Scavanging report

INTERNATIONAL PRODUCT MANAGEMENT

SEPTEMBER 10, 2014sAMARJYOTI dAS

PGP13113

CONTENTSL NO TOPIC PAGE No1 5 A’s in Marketing management 22 Awareness of Global product 23 Product specification and getting the brand out there 74 Major Product Communication Strategies Used In

International Marketing8

5 ADAPTATION in International Product management 116 Global Standardization in Marketing 127 Global Product and Promotion Strategies 14

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THEORY: 5 A’s of MARKETING MANAGEMENT

ARTICLE No 1:

This article is based on cultural awareness of brands and their adaptation according to the culture and consumer behavior of a Nation

Awareness of Global productInternational Marketing: Why Cultural Awareness Is Important

Cultural awareness among international traders, is not as new as marketing pundits believe it to be. When the East India Company came and began spice trade in India in the 17th century A.D., they gave special significance to Indian cultural values to get into the thick of things. But competition,

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Awareness

Adaptation

AffordabilityAccessebility

Acceptibility

perhaps, was not particularly stiff at that point of time, although early traders are aware of the potential it has in their trading strategy.

Nowadays, companies that are going global with their products have to contend with local companies who are armed with vast knowledge on how the locals react to a certain cultural pulse.

They had also established their presence much earlier – they were there first. Thus, the newcomers must make sure that their products and promotional techniques are sensitive to cultural values of the people to leave a good impression of their branding.

Crossing the BarriersCultural awareness should be applied in every aspect of marketing: in selling, label-printing, advertising and promotion of products. It covers language, the lifestyle and the behavioral patterns of the people in the country of interest. Of course the company should print in the local language, but that’s not where the language barrier ends.

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Companies have to be aware of what their brand names will do to their company image on foreign shores. As an example, Koreans pronounce Hyundai as "hi-Yun-day" but when it comes to producing marketing advertisements in the US, it is pronounced "Hun-day" (sounds like Sunday).

The change makes it easier for people in the US to pronounce the brand which is an important step to popularizing the car brand. At other times, the brand name means something else in the country for instance, the name for the baby food maker ‘Gerber’ is French for vomiting! Most of the time, the brand is rebranded under a different name to avoid embarrassment.

It’s In The DetailsIt’s not just the language used in the labeling or a TV commercial made to promote your company products, how the ad is created can make a lot of difference.

For instance, a car manufacturer should ensure that its ads take note of the position of the driver’s seat. An ad showing a left-handed drive vehicle would not work in a country where the driver sits on the right-hand side. The commercials should also be sensitive while using dialogues and slogans in its content.

Speaking of slogans, there are a lot of instances when translations became a source of embarrassment for a company brand. An infamous (yet unconfirmed) example is at hand: ‘Come Alive with the Pepsi Generation ‘was translated to ‘Pepsi will bring your ancestors back from the dead’ in Chinese.

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With all the possibilities of mistakes that could happen, why bother translating to the local language at all? Apparently, more than 70% of consumers are more likely to buy a product that is sold in their local language; the percentage is 10% higher when it comes to buying goods online. It is essential for companies to adapt to local preferences if they want their product lines to succeed.

The Bane of Current IssuesThere are also certain current issues that may force a company or organization to take a step back and re-evaluate their marketing slogans. For instance, in 2003, Hong Kong’s Tourism Board released their slogan, "Hong Kong will take your breath away" to help promote tourism via billboards and magazine ads.

This unfortunately occurred right before the SARS (severe acute respiratory syndrome) outbreak. The worst thing about the whole situation was that shortness of breath is one of the major symptoms of SARS. The tourism board quickly made the change to a new yet less-than-original "There is no place like Hong Kong", but by then some of the magazines were already making their rounds in the UK.

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From “THE GUARDIAN”With the burgeoning Sars epidemic spreading fear among travelers worldwide, the Hong Kong tourist board must be ruing the day it commissioned a series of magazine ads telling readers a visit to the city will "take your breath away".

Shortness of breath is one of the main symptoms of Sars - severe acute respiratory syndrome - a deadly new strain of pneumonia that started in southern China and quickly moved to Hong Kong before spreading around the world.More than 100 people have already died from Sars and there are at least 3,000 reported cases worldwide - though most of the fatalities and cases are in China and Hong Kong.A spokeswoman for the Hong Kong Tourism Board told the Wall Street Journal Europe that the ad campaign, which has been running in British editions of magazines including Cosmopolitan and Conde Nast Traveller, as well as on billboards in Hong Kong, was commissioned before the Sars outbreak.She added that when the first cases of Sars made the news in Hong Kong in mid-March, the tourist board tried to pull the ads or get the headline changed from "Hong Kong will take your breath away" to "There's no place like Hong Kong".

