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International Product Strategies


International Product Strategies

In international markets managers need to decide the level of standardization and adaptation they have
to achieve in terms of their products and related communication.

Standardization of product strategies:

- Standardization means offering a uniform product on regional or worldwide base may be with minor
- Customization leverages cross-border differences in needs & wants of the firm’s target customers.
- Forces that favor a globalized product strategy are:
– Common customer needs & buying behavior
– Economies of scale in production, R&D, marketing and cost savings
– Lesser time required in introducing into new markets
– Global consumers & consumer mobility
– Home country image
– Similar technical specs for industrial & consumer products
– Operating via exports of uniform products
– Better marketing performance
– Consistency in product design & selling techniques
– Establishes a common image
– Success in one market can be duplicated in other markets
Standardization may lead to substantial opportunity lost

Adaptation of product strategies:

Obligatory adaptation due to laws and regulations of foreign countries
Discretionary adaptation (on the choice of the marketer)
to better suit varying customer needs
differing use conditions
due to different market factors
company’s resources / product objectives
product life-cycle stage

International product and communication strategies:

International marketers may choose on of the flowing five product and communication strategies in the
international markets:

1. Product & Communication Extension: Dual Extension

- Early entrants often opt for this strategy.
- Small companies with few resources typically prefer this option.
- Also works for the company which targets a “global” customer with similar
- Offers substantial savings coming from economics of scale.
- The downside is that it might alienate foreign customers who may switch to
another competing brand that is more tuned with their needs.

2. Product Extension – Communication Adaptation

- takes care of difference across countries in the cultural or competitive environment.
- retains scale economics on manufacturing side, the firm sacrifices potential savings on the
advertising front.

3. Product Adaptation – Communication Extension

- local market circumstances often favor or require case of product adaptation (may
be due to Govt. regulations)
- Many companies add to their product portfolio via acquisition of local companies adding
new brands as an expansion strategy
- While product may differ, cultural similarities that stretch to consumers using the
product present an opportunity for a harmonized communication.
- Within such control, clever marketing ideas can be transferred from one country to another,
despite the product-related differences.

4. Product & Communication Adaptation – Dual Adaptation

- Differences in both cultural & physical environment across countries call for a
dual adaptation strategy.
- Many be due to different Govt. regulations regarding products as well as

5. Product Invention

- Develop new products from scratch from common need & opportunities around
the world – instead for simply adapting existing products or services to the local
market conditions.
- Produce products of global scope.
Today managers focus on degree of Globalization rather than striving for standardized or localized
products. What elements of a product should be tailored to local market needs & which ones to leave
Two approaches that are being commonly used in international product design are;

Modular Approach:

- This approach consists of developing a range of product parts that can be used worldwide.
- Scale economics flow from the mass-production of more or less standard product
components at a few sites.
- Popular in automotive industry

Core-Product Approach:

- Design of mostly uniform core-product
- Attachments are added to core-product to match local market needs

Balancing act between Standardization and adaptation is very tricky.

- Too much standardization (over standardization) stifles initiative & experimentation at the
local subsidiary level
- Too much customization may lose the foreigness appeal of imported brands hence
becoming me-too brands.

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