,Adapted from V,Yorio,Adapting Products for Export (New
York,Conference Board,1983),7,Reprinted with permission.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-12
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
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-13
The Market Environment
Economic Development
The stage of economic development affects the
market size and demand characteristics,
Backward innovation of the product may be
required to meet local requirements.
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-14
Product Characteristics
Product Constituents
Branding
Packaging
Appearance
Method of Operation or Usage
Quality
Service
Country-of-Origin Effects
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-15
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
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-16
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-17
Method of Operation or Usage
The product that is operable in the domestic
market may not be operable in the foreign
market.
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-18
Quality and Service
Quality is essential to marketing products
internationally,especially in markets where
price is an important competitive factor.
ISO compliance may be required by buyers.
Servicing products in international markets
requires producers to develop local repair
staffs.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-19
Country-of-Origin Effects
The origin of a product may have a strong
effect on consumer perceptions and biases
about foreign products,
Swiss
,Mad Cow”
France
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-20
Company Considerations
Organizational capabilities?
Is it worth it?
Can we afford not to do it?
Can a specific return-on-investment (ROI) be
attained?
Quality,price,and user perceptions?
Warranties?
Managerial talent?
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-21
Product Counterfeiting
Costs U.S,firms over $60 billion a year
In 1999,losses to software piracy were more
than 11 billion dollars.
Counterfeiting is estimated at 2% to 5% of
total world trade annually.
The largest number of counterfeit goods
come from:
Brazil
Taiwan
Korea
India
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-22
Market Segmentation
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-23
Local Microsegmentation
To be useful for marketing purposes
To be useful for marketing purposes
Targeted segments have to be
– Identifiable (What distinguishes them?)
– Measurable (How many belong to each
segment?)
– Reachable (How to distribute to,communicate
to,each segment)
– Able to buy (Can they afford it?)
– Willing to buy (Do they want it?)
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-24
Local Microsegmentation
Segmentation Criteria
The most useful segmentation criteria accomplish
three goals:
– The criteria help give a clue to what influences the
segment’s buying behavior
Both consumption level and choice between
competing brands
– The criteria should be reflected in published data
so that the size of the segment can be calculated
– The criteria should help identify the media
through which marketers can communicate with
the segment
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-25
Local Microsegmentation
Segmentation Criteria (cont.)
Economic - the most basic local segmentation
criterion is still economic development
Demographic - the age and family structure in
different countries play an important role in
determining global segments
Culture - people care about their identify even
though a lot has been said in the media about
the emergence of global segments of people
Benefits - the most clearcut segmentation
criteria are those which focus on the benefits
sought
Lifestyle – consumers start developing their
own lifestyle with buying behavior involving
more than simple necessities
the following address,Permissions Department,Harcourt,Inc.,6277 Sea Harbor Drive,Orlando,Florida 32887-6777.
INTERNATIONAL MARKETING 6e
Production Adaptation
Chapter 10
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-2
Production Adaptation
Marketing and Materialism
Marketing actions are basically undertaken in the
belief that more and better goods will bring an
increase in consumers’ standards of living,an
increase in their satisfaction,and perhaps even
more happiness
When anticipating customers’ reactions to new
products and increased product choices,it is
important to note the limits on the causal
relationship between material affluence and
personal happiness
The psychologically effective impact of risking
income is that of the relative income,not the
absolute income
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-3
Defining International Product
The difference between domestic and
international product = the difference between
physical and total product
Total Product,
The Core Product
The Tangible Product
The Augmented Product
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-4
Product Variables (components)
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-5
Product Variables
Core
Product
Tangible
Product
Augmented
Product
Installation
Brand
Name After Sale
Service
Delivery
and
Credit
Warranty
Features
Packaging
Styling
Core
Benefit
or
Service
Quality
Source,Adapted from Phillip Kotler,Marketing Management,
10th edition,2000 p,395,Reprinted by permission of Prentice-
Hall,Inc.,Englewood Cliffs,New Jersey.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-6
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-7
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
Global market (taste)
Global advertisement (MTV)
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-8
Factors Encouraging Adaptation
Differing use conditions
Government and regulatory influences
Differing consumer behavior patterns
Local competition
True to the marketing concept
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-9
Strategic Adaptation to Foreign Markets
Low
High
Industrial/ Technology Intensive Consumer
Need for
Adaptation
Degree of
Cultural
Grounding
Nature of Product
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-10
Strategic Adaptation to Foreign Markets
Low
quality
High
quality Need for
Adaptation
Type of
product
Adaptation
process
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-11
Regional,
Country,or Local
Characteristics
Product
Characteristics
Company
Considerations
Decision to Alter the Domestic Product
Factors Affecting Adaptation
Source,Adapted from V,Yorio,Adapting Products for Export (New
York,Conference Board,1983),7,Reprinted with permission.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-12
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
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-13
The Market Environment
Economic Development
The stage of economic development affects the
market size and demand characteristics,
Backward innovation of the product may be
required to meet local requirements.
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-14
Product Characteristics
Product Constituents
Branding
Packaging
Appearance
Method of Operation or Usage
Quality
Service
Country-of-Origin Effects
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-15
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
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-16
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-17
Method of Operation or Usage
The product that is operable in the domestic
market may not be operable in the foreign
market.
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-18
Quality and Service
Quality is essential to marketing products
internationally,especially in markets where
price is an important competitive factor.
ISO compliance may be required by buyers.
Servicing products in international markets
requires producers to develop local repair
staffs.
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-19
Country-of-Origin Effects
The origin of a product may have a strong
effect on consumer perceptions and biases
about foreign products,
Swiss
,Mad Cow”
France
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-20
Company Considerations
Organizational capabilities?
Is it worth it?
Can we afford not to do it?
Can a specific return-on-investment (ROI) be
attained?
Quality,price,and user perceptions?
Warranties?
Managerial talent?
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-21
Product Counterfeiting
Costs U.S,firms over $60 billion a year
In 1999,losses to software piracy were more
than 11 billion dollars.
Counterfeiting is estimated at 2% to 5% of
total world trade annually.
The largest number of counterfeit goods
come from:
Brazil
Taiwan
Korea
India
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-22
Market Segmentation
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-23
Local Microsegmentation
To be useful for marketing purposes
To be useful for marketing purposes
Targeted segments have to be
– Identifiable (What distinguishes them?)
– Measurable (How many belong to each
segment?)
– Reachable (How to distribute to,communicate
to,each segment)
– Able to buy (Can they afford it?)
– Willing to buy (Do they want it?)
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-24
Local Microsegmentation
Segmentation Criteria
The most useful segmentation criteria accomplish
three goals:
– The criteria help give a clue to what influences the
segment’s buying behavior
Both consumption level and choice between
competing brands
– The criteria should be reflected in published data
so that the size of the segment can be calculated
– The criteria should help identify the media
through which marketers can communicate with
the segment
Copyright? 2001 by Harcourt,Inc,All rights reserved,10-25
Local Microsegmentation
Segmentation Criteria (cont.)
Economic - the most basic local segmentation
criterion is still economic development
Demographic - the age and family structure in
different countries play an important role in
determining global segments
Culture - people care about their identify even
though a lot has been said in the media about
the emergence of global segments of people
Benefits - the most clearcut segmentation
criteria are those which focus on the benefits
sought
Lifestyle – consumers start developing their
own lifestyle with buying behavior involving
more than simple necessities
