chapter 10 global product strategies. copyright © houghton mifflin company. all rights...
TRANSCRIPT
Chapter 10
Global Product Strategies
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 2
McDonalds Products Around the World
• McDonalds tries to standardize its products as much as possible around the world– Basic meal of sandwich, fries, drink in
most markets– Fries are exactly the same in each
market!
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 3
McDonalds’ Product Adaptations
• CanadaCheese, vegetable, pepperoni and deluxe pizza
• UruguayMcHuevo - A hamburger with a poached egg on top
• Thailand Samurai Pork burger - A sandwich marinated with teriyaki sauce
• Philippines McSpaghetti - Pasta in a sauce with frankfurter bits
• New Zealand Kiwiburger - A hamburger with a fried egg and slice of beet
• JapanChicken Tatsuta - A fried chicken sandwich spiced
with soy sauce and ginger • Germany
Frankfurters, beer and a
cold four-course meal
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 4
Product
Standardization
Product
Adaptationversus.
The International Marketing Dilemma
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 5
Benefits of Product Standardization
+Lower costs+ Lower R&D costs+ Lower ingredient / input costs+ Fewer setup / changeover costs+ Lower handling costs+ Lower distribution costs
+Faster global roll-outs are possible+Stronger (?) brand equity+“Global Brand”
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 6
Types of Product Adaptation
• Mandatory – Necessary for product to be sold in a local
market
• Discretionary– Not necessary but may be beneficial
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 7
PRESSURES FOR PRODUCT ADAPTATIONCompetitive offerings
Climate, geography, and infrastructureGovernment regulations and international standards
Customer expectations, preferences, and buyer behavior
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 8
Benefits of Product Adaptation
+Penetrate otherwise closed markets+“Stress-Testing” your product for global
expansion+Better product performance in different
use conditions+Lower costs by using local inputs+Lower costs due to feature elimination
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 9
Climatic, Infrastructure and Use
• Physical realties of markets affect product decisions– Air conditioners in Saudi Arabia must be able to
operate under conditions that are hotter and dustier than those in most U.S. locations
• People may actually use the products differently in a market– P&G had to adapt Cheer detergent because
Japanese consumers washed their clothes in cold tap water, used leftover bath water, and liked to add fabric softeners
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 10
Performance and Quality Standards – Developing and Developed Countries
• Products designed in highly developed countries often exceed the performance standards of developing countries– Customers in developing countries may prefer
simpler products – to save money and ensure better performance over the product’s life.
• Companies from developing countries selling to developed-country markets may have to improve the performance of their products to meet these countries’ higher standards of quality.
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 11
Be careful when upgrading!!!
• MNCs often acquire local competitor in developing country – overhaul production and marketing capability to
mirror that of the parent organization– Company then raises prices, making products
unaffordable to developing market– Market size is extremely limited!
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 12
Global Standards
• Growth in international commerce has increased the benefits of international standards
The benefits of international
standards are obvious when you travel….
Ever tried to use your U.S, hairdryer in another country?
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 13
Global Standards (cont’d)
• Country-to-country standards still predominate– National organizations set standards for
products and business practices• E.g., British Standards Institute,
Canadian Standards Association– U.S. standards system is fragmented• 450 different standard-setting groups
– Unification of Europe forced EU to adopt regional standards
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 14
Global Standards
• Incompatible national standards can hinder global companies– May require expensive product, packaging, and
labeling adaptation– Fewer economies of scale opportunities– Time and effort required to research and monitor
standards– May dissuade firms from entering markets
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 15
Global Standards (cont’d)
• 1947 creation of International Standards Organization in Geneva– Non-governmental organization– Federation of national standards bodies from
140+ countries– Consists of member firms “most representative of
standardization in their home countries”– Standards set by ISO are highly specific
• Examples: film speed codes, formats for telephone and banking cards, etc.
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 16
Global Standards (cont’d)
• ISO 9000– Established 1987– Based on the British standard for quality
assurance (BS5750)– Generic management system standard• Ensures organization can consistently deliver
a product or service that satisfies the customer’s requirements via a state-of-the-art management system.
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 17
Cultural Preferences
• Color– Red and white have happy
associations in Japan; green associated with jungle and illness in Malaysia
• Scent – Strawberry shampoo failed
in China where consumers shun non-edible items that smell like food
• Sounds– Forced to eliminate
“ping” sound from word processing in Japan because workers were mortified when their mistakes were made public.
• Taste– What tastes good varies
from country to country (saltiness, sourness, sweetness, etc.)
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 18
Food Culture Is About More Than Just Taste!
• Why did Frito Lay potato chips fail to sell in China in the summertime?– Chinese consumers associated fried foods with
yang – which according to Chinese traditional medicine generates body heat and should be avoided in hot weather
• The solution?– Frito Lay introduced a “cool lemon” chip
packaged in pastel shades – it became the company’s best selling item in China!
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 19
Product Size and Dimensions
• Different physical surroundings and available space
• Different physical characteristics of consumers
• Consumer income levels – more affluent consumers can buy in bulk
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 20
Customers often want EXTRA assurance that the supplier will back the product or service
Comprehensive warranty and
service policies can be
important marketing tools!
Companies Interested in Doing Business Abroad Are Often at a Disadvantage…
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 21
Global Product Service (cont’d)
• Maintaining required service levels abroad– Selecting organization to provide service• Company-owned or outsourced?
– Adequate inventory of spare parts– Viewing investments in service costs as
investments in future volume
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 22
Global Product Line Management
Not all products are suitable for all markets!– Coca-Cola’s traditional brands =
90% global sales 33% Japan subsidiary sales
25 years of product innovation in Japanese subsidiary!
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 23
• Lines in overseas markets typically are NARROWER than in home market– Lack of sufficient market size– Earlier life cycle stages– Niche target segments at home may be
smaller or absent– Lack of market sophistication– New product introductions tend to begin at
home and follow abroad
Global Product Line Management (cont’d)
Copyright © Houghton Mifflin Company. All rights reserved. Chapter 10 | Slide 24
Foreign Subsidiary Input in R&D
• Foreign subsidiaries can play active R&D roles – especially in adaptive environments - but oftentimes do not
• Sales subsidiaries may provide ideas about product adaptation
• MNCs are increasing R&D investment abroad to obtain key market input – New ideas come from foreign cultures and
marketers – but where can they be re-applied?