Вы находитесь на странице: 1из 31

International Product

Strategies
Mukul Mishra

IPLC Theory (Raymond


Vernon)
Early in a product's life-cycle : all parts and labor
come from the area in which it was invented.

After product adoption and increasing use in the


world markets, production gradually moves away
from the point of origin.
In some situations, the product is imported by its
original country of invention.
A common example - invention, growth and
production of the personal computer with respect
to the United States.

IPLC Theory
In the new product stage
the product is produced and consumed in the US
no export trade occurs.

In the maturing product stage


mass-production techniques are developed
foreign demand (in developed countries) expands; the
US now exports the product to other developed
countries.

In the standardized product stage


production moves to developing countries,
they then export the product to developed countries.

International Product Life Cycle


(IPLC)
Introduction
and Growth
Stages:
MNC Manufactures
Product in Developed
Countries; Exports to
Developing Countries

Sales

Early
Maturity:

Late
Maturity

Decline

MNC Moves
Production to
Developing
Country; Begins
Importing to
Home Country

Developing
Country
Competitor
Exports Product
To MNC Home
Country;
Competes
with MNC
Imports

Developing Country
Markets Remain Viable
Target Markets for
MNC; MNC Home
Country Market Is
Diminishing

Time

IPLC Contd

The Product Introduction Stage


Products are developed and marketed in
developed countries

IPLC Contd
The Growth Stage

Increasing competition and rapid


product adoption

Marketed primarily in developed


countries

Product is exported to developing


countries

IPLC Contd
The Maturity Stage

Product is adopted by most target consumers

Sales are leveling of

Profits decline due to intense competition

Manufacturing operations move to developing


countries to take advantage of cheap labor

New competitors: firms from developing countries

IPLC Contd
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

Key Issues in Product


Strategy
Key issue in global marketing mix
decisions
What new products what markets
What products-added,removed,
modified
Mistakes are common - Ikea in U.S

Global Product Strategies


Extension : same product, same
communication
Adaptation : cater to needs/wants of
foreign customers.
Invention : products designed from
scratch for global marketplace.

Table 1:Global Expansion Strategies

International
Product Strategy
Strategy 1
Product and
Communication
Extension
Strategy 2
Product Extension
Communication
Adaptation
Strategy 3
Product Adaptation
Communication
Extension
Strategy 4
Product and
Communication
Adaptation
Strategy 5
Product Invention

Product
Example

Consumer Need
Satisfied

Product Strategy

Communication Strategy

Gillette
Razor

Disposable, easy to use


product

Extension

Extension

Wrigley
Chewing Gum

USA: Substitute for


Smoking
Europe: Dental benefits

Extension

Adaptation

McDonalds

Fast-Food

Adaptation:
Adding local products to
range

Extension:
Using global campaign

Slim Fast

Identical:
Lose Weight

Adaptation:
Consumer preferences
for different flavors

Adaptation:
Celebrity in Germany,
Teacher in UK

Buckler Beer

Non-alcoholic beer

Invention

Develop new
communication

Strategic Option 1 :
Product & Communication Extension Dual Extension
Standardized Product/Uniform Communications
Strategy.
Early entrants/small cos. With limited resources
Results in substantial savings coming from economies
of scale.
Product driven strategy rather than market driven.
Negative-alienate foreign customers
Modern production processes ( CAD/CAM) obviate the
need for large batch sizes.

Strategic Option 2:
Product Extension-Communication Adaptation
Diference in cultural/competitive environment
benefits/functions sought are diferent from same
product
Gap between home and foreign market firms use
customized advertising campaigns.
Manufacturing economies of scale retained
;Advertising sacrificed
E.g. Wrigley benefits promoted vary from country to
country.
U.S-substitute to smoking

Strategic Option 3:
Product Adaptation-Communication Extension
Firms adapt product/standardize communications
strategy
Local Market Circumstances-product adaptation,
acquired brands in foreign countries.
Similar core values/consumer behavior
-harmonized communications.
Marketing ideas transferred from country to country
despite product diferences.
P&G Pantene Shampoo Ad developed in Taiwan used
with minor changes in Latin America / McDonalds.