But this was too late for some monthly magazine headlines, so the "take your breath away" ad is now running in several UK titles.

LEARNING AND UNDERSTANDING:

1. In international product management cross cultural product awareness is very important. Adapting a product or brand according to the culture of a nation is the key step to gain market share and brand awareness however it is not a new concept as believed by marketing Guru’s but is a long lived concept as discussed in the article above.

2. The article also discusses about a brand going global and the competition global brands face while going into a new market, for global brand local players also face a lot of competition from the local brands as they are more informed and well adapted with the market and have an head start for the market.

3. Cultural awareness should be applied in every aspect of marketing starting from labeling, product specification, in selling, local language printing etc. there should not be any barrier also in brand naming it should be noted what the name pronounces in different nations as the have different affect in brand awareness

4. At certain instances some brand have to take a back step for certain unfortunate incidents as discussed in the topic Hong Kong Tourism have to change its brand slogan “ We will take your Breath away” as there was an epidemic of Sars and having the tag line does a negative effect on the brand value.

5. Promoting a brand in new markets is not constrained to language printing only, brands have to give importance to minutest details in the promotional ads i.e.

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ARTICLE No: 2Product SpecificationsUnderstanding customer preferences is a tricky issue, even when it comes to the serving size of your product. This issue is dependent on local cultures and also the consumption level of consumers of the region. For example, cereal isn’t a preferred choice for breakfast in Asian countries, so there isn’t much motivation to produce it in large servings (or boxes).

It is also not a smart move to push products against the local culture, but if you are confident in your product, it is all right to be adventurous (and experiment with various serving sizes). When testing new markets with new products, there will always be the risk of suffering losses so one should always do their homework when it comes to culture-influenced preferences.

Getting the Brand Out ThereCustomers are reluctant to buy without first hearing or knowing about a new brand. When mobile phones entered India in the late 90’s, people were not willing to make outright purchases. The rich did but mostly out of curiosity that were induced by promotional adverts and the hype generated by company branding exercises. As soon as call rates subsided, a big market was created and people thronged everywhere to buy one.

It’s hard to convince one to buy, or even try a product that came out of nowhere. Customers would make the shift from hearing and knowing about a product, then recognizing the brand that produces it before trying out the product.

LEARNINGS AND UNDERSTANDINGS:

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1. Product specification is a tricky part in international product management as while taking a brand to a new territory one should take special care for product specification as different culture leads to different customer’s preferences. At the same time going against the local cultural needs and preferences may lead to brand dilution and value dilution, brands should do proper market research before a new product launch as it is highly likely to suffer losses.

2. New products are perceived differently by new markets so creating brand curiosity and hype generation by promotional activities and then at a later stage making the product pricing and availability for the mass market

ARTICLE No: 3Major Product Communication Strategies Used In International MarketingSome of the important product communication strategies used in international marketing are as follows: 

A product can be marketed abroad only with the help of a communication strategy, which is what conveys the promotional theme to consumers abroad, allowing them to form perceptions about the product, spelling out, in turn, the quantitative and qualitative sales for the manufacturers. Keegan has identified five major product communication strategies, international marketers can chose from to convey the message to customers in different foreign markets.

Companies can pursue three strategies to penetrate foreign markets. Some firms will simply adopt the same product or communication strategy used in their home market. This is extension. Other companies prefer to adapt their strategy to the local marketplace.

This strategy of adaptation enables the firm to cater to the needs and wants of its foreign customers. A third alternative is to adopt an invention strategy, where products are designed from scratch for the international marketplace. These three basic strategies can be extended into five strategic options which are as follows:

Strategic Option 1:Product and Communications Extension – Dual Extension: At one extreme, a company might choose to market a standardized product using a uniform communications strategy. Early entrants in the international arena will often opt for this approach. Also, small companies with few resources typically prefer it.

For them, the potential pay-offs of customized products or advertising campaigns usually do not justify the costs of adaptation. Dual extension might also work when the company targets a ‘global’ segment with similar needs. The Japanese firm, Shiseido, the world’s sixth-largest cosmetics company by sales volume, sells in Europe, the Americas and across the Asia- Pacific, including Australia and New Zealand. The company’s strategy is a global multi-brand strategy, with each brand similarly positioned in each market, including near-identical advertising and packaging.

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Generally speaking, a standardized product policy coupled with a uniform communication strategy offers substantial savings because of economies of scale. This strategy is basically product-driven rather than market-driven. The downside is that it is likely to alienate foreign customers, who might switch to a local or other foreign competing brand that is more in tune with their needs.

