International Product

Policy And Planning

Yalew Mamo
Introduction
• One of the fundamental decisions for successful
international marketing relates to product policy and
planning.
• Product policy refers to decisions regarding the design,
development, positioning, and management of a
product in international markets.
• Many product decisions lie between the two extremes
i.e. whether to sell globally standardized or adapted
products.
What is a product?
• To be more concise, a product can be defined as a
collection of physical, service and symbolic attributes
which yield satisfaction or benefits to a user or buyer.
• A product is a combination of physical attributes say,
size and shape, and subjective attributes say image or
quality. A customer purchases on both dimensions. It is
increasingly important that the product fulfils the
image which the producer is wishing to project.
Continued
• A product's physical properties are characterised the same the
world over. They can be convenience or shopping goods or
durables and non-durables; however; one can classify
products according to their degree of potential for global
marketing:
• Local products - seen as only suitable in one single market.
• International products - seen as having extension potential
into other markets.
• Multinational products - products adapted to the perceived
unique characteristics of national markets.
• Multinational products - products adapted to the perceived
unique characteristics of national markets.
International Product Life Cycle
• International product life cycle discusses the consumption
pattern of the product in many countries. This concept
explains that the products pass through several stages of the
product life cycle.
• The, product is innovated in country, usually a developed
country, to satisfy the needs of the consumers. The innovator
country wants to exploit the technological breakthrough and
start marketing the products in foreign country.
• Gradually foreign country also starts production and becomes
efficient in producing those commodities.
• As a result, the innovator country starts losing its export
market and finds the import of that product advantageous.
Continued
• In this way, the innovator country becomes the importer of
the products. Terpstra and Sarathy have identified four phases
in. the international product life cycle.
• Export strength is evident by innovator country: Products
are normally innovated in the developed countries because
they possess the resources to do so. The firms have the
technological know-how and sufficient capital to invest on
the research and development activities. The need of
adaptation and modification also forces the production
activities to be located near the market to respond quickly to
the changes.
Continued
• Foreign production starts: The importing firms in the middle
income country realise the demand potential of the product in the
home market.
• The manufacturers also become familiar in producing the goods.
The growing demand of the products attracts the attention of
many firms. They are tempted to start production in their country
and gradually start exporting to the low income countries.
• The large production in the middle income country reduces the
export from the innovating country.
• This shows the maturity stage of product life cycle where the
production activities' start shifting from innovating country to
other countries.
Continued
• Foreign production becomes competitive in export
market: The firms in low income country also realise the
demand potential in the domestic market. They start
producing the products in their home country by exploiting
cheap labour.
• They gain expertise in manufacturing the commodity. They
become more efficient in producing the goods due to low cost
of production. Gradually they start exporting the goods to
other countries.
• The export from this country replaces the export base of
innovating country, whose export has been already declining.
Continued
• Import Competition begins: The producers in the low
income importing country gain sufficient experience in
producing and marketing the products.
• They attain the economies of scale and gradually become
more efficient than the innovator country.
• At this stage, the innovator country finds the import from this
country advantageous.
• Hence, the innovator country finally becomes the importer of
that product. In this fourth stage of product life cycle the
product becomes completely standardized.
International Product Life Cycle
Continued
• In simple words, the theory of IPLC brings out that advanced
(initiating) countries play the innovative role in new product
development. Later for reasons of comparative advantage or
factor endowments and costs, such a product moves over to
other developed countries or middle.
• Income countries and ultimately gets produced and exported
by less developed countries. Not surprisingly, therefore, those
countries such as Taiwan, Korea, Singapore and India have
emerged as major exporters of growing range. of products to
USA and Western Europe during the last decade and a half.
The general pattern of a typical IPLC has been shown in the
following table.
Pattern of IPLC
Innovating Other Developed Less Developed
Country Countries Or Middle Countries
Stage Income Countries
Production Early Imports Late Imports
Exports Production Production
Imports Exports (Large volume Exports (Small volume
declining to small rising to large volume)
volume)
Continued
• The IPLC theory 'presents the following implications for
international product planner:
• Innovative products improve the staying power of the
international firm.
• The marketers whose products face declining sale in one
foreign market may find another foreign market with
encouraging demand for his product; and
• Innovative products carry significant export potential
International Product Policy
• A firm's product policy reflects its marketing orientation.
