This document discusses international product strategies. It covers the stages of the international product lifecycle, including introduction, growth, maturity, and decline. It also discusses dimensions of the international product mix, the new product development process, degrees of product newness, and product diffusion in international markets. The chapter evaluates key aspects of developing and marketing products globally.

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2. International Product and Service
Strategies
Dana-Nicoleta Lascu
Chapter 10
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3. Chapter Objectives
• Evaluate the stages of the international product
life cycle identify locus of operations and target
markets at each stage
• Identify the different dimensions of the
international product mix with company
illustrations
• Examine the new product development process
and the activities involved at each stage in
international markets
• Examine degrees of product newness and
address international diffusion processes
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4. The International Product Life Cycle
Introduction Early Late Decline
and Growth Maturity: Maturity
Stages:
MNC Manufactures MNC Moves Developing Developing Country
Product in Developed Production to Country Markets Remain Viable
Countries; Exports to Developing Competitor Target Markets for
Developing Countries Country; Begins Exports Product MNC; MNC Home
Importing to To MNC Home Country Market Is
Home Country Country; Diminishing
Competes
with MNC
Imports
Sales
Time
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5. International Product Life Cycle,
continued
• The Product Introduction Stage
 Products are developed and marketed in developed
countries
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6. International Product Life Cycle,
continued
• The Growth Stage
 Increasing competition and rapid product adoption
 Marketed primarily in developed countries
 Product is exported to developing countries
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7. International Product Life Cycle,
continued
• The Maturity Stage
 Product is adopted by most target consumers
 Sales are leveling off
 Profits decline due to intense competition
 Manufacturing operations move to developing countries to
take advantage of cheap labor
 New competitors: firms from developing countries
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8. International Product Life Cycle,
continued
• The Decline Stage
 Products are rapidly losing ground to new technologies and
product alternatives
 Decrease in sales and profits
 Product lifecycle is extended through sales to consumers in
developing countries
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9. Dimensions of the International
Product Mix
• Product length
 Total number of brands
• Product width
 Total number of product lines
• Product depth
 Total number of different offerings for a product category
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10. New Product Development
• Substantial risk and costs
• Complex in international markets
 Competition can appropriate the product/service idea and
deliver final product or service to the market more swiftly
than the initial developer
 International consumers might not respond as anticipated
 Local and/or home-country government might impose
restrictions on product testing
 Technological infrastructure of individual markets may be
substandard and unable to support the product
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11. Generating New Product Ideas
• Most product and service firms are driven by the
marketing concept
 Product development decisions are based on identifying the
needs, wants, and desires of consumers
• Technology firms focus on the products
 Focus on research and development
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12. Product Ideas
• Consumers
• Competitive Analyses
• Channel Members
• Employees
• Top Management
• Inventors
• Consultants
• University Research
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13. Screening Ideas
• Consider:
 Fit with target consumers and the overall mission of the
organization
 The extent to which product offers unique benefits
 The extent to which target market is large and/or is likely
to grow
 Fit between new product requirements and resources,
skills, experience of the firm
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14. Developing and Evaluating Product
Concepts
• Develop detailed description of product
• Ask consumers to evaluate and indicate
willingness to buy
• Use:
 Focus Groups
 Conjoint Analysis
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15. Product Business Analysis
• Estimate:
 Project costs
 Return on investment
 Cash flow
 Fixed/variable costs
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16. Product Development
• Create prototypes
• Create brand identity and marketing mix
• Coordinate strategy across international subsidiaries
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17. Test Marketing
• Involves testing new product performance in a
limited area of a national or regional target market
• Provides estimate of product performance in the
respective country or region
• Expensive
• Time consuming
• Open to competitive sabotage
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18. Types of Test Marketing
• Simulated Test Marketing
 Test marketing simulating purchase environment where
samples of target consumers are observed during the
decision-making process
• Controlled Test Marketing
 Test marketing that involves offering a new product to a
group of stores and evaluating market reaction
• Test Marketing
 Full-blown test marketing
 Focus on cities appropriate for the test; involves selecting
distributors and the ancillary marketing infrastructure
 Most costly
 Leaves the company most exposed to competitive sabotage
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19. Launching Product Internationally
• Quality of launch
 High service quality
 On-time shipment
 Appropriate product availability
 Quality sales force and support
 Quality and amount of promotion
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20. International Launch Decisions
• Timing of launch
• Consumers and countries
• Marketing mix decisions
 Product mix
 Place
 Price
 Promotion
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21. Degree of Product/Service Newness
• New product to existing market
• New product to existing company
• New line
• New item in an existing product line
• Modification of an existing company product
• Innovation
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22. Product Diffusion
• Product Factors
 Relative advantage compared to competitive products
 Compatibility with the needs of the consumers
 Observability, or communicability to other consumers
 Trialability – the ability of consumers to experience the
product with only minimal effort
• Country (Market) Factors – the country may be a
 Lead country – wealthy industrialized country where the
product is adopted first
 Lag country – developing country that adopts the product
later
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23. Adopters
• Innovators
 Risk takers who can afford to pay a higher price during the
introduction stage (2.5% of the total market)
 Primarily consumers in developed countries
• Early adopters
 Consumers who purchase the product early in the lifecycle
stage and who tend to be opinion leaders in their community
 (13.5% of the total market)
 Primarily consumers in developed countries
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24. Adopters, continued
• Early majority
 Consumers who enjoy status of being among the first to
purchase a popular product (34% of the total market)
 Consumers are primarily from developed countries
• Late majority
 Consumers who adopt popular products when the risk
associated with them is minimal (34% of the total market)
 Consumers are from both developed and developing
countries
• Laggards
 The last consumers to adopt a product; they are risk averse
and conservative in their spending (16% of the total
population)
 Consumers are primarily from developing countries
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25. Chapter Summary
• Evaluated stages of the international product lifecycle
• Identified focus of operations and target markets at
each stage
• Identified the different dimensions of the international
product mix
• Examined the new product development process
• Examined degrees of product newness and
addressed the international diffusion processes
Copyright Atomic Dog Publishing, 2002