In many industries, modern production processes, such as Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM) technologies, obviate the need for largo production batch sizes. Blundstone, the unique and highly successful Australian boot brand, exports the same range and is similarly positioned in each of its international markets. It has been able to leverage the inherent features of the products and capitalize on its Australian heritage to differentiate itself and become an international success using the dual product and communication extension strategy.

Strategic Option 2:Product Extension – Communications Adaptation: Because of differences in the cultural or competitive environment, often the same product is used to offer benefits or functions that dramatically differ from those in the home market. These differences between the foreign and home market drive companies to market the same product using customized advertising campaigns.

Although it retains the economies of scale in manufacturing, the firm sacrifices potential savings on the advertising front. Clothing Company Levi’s uses this approach. Although the famous Levi’s brand name carries clout in many parts of the globe, and the basics such as manufacturing and distribution are pursued by Levi’s relatively uniformly, there are wide differences in its communication strategies within different markets.

As a consequence, Levi’s produces both global brand positioning ads and localized ads that appeal to specific markets. For example, for the British market, where Levi’s have a particular status among the young, TV ads highlight British icons of youth culture including Triumph cars and quirky celebrities, while for the French market, ads stress the perceived individual nature of French youth.

In Japan Levi’s are positioned as an American icon and the communications strategy reflects this. For many years, Levi’s was slow to recognize females as an important segment, so recently communications strategies have been adapted to fit the aspirations of young women.

Strategic Option 3:Product Adaptation – Communications Extension: Alternatively, firms might adapt their product but market it using a standardized communications strategy. Local market circumstances often favor the case of product adaptation. Another source for product adaptation is the company’s expansion strategy.

Many companies add brands to their product portfolio via acquisitions of local companies. To leverage the existing brand equity enjoyed by the acquired brand, the local brand is usually retained. Although these factors lead to product adaptation, similar core values and buying behaviors among consumers using the product might present an opening for a harmonized communications strategy.

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Within such a context, clever marketing ideas can be transferred from one country to another country, despite the product-related differences with their core brand, ‘British Petroleum’. BP delivers a series of adapted energy products in more than 100 countries (e.g., different formulae of petrol to meet each country’s unique regulations). However, the core brand values remain almost identical and the communication strategies and commercials are very similar in each market. The logo and most visible aspects of BP are markedly consistent in most countries.

Strategic Option 4:Product and Communications Adaptation – Dual Adaptation: Differences in both the cultural and physical environments across countries call for a dual adaptation strategy. In such circumstances, the most viable option for international expansion is adaptation of the company’s product and communication strategy.

Slim-Fast adapts both product and advertising to comply with varying government regulations for weight-loss products. When Slim-Fast was first launched in Germany, its ads used a local celebrity. In the U.K., testimonials for diet ads may not feature celebrities. Instead, the U.K. introduction campaign centered around everyday people. Also, the product gets adapted to the local markets. In the U.K., banana is the most popular flavour but this flavour is not sold in continental Europe.

Strategic Option 5: Product Invention:Genuinely global marketers try to figure-out how to create products with a global scope rather than just for a single country. Instead of simply adapting existing products or services to the local market conditions, their mindset is to zero in on global market opportunities. Black & Decker is a good example of a company that adopts the product invention approach to international market expansion. Black & Decker aims to bring out new products that cater to common needs and opportunities around the world to manage its global product development process. Black & Decker set up a worldwide household board.

This steering committee approves global plans, allocates resources and gives direction and support, among other tasks. One of the product innovations flowing from this global product planning approach is the SnakeLight Flexible Flashlight. The SnakeLight was first launched in North America, and then, six months later, in Europe, Latin America and Australia. The product addresses a global need for portable lighting. The SnakeLight proved to be major hit around the world.

LEARNING AND UNDERSTANDING:

The most effective way to market a product in a foreign market is through communication strategy which helps to form perception of products or brands in the mind of customers. According to Keegan there are five strategies and out of which three strategies can be used to penetrate foreign markets. In the strategies discussed some firms will simply adopt the same product or communication strategy used in their home markets. However adaption in terms of product as well as communication and marketing strategy helps to cater to the need and wants of foreign customers’ better.

1. The first strategy discuss about the use of product extension technique where the same product or services and communication may cater to the specific needs of the new market. This is a standard product and uniform communication approach mainly helpful for new entrants multinationals. A standardized product policy coupled with a uniform

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communication strategy offers substantial savings because of economies of scale and is accost effective approach.

