International Marketing Chapter 10

True

True or False: the need for adaptation is true even for internet firms that only virtually enter international markets.

True

True or false: today, the average time lag between domestic interaction and foreign introduction has diminished considerably

A subsidiary located in a lead market is usually in a better position to observe developments and to accommodate new demands. international firms with subsidiaries in lead markets have an opportunity to turn such units into effective "listening posts"

Foreign subsidiaries may assume certain R&D functions if products require some adaptation to the local market. In larger markets, subsidiaries may even be responsible for developing products specifically for local consumption. Why do subsidiaries often assume a more global role when they are located in a lead market?

Sometimes a test market takes place in a country other than the country of the initial launch - circumstances are never exactly the same from one national market to another, and this must be done with caution

A common approach to international test marketing is to use a single country as a proving ground before other markets are needed. What is another way some firms will test?

a differentiated approach

A company must address its warranty policy for international markets either by declaring its domestic warrant valid worldwide or by tailoring warrantees to specific countries or markets. Which approach do local market often dictate?

Lead markets

A market whose level of development exceeds that of the markets in other countries worldwide and whose developments tend to set a pattern for other countries

establish a joint venture join a consortia

Alliances are an effective way to share technology and R&D for competitive advantage. To share the huge cost of developing new products, some companies establish ____?_____ or join a _____?_____ to share in new product development

Usually discretionary fashion and tastes, scent and sounds, etc. most culturally distinct product areas - food --> region can dictate what people will and will not eat. other traditional beliefs may require product adaptations as well

Are cultural adaptations usually discretionary or mandatory? What types of things differ culturally? What is one of the most culturally distinct product areas?

a comprehensive warranty and service policy

Buyers around the world purchase products with certain performance expectations and further expect companies to back their promises concerning product performances. What can become a very important marketing tool for MNCs in response?

- a product may have to be debugged and refined. This job can best be handled in the original market or in a country close to a company R&D centers. Also, the marketing approach will have to be refined. This stage is usually limited to the advanced markets, often the company's domestic market it may still be marketed successfully in others

Describe the introductory phase in a product's life cycle... What happens when a product faces life cycle maturity or decline in one market?

Size, shape, materials, color, and text. Packaging adaptations may also reflect a country's retailing structure. Distribution handling requirements are not identical worldwide. Packaging can even face legal restrictions

Different climatic conditions often demand a change in the package to ensure sufficient protection or shelf life. Culture may play a role as well. Specific packaging decisions that may be affected include:

adapting watchbands to different wrist sizes produce property fitting shoes in different countries

Different physical characteristics of consumers can also influence product design. Give examples:

they often determine that smaller sizes are necessary and they must adapt the physical qualities as well. - be aware that consumers in developing countries may demand bigger and better products as their incomes increase

In markets where many potential consumers have little disposable income, what do packaged-goods manufactures often determine about a product so they can offer the customer a lower-priced, accessible product?

highly competent subsidiary - strategic leader role, with responsibility for developing a new range of products to be used by the entire company OR a contributor, adapting some products in smaller but still important markets Smaller, located in less strategic markets - implementers of the overall strategy, without making a major contribution either technically or strategically

Increasingly, MNCs are investing in research facilities abroad in order to obtain input form key markets. What roles may be assigned to highly competent subsidiaries? What role will be assigned to most subsidiaries, being small, less strategic markets?

- Licensing --> gain access to new developments from lead markets and can be a boon to entrepreneurs who have few funds for R&D - Purchasing products or acquiring other firms --> firms may establish or expand a market position for competitors who may choose to pursue the market on their own in the future. It may best apply in areas that do not represent the core of the firm's business and technology

Instead of developing new products through its own R&D personnel, a company may acquire products from independent outside sources. This can be accomplished in 3 ways:

Yes!

Is it possible for a product to be in different stages of the product life in different countries?

the product development staff to become globalizes early in the creation process.

It remains a challenge to keep all relevant product modifications in mind before the design is frozen. Later changes or modifications can be expensive. To keep a product acceptable in many or all revenant markets from the offset, it requires what?

Cultural implications

Labeling is another Conner for international marketers. Labeling helps consumers better understand the products they are buying and can convey rudimentary instructions for their use. What can sometimes create problems in unexpected ways?

International Standards Organization (ISO) - each member of the ISO is the firm "most representative in its country"; only one such member is allowed per country. - most standards set are highly specific - EU standards concerning consumer safety are generally tougher than their US counterparts

Located in Geneva, was founded in 1947 to coordinate the setting of global standards. It is a NGO, a federation of national standards from some 140 countries.

Most mandatory adaptations are made to adhere to national legal requirements yes, sometimes discretionary adaptations can become mandatory --> some mandatory adaptations are responses to differing physical realities (ex. consumer electronics must be adapted to work with different voltages)

Many adaptations are discretionary; that is, firms may choose to make certain adaptations or not to do so. In some case, however, adaptations are mandatory. Why do most mandatory adaptations occur? Can discretionary adaptations become mandatory?

the stated level of product quality - although national standards institutes ensure consistency within countries, an international agency is necessary to coordinate across countries

Many countries have organizations that set voluntary standards for products and business practices. If producers adhere to these standards, buyers are assured of what?

the outset to include some standardization but to assure as well that necessary local adaptations can be made quickly with a minimum of additional costs

Many firms now develop new products with global markets in mind. A global product is not a standardized product. Instead, a global product is designed from...

the market potential of the country, its competitive environment and whether the country-specific line can be extended into similar markets. In addition, the firm must commit to adequate R&D resources for the project - global markets often combine local offerings with foreign offerings

Market conditions sometimes lead to product lines overseas that may be broader than those at home. Firms confronted with deletions in their product lines may develop country-specific offerings to fill the gap in the line. When considering country-specific product lines, global marketers must consider...

