Global Marketing Management, 5e Chapter 10Copyright (c) 2009 John Wiley & Sons, Inc. 1 Chapter 10...

Global Marketing Management, 5e

Chapter 10Copyright (c) 2009 John Wiley & Sons, Inc.

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Chapter 10

Global Product Policy Decisions I: Developing

New Products for Global Markets

Chapter Overview

1.Global Product Strategies2.Standardization Versus Customization3.Multinational Diffusion4.Developing New Products for Global

Markets5.Truly Global Product Development


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Introduction

A cornerstone of a global marketing mix program is the set of product policy decisions that multinational companies (MNCs) constantly need to formulate.

The range of product policy questions may include: What new products should be developed for what

markets? What products should be added, removed, or

modified for the product line in each of the countries in which the company operates?

What brand names should be used? How should the product be packaged and serviced?


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Introduction

Examples of improper product policy decisions in global marketing: Ikea in the United States Procter & Gamble in Australia U.S. Car Makers in Japan


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1. Global Product Strategies

Three global strategies to penetrate foreign markets: Extension strategy Adaptation strategy Invention strategy


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1. Global Product Strategies

Five strategic options for the global marketplace: Strategic Option 1: Product and Communication

Extension -- Dual Extension Strategic Option 2: Product Extension --

Communications Adaptation Strategic Option 3: Product Adaptation --

Communications Extension Strategic Option 4: Product and

Communications Adaptation -- Dual Adaptation Strategic Option 5: Product Invention


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Exhibit 10-1: Global Expansion Strategies


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2. Standardization versus Customization

Five forces favoring a globalized product strategy:1. Common customer needs2. Global customers3. Scale economies4. Time to market5. Regional market agreements


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2. Standardization versus Customization

Degree of Standardization Modular Approach Core-Product (Common Platform) Approach

Balancing act between standardization and adaptation

Overstandardization vs. overcustomization


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Exhibit 10-2: 2008 Automotive Color Popularity


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Exhibit 10-2 (cont): 2008 Automotive Color Popularity


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Exhibit 10-2 (cont): 2008 Automotive Color Popularity

3. Multinational Diffusion

Example: Microsoft’s Xbox videogame

The Adoption of new products is driven by three types of factors: Individual Differences Personal Influences Product Characteristics

1. Relative advantage2. Compatibility3. Complexity4. Trialability5. Observability


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Other country characteristics used to predict new product penetration patterns include: Homogeneous population Lead countries Lag countries Cosmopolitanism Mobility Labor force profile, Developing vs.

Developed countries


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Time to “Take off”- Most new products display a distinct period

of time to takeoff- Varies a great deal across product

categories, between countries, previous takeoff experience


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Exhibit 10-3: Mean Time to Take Off Across Product Categories within a Country


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4. Developing New Products for Global Markets Identifying New Product Ideas

4 C’s:CompanyCustomersCompetitionCollaborators

New Product Development (NPD) Process Screening Concept Testing

Conjoint analysis To Standardize or not to standardize


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4. Developing New Products for Global Markets

Test marketing May be skipped to save money Lead markets can be used as projections

(Exhibit 10-4)

Timing of Entry (Exhibit 10-5) Waterfall—staged rollout beginning with home

country Sprinkler—global rollout simultaneously

Often used for high tech goods


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Exhibit 10-4: Examples of Test Market Countries

Exhibit 10-5: Waterfall versus Sprinkler Models


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Exhibit 10-6: Roll-Out of Xbox 360 and Sony Playstation 3

5. Truly Global Product Development

Scores of companies have research centers spread across the world. Challenge is to establish a truly global innovation process that transcends local clusters (i.e., to become a metanational innovator).

To harvest the benefits of metanational innovation: Prospecting- find valuable new pockets of

knowledge around the world. Assessing- decide on an optimal footprint

(number and dispersion of knowledge sources).


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5. Truly Global Product Development

Mobilizing: To harness the benefits of global innovation, companies must find ways to mobilize pockets of knowledge (e.g., technical blueprints, patents, equipment, market knowledge).

The optimal strategy for mobilizing knowledge depends on the type (simple vs. complex) and nature (technical vs. market) of the knowledge involved.


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5. Truly Global Product Development 4 possible strategic scenarios for mobilizing

knowledge: Exchange information (arm’s length, digital

transfer is sufficient). Move information about the market where the

technology is. Move information about the technology to

where the market knowledge is Move knowledge by rotating people and by

temporary co-location(See Exhibit 10-7.)


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Exhibit 10-7: Mobilizing Knowledge


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Global Marketing Management, 5e Chapter 10Copyright (c) 2009 John Wiley & Sons, Inc. 1 Chapter 10...

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