2. Product extension and Communications Adaptation approach can be used because of differences in the cultural or competitive environment, often the same product is used to offer benefits or functions that dramatically differ from those in the home market. Although it retains the economies of scale in manufacturing, the firm sacrifices potential savings on the advertising front.

3. Dual Adaptation approach can be used where there is differences in both the cultural and physical environments across countries. In such circumstances, the most viable option for international expansion is adaptation of the company’s product and communication strategy.

4. Product invention is an innovative and best approach where multinationals try to invent a global product instead of adopting the same product for different countries.

ADAPTATION in International Product managementTotal Product Model

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Product adaptation process

Global Standardization in Marketing

As a business owner, a key component to your business plan is likely how to promote your product. It's important to create an efficient, results-driven marketing and advertising strategy, especially if your product will be sold internationally. If this is the case, you may consider using a global standardization of marketing to sell your product, gain a larger customer base and increase sales and profits.

What It IsGlobal standardization in marketing is a standardized marketing approach that can be used internationally. This type of marketing strategy conforms to work across different cultures and countries to promote a product. A good example of a company that uses global standardization in marketing is Coca-Cola, according to University of South Carolina professors Saeed Samiee and Kendall Roth. The company uses "relatively standard brands, formulations, packaging, positioning and distribution in its global markets," the pair state in their paper entitled "The Influence of Global Marketing Standardization on Performance."

ImportanceThe advent of technology and quicker communication has made the world increasingly "smaller" than ever before, making global standardization in marketing an important tool, especially for multinational companies whose reach spans the globe. By laying out a unified marketing framework that is effective across different time zones, a company can save time and money in

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Product Adaptation

Generationof ideas

Screen Ideas

Test Concept/BusinessAnalysis

Design/Development

Test Marketing

Launch

its marketing efforts, since individual marketing strategies in each country or region are unnecessary.

Related Reading: Global Marketing vs. Multi-Domestic MarketingDemographic ConcernsNot every market has the same wants and desires. For example, one market may view soda as commonplace, while another market may view soda as a luxury. By applying a global standardization to marketing, a homogenized soda campaign may not necessarily work in certain regions. This may especially be the case across countries of varying economic statuses. A poorer country where inhabitants have less discretionary income may not respond as well to a marketing strategy that works in a more economically developed country.

DifferentiationIf you are a business owner who uses global standardization to market your product, you may also run the risk of losing out to local competitors who can tailor their goods and marketing efforts to the local population. For example, if you run a global fast-food chain that sells the same hamburgers internationally, in some cities you may lose customers to local competitors who can customize hamburgers to what is popular in the area. In these type of cases it's important to be able to adapt your global marketing tactics to specific local markets when needed. For example, if research shows that Parisians enjoy avocados on their burgers, market your burgers in Paris to include avocados.

Advantage of product standardization in global market?

This is known as Global Standardization, which means developing standardized products marketed worldwide with a standardized marketing mix. An example of this is the Big-Mac of McDonald's. They used the same brand name and same slogan for the same product all over the world. This assumes that there is a large, similar target market that can be targeted globally. McDonald's and Coca-Cola are two examples of companies using this strategy.The main advantage of this strategy is cost saving. Using standardized products across all your business units helps generate economies of scale. These savings can then be applied to your business' margin, lower price to consumer, or reinvested into the company for research and development. In the examples of Coke and McDonald's they use their cost savings to offer low prices to consumers, they then make their money with smaller margins spread across high numbers of consumers.

Products and International Marketing

Standardization versus AdaptationAs you will see from this website, product is a focal element of the marketing mix. When considering the nature of products and services in international marketing, the same models apply such as:Another problem with standardization is that it depends largely upon economies of scale. With global businesses, your business will manufacture in a number of nations. However, some countries implement trade barriers (and yes – this includes the USA and the European Union). If this is the case, then localization and the resultant adaptation is inevitable.

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What exactly do you intend to standardize? Is your whole product ‘experience’ to be standardized? Do you standardize customer service and product support, marketing communications, pricing, and channels of distribution? Then you have a standardized marketing mix – surely this cannot benefit your business.

Product Life Cycle (PLC)  – products could be at different points in the PLC in various nations,

possibly creating new opportunities.

Ansoff’s Matrix  – market development could mean that an existing product is marketed in a

new international market.

Three Levels of a Product  – marketers would consider the local market’s need for core, actual

and augmented products.

Internet Marketing and Product  – how do eMarketers make product decisions?However, international product decision-making often centers around the standardization versus adaptation debate. Essentially, do we market the same, standard product in an international market or segment, or do we localize it, and adapted it so that it pleases local tastes? Here are some of the advantages and disadvantage of standardization.Advantages of Standardization.