Following the framework of IPLC, a firm may begin
exporting the products it sells in the domestic market.
• Alternatively, it may recognize the significant differences in
customer needs, conditions of product use, etc., and may plan
for exporting different products or product versions to meet
the specific needs of each of its different global market
segments.
• In the latter case, the exporting firm would thus offer a large
product mix.
Continued
• The other option available to exporting firms is to develop a
new product for the export markets. This new product may be
the result of the firm's own R&D acquisition or joint venture
with a business partner in the host country.
• Interesting examples, here, include Coca-Cola Corporation
which having entered Japan in 1958 had added Fanta and Sprite
by 1970 and still later introduced fruit drink products,
carbonated orange fruit drinks and also potato chips which were
not even sold by the company in its US market.
• Similarly, IBM developed EPABX within the U.K. An
International marketer may use one of the following five
strategies:
Continued
• Product communications extension
• This strategy is very low cost and merely takes the same
product and communication strategy into other markets.
However it can be risky if misjudgements are made.
• For example CPC International believed the US consumer
would take to dry soups, which dominate the European
market. It did not work.
Continued
• Extended product- communications adaptation
• If the product basically fits the different needs or segments of
a market it may need an adjustment in marketing
communication only.
• Again this is a low cost strategy, but different product
functions have to be identified and a suitable
communications mix developed.
Continued
• Product adaptation - communications extension
• The product is adapted to fit usage conditions but the
communication may stays the same.
• The assumption. is that the product will serve the same
function in foreign markets under different usage conditions.
• Product adaptation - communications adaptation
• Both product and communication strategies need attention to
fit the peculiar need of the market.
Standardization Vs. Adaptation
• 1. Product Standardization
• A product designed originally for a local market is
exported to other countries with virtually no change,
except perhaps for the translation of words and
other cosmetic changes.
• It’s simple and cost-effective.
Standardization:
• Achieving maximum productivity through
standardization of product or delivery achieving
global economy of scale and lowest unit cost
Standardization means "one size fits all”.
Factors That Promote Standardization
• Convergence in customer preferences and income
across target countries with economic development
and trade
• Competition from successful global products
International brand awareness
• Cost benefits from standardization
• Standardization is assumed to be the best method as it
could give a maximum profit
Product Adaptation
• Customization refers to the tailoring of the campaign
according to the needs of an individual or groups of
individuals.
• These are high margin products where the volumes are
low and the buyers are few.
• Also called differentiation or localization or
customization.
Forces Calling ForLocal Products
(Customization)
• Differences in customer preferences and income across target
countries
• Build local brand recognition
• Competition from successful domestic products
• Regulatory requirements (quality, safety, technical
specifications, domestic content).
Product adaptation is necessary under
several conditions
• Government’s mandatory standards
• Electrical current standards: variations in electrical
standards in d/t countries (phase, frequency, and
voltage) abroad can easily harm products
• Measurement standards: vary from country to
country; Imperial system of measurement (feet,
pounds)
Optional Product Modification
Physical distribution
 Local use conditions,
Users’ habits
including climatic
Environmental
conditions. The hot/cold,
humid/dry conditions may characteristics
Price
affect product durability or
Historical preference
performance.
 Physical appearance: Local customs and culture
• short or long, fat or tin
International Branding
• Definition of Branding
• Branding is the process of creating a unique identity for a
product or company in the minds of consumers. It
includes elements such as brand name, logo, tagline,
colors, and overall customer perception.
• Branding is personalizing the product by giving it a name.
The right name has to be the product of a carefully
prepared strategic brief, showing creativity, selected
with a lot of linguistic and cultural research.
Continued
• A good name is an incredibly valuable asset.
• Naming, in today’s global market, has evolved into a
complex creative process and is also subjected to
stringent legal checks.
Importance of International Branding
• International branding is crucial for businesses looking to
expand beyond domestic markets.
• Brand Recognition and Awareness
• A strong international brand ensures that customers recognize
and trust the company worldwide. Example: Apple, Nike, and
Coca-Cola have consistent branding that makes them easily
identifiable in any country.
