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Premium member Presentation Transcript Slide 1: International Product Planning PREPARED BY: ABHINAV MISHRA MUDIT DUBEY NISHANT SRIVASTAVA KETUL SAHU GAURAV MAHAVAR 13-AUG-2010 MBA MS 5YRS 9 TH SEMProduct Decisions: Product Decisions Product decisions are crucial to a firms success in international markets. In order to gain significant percentage of market share, a firm should address and satisfy customers needs and expectations of overseas market. A firm operating in international markets should not only identify the products for various markets but should also evolve suitable marketing strategies for developing such products. 1- 2Product Decisions: Product Decisions Whether a single standardized product can be offered world wide or a customized product needs to be developed for each market is the most significant product decision that a firm, has to make while operating in international markets. 1- 3Types of Product Decisions: Types of Product Decisions Market segment decision Product mix decision Product specification Positioning and communications decisions 1- 4Global Product Strategies: Global Product Strategies Companies can pursue three global strategies to penetrate foreign markets. Companies can Extend their domestic product or communication strategies to their foreign markets. Companies can Adapt their strategy to the local market place. Companies can follow invention strategy, where products are designed for global market. 1- 51. Product and Communication Extension: 1. Product and Communication Extension A company can enter into a market with standardized product using a uniform communications strategy. Early entrants in the global arena will often opt for this approach. Small companies, with few resources typically prefer this option. A standardized product pricing coupled with a uniform communication strategy offers substantial savings coming from economies of scale. 1- 62. Product Extension - Communication Adaptation : 2. Product Extension - Communication Adaptation Due to the gaps between the foreign and home market, drive companies to market the same product using customized advertising campaigns. It retains the scale economies on the manufacturing side. 1- 73. Product Adaptation - Communication Extension: 3. Product Adaptation - Communication Extension In this case firms adapt their product but market it using a standardized communication strategy. Local market circumstances favor the case of product adaptation. Many companies add brands to their product portfolio by acquisitions of local companies. 1- 84. Product and Communication Adaptation: 4. Product and Communication Adaptation Differences in the both the cultural and environments in different countries call for a dual adaptation strategy. Under such circumstances, adaptation of the company’s product and communication strategy is most viable option for international expansion 1- 95. Product Invention: 5. Product Invention Company which adopts the product invention aims at bring out new products that cater to common needs and opportunities around world. In this option companies try to figure out how to create products with a global scope rather than just for a single country. 1- 10Standardization V/s Adaptation: Standardization V/s Adaptation 1- 11Product Standardization: Product Standardization Process of marketing a product in overseas markets with little change except for some changes such as modified packaging and labeling. Benefits Projecting global market image. Catering to customers globally Cost savings in-terms of economies of scale. Facilitating the development of a product as a global brand. 1- 12Product Standardization: Product Standardization The major factors that favour product standardization for international market include- High level of technological intensity High adaptation costs Convergence of customers needs The country of origin impact 1- 13Product Adaptation (Customization): Product Adaptation (Customization) Making changes in a product response to the needs of the target market. Adaptation of product may vary form major modifications in the product, packaging, logo or brand name. Benefits It helps in gaining market share It fulfils needs and expectations of customers in varied cultures and environments. It increases sales, leading to economies of scale. 1- 14Product Adaptation (Customization): Product Adaptation (Customization) The major factors that favour product adaptation for international markets include- Government regulations Operating system Measurement system Environmental changes Packing & labeling regulations Price sensitivity. 1- 15Developing New Products for Global Markets : Developing New Products for Global Markets If a company find that good opportunity exists for products it does not manufacture now, to exploit that opportunity new product development becomes essential. The steps to be followed in the global new product development process are, by and large similar to domestic marketing situations – but innovation efforts are implemented on a global scope 1- 16New Product Development Process: New Product Development Process 1- 17 Idea Generation Concept Development and Testing Marketing Strategy Development Idea Screening Business Analysis Product Development Market Testing CommercializationIdea Generation: Idea Generation 1- 18 Company Employees Customers Competitors Distributors SuppliersIdea Screening: Idea Screening Process to spot good ideas and drop poor ones. Develop system to estimate: market size, product price, development time and costs, manufacturing costs, and rate of return. Evaluate these findings against set of company criteria for new products. 