Strategic Option 4:
Product & Communications Adaptation-Dual
Adaptation.
Diferences in both cultural & physical environments
dual adaptation strategy.
Both product & communications strategy are
adapted.
E.g. Slim fast weight loss products
Germany-Celebrities
U.K- Celebrities (not permitted), therefore

Strategic Option 5:
Product Invention
Genuine Global Marketers-create products with a
global scope.
Identify common global needs and opportunities and
design products catering to them.
Black & Decker-Product Invention Strategy.
( Worldwide Household Board)
Ford Mondeo part of Ford's world car strategy.
( Developed in Europe)

Standardization Vs.
Customization
Whether standardized or country tailored product strategies

Standardization :
offering uniform product on a regional or worldwide basis.
( Minor alternations when needed)
Capitalize on commonalities in customers needs across
countries
Minimize costs-> cost savings passed to customers via
lower prices.
Product driven orientation

Customization:
focus on cross border differences in the needs
and wants of firms target customers.
Changes made to suit local market
conditions.
Market driven mindset increasing
customer satisfaction by adapting products
to local needs.

Drivers of Global Product


Strategy

1. Common Customer Needs :

Many product categories consumer needs


similar in diferent countries.
Same functions/usage conditions/benefits sought
E.g., Diet Coke
Also many product categories show a gradual
convergence of consumer preferences. E.g., In
Triad Markets preferred car size has shifted
towards a space of 7 to 9 cu. meter.

2. Global Customers :
Imp. In B2B marketing businesses for
many firms comes from firms that are
global customers.
Buying/Sourcing are centralized or
regionalized
Such customers require services/products
that are harmonized worldwide.

3. Scale Economies :

In Manufacturing/distribution key driver for


standardization.

Sourcing efficiencies achieved/lowered R&D expenditures.

Cost savings passed on to customers as lower prices.

Great advantage vis--vis local or regional competitors.

However recent procedures like flexible manufacturing/JIT


production shifted focus from size to timeliness.

CAD/CAM-customized products, small batch size &


reduced costs.

Diseconomies of scale with size-hidden costs like


bureaucratic structure, shopfloor inefficiency.

4. Time to Market :
Being innovative is not enough to be
competitive
Ways to shorten time to bring new
products to market
Centralizing R&D / focusing NPD eforts on
few projects
P&G in Europe Currently Pan European
launch of liquid laundry detergent is done
in 10% of the time it took in the early
1980s when marketing was decentralized.

5. Regional Market Agreements :


Formation of RTAs encourages firms to
launch regional products or redesign
existing products as regional products
e.g., EU.
RTA's also lead to harmonization of
technical standards in many countries.
Marathon in UK became Snickers in
continental Europe as Europe is now one
single market.
Raider bar in Europe became Twix, the

Standardization vs. localization is not an


either / or dilemma

Look at it in terms of degree of globalization

What elements of product policy should be


tailored to local market conditions.

Which elements should be left unchanged.

Strategies :
1. Modular Approach-develop a range of product
parts that can be used worldwide. These
parts can be assembled into numerous
product configurations.

2. Core-Product Approach Common platform


designed ,attachments are added to meet
local requirements. e.g., Renault.

Timing of Entry :
Waterfall vs. Sprinkler Strategies
Key element of regional/global product
launch strategy entry timing decision
When to launch a new product in the
target markets
Two broad strategies waterfall & the
sprinkler model

Waterfall Model :
Global phased roll-out where new products tickle
down in a cascade like manner.
Introduce product first in firms home market, then
in other advanced market (2nd Phase), lastly MNC
introduces innovation in less advanced
countries(3rd Phase).
Whole process-lasts several decades.E.g.,
McDonald's 22 years ;Coca-Cola 20 yrs.
Motives for waterfall model
Customization of product for foreign market is
time consuming
Less demanding on firms resources
Absence of good local partners

Phases roll-out not always preferable


In B2B markets customers dont want to be left behind
They want access to latest generation products and
technologies
They are knowledgeable about products ofered in
diferent countries.
By withholding the latest models, firm faces the risk
that consumers will view its products as outdated.
Gives competitors time to catch up.
E.g. Nokia has a simultaneous launch in both Europe &
North America.

Fig.1:Waterfall Model
Home Country

> 3 years

Sprinkler Strategy :
Simultaneous worldwide entry
Global roll-out takes place within a very
narrow time window
Motives: universal segments & issues of
competitive preemption in foreign markets.
E.g., Microsoft Xbox videogame
In U.S ( mid November 2001)
In Japan ( February 22,2002)
In Europe ( March 14,2002)

Fig.2:Sprinkler Model

Home Country

1-2 years