International uniformity has its own advantages. As people travel the World, they can be assured that wherever they go the product that they buy from you will be same and that it will have the same, standard benefits. This could mean the components that they buy from you in different local markets as they themselves become global.Standardization reinforces positive consumer perceptions of your product. One of the payoffs of great quality for a single product category is that the reputation of your product will help you sell more of it. Positive word-of-mouth pays dividends for brand owners.Cost reduction will give economies of scale. Since you are making large quantities or the same, non-adapted product – you benefit from the advantages associated with manufacturing in bulk. For example, components can be bought in large quantities, which reduces the cost-per-unit. There are other benefits relating to economies of scale, including improved research and development, marketing operational costs, lower costs of investment, and in an age where trade barriers are coming down – standardization is a plausible product strategy.Quality is improved since efforts are concentrated upon the single product. Staff can be trained to enhance the quality of the product and manufacturers will invest in technology and equipment that can safeguard the quality of the standardized product offering.Disadvantages of Standardization.

Since the product is the same wherever you buy it, it is wholly undifferentiated. It is not unique in anyway. This leaves the obvious opportunity for a competitor to design a tailor-made, differentiated or branded product that meets the needs of local segments. Of course products have different uses in different countries (for example cycling is a leisure activity in some nations, and a form of transport in others). Local markets have local needs and tastes. Therefore by standardizing, you could leave yourself vulnerable.

Global Product and Promotion Strategies

Companies develop marketing strategies to build a loyal customer base, to build relationships with those customers and to create value for the customer. Effective product and promotion

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strategies are essential in making sure your product is readily accessible in the global marketplace. Special considerations are necessary when marketing to global customers such as international issues of technology, transportation and regulation.

ExtensionA straight product extension is presenting your product to a global marketplace without any changes. Some products are globally known and need no additional product or promotion changes. People want the product on a global basis, and once it is made available to them, it is purchased without having to create any additional marketing or promotion strategies.

AdaptationProduction and promotion adaptation strategies are used in a global market for a product that may be popular but needs to be adapted to meet local customs and demand. For example, customers of less affluent countries may need a product of similar quality that has been downscaled to be more affordable to purchase. Technology products must be altered to meet the specific language of the country being marketed to.

Related Reading: Global Business Strategy Simulation StrategiesInventionAnother product and promotion strategy is inventing a new product to meet the needs of a particular country. For example, consumers in crowded commuting conditions might need a laptop product that better fits their travel situation, a more compact version of the typical laptop. This strategy also could take on the form of reinventing a popular product to meet the needs of a particular country or world region.

Pricing ConsiderationsGlobal product and promotion strategies must take into consideration the economic conditions of the country where products are introduced. For example, a price that might be discounted in the United States would be considered too high for poorer countries or perhaps not high enough in rich countries. To combat prices being too high in less affluent countries, a company could make a smaller or less complex version at a lower price.

LEARNINGS AND UNDERSTANDINGS:

1. Global standardization in marketing is a standardized marketing approach that can be used internationally. This type of marketing strategy conforms to work across different cultures and countries to promote a product. Globalization have given the multinationals wings to expand now they have the whole world to look for opportunities and cater to the needs, which is only possible because of technological advancement and resources of communication.

2. For global markets there are mainly concerns related to demographics and local layers as demographics can have totally different needs and concerns and the product may differ to satisfy them also at the same time local players may have greater extent of understanding of the products and the customers of the specific market.

3. Product is a focal element of the marketing mix. When considering the nature of products and services in international marketing, the same models apply. Another

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problem with standardization is that it depends largely upon economies of scale. With global businesses, your business will manufacture in a number of nations.

4. Standardized marketing mix: Product Life Cycle (PLC. Ansoff’s Matrix Three Levels of a Product. Internet Marketing and Product.

5. Global product and promotion strategies must take into consideration the economic conditions of the country where products are introduced as well as the market maturity of the country. The whole perspective of the product as well as brand depends on this strategy.

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Reference

1. http://www.theguardian.com/media/2003/apr/09/pressandpublishing.marketingandpr2. http://www.hongkiat.com/blog/international-marketing-strategy/ 3. http://smallbusiness.chron.com/global-product-promotion-strategies-26101.html 4. http://smallbusiness.chron.com/advantages-disadvantages-global-strategy-11664.html 5. http://smallbusiness.chron.com/challenges-strategies-global-company-66685.html 6. http://www.yourarticlelibrary.com/marketing/5-major-product-communication-strategies-used-

in-international-marketing/5834/7. http://www.marketingteacher.com/products-and-international-marketing/

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