1- 19Concept Development and Testing: Concept Development and Testing Product Idea : idea for a possible product that the company can see itself offering. Product Concept : detailed version of the idea stated in meaningful consumer terms. Product Image : the way consumers perceive an actual or potential product. 1- 20Marketing Strategy Development: Marketing Strategy Development 1- 21 Part One Describes: The Target Market Planned Product Positioning Sales, Market Share, & Profit Goals Part Two Outlines the First-Year’s: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Run: Sales & Profit Goals Marketing Mix StrategyBusiness Analysis: Business Analysis Involves a review of the sales, costs, Competition, investment and profit projections to assess fit with company objectives. If yes, move to the product development phase. 1- 22Product Development: Product Development Develop concept into physical product Calls for large jump in investment Prototypes are made Prototype must have correct physical features and convey psychological characteristics 1- 23Test Marketing: Test Marketing Product and program introduced in more realistic market setting. Not needed for all products. Can be expensive and time consuming, but better than making major marketing mistake. 1- 24Test Marketing: Test Marketing 1- 25 Nokia test-marketed its new cell phone/mobile game player extensively before introducing it worldwide.Commercialization: Commercialization Must decide on timing (i.e., when to introduce the product). Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally). Must develop a market rollout plan. 1- 26Product Life Cycle in International Market: Product Life Cycle in International Market 1- 27Product Life Cycle in International Market: Product Life Cycle in International Market International markets follow a cyclical pattern over a period of time due to a variety of factors. Factors like level of innovations and technology, resources, size of market and competitive structure influence the market patterns. In addition, the ability of the customers in international markets also determines the stage of international product life cycle. The PLC for international markets has the following four identifiable stage 1- 281. Introduction: 1. Introduction A majority of new product inventions are made in highly industrialized and developed countries. In the initial stages, the price of a new product is relatively high. There fore , a firm find markets for new products only in developed countries. 1- 292. Growth: 2. Growth The demand in the international markets exhibits an increasing trend and an innovating firms gets better opportunities for exports. Markets begin to mature in the developed countries, an innovating firm faces increased international competition in the target market. In order to defend its position in the international markets, the firm establishes its production locations in the developed countries. 1- 303. Maturity : 3. Maturity As the technical know-how of an innovative process becomes widely known, a firm begins to establish its operations in middle and low-in-come countries in order to take advantage of resources available at competitive prices. 1- 314. Decline: 4. Decline The major thrust of the marketing strategy at this stage shifts to price and cost competitiveness, as technical know-how and skills become widely available There fore, the emphasis of a firm is most on the cost – effective locations. Besides developing countries, production also intensifies in least developed countries. 1- 324. Decline: 4. Decline As a result, it has been observed that the innovating country begins to import such goods from other developing countries. Rather than manufacturing them itself. 1- 33 Product life cycle theory: Product life cycle theory 1- 34Branding Decisions: Branding Decisions To brand or not to brand A firm has to make an initial decision whether, it should sell the product as an undifferentiated generic commodity or sell it in branded form. Selling an unbranded product reduces the cost of production, packaging and legal costs. 1- 35Branding Decisions: Branding Decisions Manufacturers brand or private brand A manufacturer may use for his products his own or private brand. Many Indian firms are manufacturing products for private brands of the foreign sellers. It will be very difficult for the small exporter to sell their products abroad under his own unknown brand name 1- 36Branding Decisions: Branding Decisions Same Brand or different brand 1- 37Global Branding Strategies: Global Branding Strategies BRAND DOMAIN BRAND REPUTATION BRAND AFFINITY BRAND RECOGNITION 1- 38 THANK YOU: THANK YOU You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.