Consortium Approach - a shift toward such non-equity forms of R&D agreements has been encouraged by improved protection worldwide for contracts and intellectual property - can avoid high development costs and share risk - can be employed by global buyers as well as manufacturers

Member firms join in a working relationship without forming a new entity

R&D must be integrated into a firm's overall marketing strategy. This requires frequent contacts. Such contacts are maintained more easily with close proximity. Centralized R&D is thought to maximize results from scarce research funds. Another reason is the company's experience in its domestic market. It is often the largest market as well.

Most companies that currently engage in R&D on a global scale originally conducted their development efforts strictly in centralized facilities in the firm's domestic market. Most new product ideas are first developed in the context of the domestic market. Introduction at home is followed by a phase-in introduction to the company's foreign market. Why?

It is particularly important to subject a new product to actual use conditions. A full test in several major markets is essential so that any shortcomings can be addressed at an early stage before costly adaptations for individual countries are made.

Once a prototype or sample of product has been developed, a company may decide to do a series of tests to determine its commercial feasibility. Why should you test in multiple markets (not just domestically)?

Abroad, some segments may be too small to warrant commercial exploitation. Lack of market sophistication is another reason. Poor developing countries may not demand some of its most advanced items in a product line. Finally, some product lines struggle to find a place in competitive markets

Product lines abroad are frequently narrower than in a company's domestic market. What are some reasons for product-line deletions abroad?

Sprinkler Strategy - involves a global launch of a product or service in many different markets, is best to preempt competition that would steal new ideas - global launches are easier conceived than implemented

Simultaneously introducing new products across countries

Product quality and safety, hygiene and environmental - meeting these standards can add costs to the product

Sometimes product standards are not voluntary but regulated by law. In these cases, adaptation is mandatory. What do most of these mandatory standards involve?

Waterfall strategy - allows marketers to learn from their experiences in some countries before attempting to market their new products in other countries

Staggering commercialization of new products across countries

They may prefer products of greater simplicity, not only to save costs but also to ensure better service over the products' lifetime However, manufacturers often must increase the performance of their products to meet standards of industrialized countries

The necessity to increase product quality or performance for a foreign market tends to be readily apparent. Products designed in highly developed countries often exceed the performance needed in developing countries. What might developing countries prefer?

ideally, company personnel are preferable because they tend to be better trained. In cases where a company does not maintain its own marketing subsidiary, it is vernally more efficient to turn to an independent service company or local distributor. To provide adequate service via independent distributors requires extra training for the service technicians, usually at the manufacturer's expense - a company must store sufficient inventory of spare parts within reach of its markets - subsidiaries are often at an advantage over firms that use distributors - because reliable and efficient service is so important, investment in service centers sometimes must be made before any sales take place. service costs are viewed as an investment

The selection of an organization to perform after-sales service is an important decision. There are two options that firms can go with for after service. What are they?

global product development - a portion of the final design is standardized. However, the design retains some flexibility so that the end product can be tailored to the needs of individual markets

There are relatively few opportunities for producing completely standardized products. As a result, many firms now employ a new strategy...

Modularity - cost pressures force them to standardize, while market pressures require more customization of products - most international firms take advantage of economies of scale on the standardization, or core, of their products. Rarely is a firm able to standardize its product 100%

This process involves the development of standard components that can easily be connected with other standard components to increase the variety of products. By doing this, global firms can realize significant cost savings from standardization while providing some customization for different markets

- economies of scale --> this can allow products to be produced more cheaply. As a result, a firm can sell their product at a cheaper price, likely increasing its share of the market. OR it can keep the price the same but realize a greater profit margin - serves to better satisfy global customers - if a product requires high development costs but has a short product life cycle, it may need to enter global markets rapidly --> sell high volumes to recoup their investment - cost savings may be achieved by eliminating efforts to adapt products - fast global product rollouts - international customers may prefer the same product available worldwide - may enhance consumer perceptions of a global brand

What are the benefits of product standardization?

Physical surroundings and available space - ex. in many countries, limited living space necessities home appliances and furniture be substantially smaller than those found in a country such as the US, where people live in large dwellings

What can product sizer be affected by?

Firms usually introduce new products first in their domestic markets to gain experience in production, marketing and experience. However, a foreign market may prove the better choice for a product launch

When should a product be introduced in each market?

- can gain new technology or unique products - partially motivated by a desire to access more value-added products and services - can move more quickly into a national market already dominated by competitors

Why are acquisitions increasingly popular?

Yes, in some cases - a firm must often go beyond a single translation of nonmetric to metric sizes (or vice versa)

With most of the work operating on the metric standard, the US is one of the few remaining major non metric markets. Is it required to change the physical sizes of products to conform to legal standards based on metric scale?