• Higher Perceived Value
• International brands often carry a perception of higher quality
and prestige. Example: Luxury brands like Rolex, Gucci, and
Louis Vuitton maintain premium pricing due to their global
brand reputation.
Continued
• Competitive Advantage
• A well-established brand helps a company stand out from
competitors in global markets. Consumers are more likely to
choose a familiar brand over an unknown local competitor.
Example: McDonald’s competes with local fast-food chains
but wins due to its global branding.
• Customer Trust and Loyalty
• A strong international brand builds credibility and emotional
connections with consumers. Customers tend to be more loyal
to brands they recognize and trust. Example: Toyota is known
worldwide for reliability, leading to strong customer loyalty.
Continued
• Easier Market Expansion
• A strong global brand makes entering new markets smoother.
• Customers already familiar with the brand in one country are
more likely to accept it in another. Example: Starbucks
expands internationally by leveraging its established brand
reputation.
• Cost Efficiency in Marketing and Advertising
• A consistent brand identity allows companies to use similar
marketing campaigns across multiple markets, reducing costs.
• Example: Nike’s “Just Do It” slogan works globally,
minimizing the need for localized campaigns.
Continued
• Supports Product Line Expansion
• A strong brand makes it easier to introduce new products
under the same name. Example: Samsung successfully
expands from electronics to appliances and software due to
its strong global brand.
• Easier Partnerships and Collaborations
• Well-known brands attract better business partners,
distributors, and suppliers. Example: Coca-Cola partners
with major retailers worldwide because of its strong brand
reputation.
In selecting a brand name, a marketer should
• First find out whether a brand name has any negative
connotation in the target market.
• Consider whether the brand reflects the desired product
image.
• Branding in a foreign language
• Brand name that is unique or distinctive
• International brand name,
• Not overlooked the legal aspect of branding
Types of International Branding Strategies
• Global Branding
• The same brand identity, name, and marketing strategy
worldwide. Examples: Apple, Coca-Cola, Nike.
• Advantages:
• Strong global brand recognition.
• Cost efficiency in marketing and production.
• Consistency in brand image.
• Challenges:
• Cultural differences may require adaptations.
• Regulatory differences across countries.
Continued
• Local Branding (Multi-Domestic Strategy)
• Customizing branding elements for each market.
• Example: Unilever brands like Dove (global) vs. Lux
(localized in some regions).
• Advantages:
• Better cultural alignment with local consumers.
• Higher consumer engagement and acceptance.
• Challenges:
• Increased costs for marketing and product adaptation.
• Brand fragmentation may reduce global recognition.
Continued
• Hybrid Branding (Glocal Strategy)
• A mix of global and local branding elements.
• Example: McDonald's (same logo globally, but menu
adaptations per country).
• Advantages:
• Balances global consistency with local relevance.
• Flexibility to adapt to different consumer needs.
• Challenges:
• Requires strong market research and strategic
planning.
Packaging of International Products
• Packaging plays a crucial role in international
marketing as it protects the product,
communicates essential information, and
influences consumer purchasing decisions.
• Importance of International Product Packaging
• Protection – Ensures the product remains safe during
transportation and storage.
• Regulatory Compliance – Meets labeling, safety, and
environmental laws in different countries.
Continued
• Brand Recognition – Maintains a consistent global
identity while adapting to local preferences.
• Consumer Attraction – Appeals to cultural tastes and
purchasing behaviors.
• Sustainability – Meets environmental concerns by
using recyclable or biodegradable materials.
Functions of International Packaging
• Physical Protection: Shields products from damage due to
temperature, humidity, or handling. Example: Electronics
need anti-static packaging, while perishable goods require
temperature-controlled packaging.
• Communication and Labeling: Displays product
information, brand identity, and legal disclaimers. Example:
Food packaging must include nutritional facts and
expiration dates.
• Convenience for Consumers: Ensures easy handling,
opening, and disposal. Example: Resealable packs for snacks
and easy-pour designs for liquids.
Continued
• Adaptation to Local Preferences: Uses culturally
preferred colors, symbols, and design elements.
Example: Red and gold packaging in China
symbolizes luck and prosperity.
• Eco-Friendly and Sustainable Packaging:
Governments and consumers demand biodegradable
or recyclable materials. Example: Coca-Cola’s
plant-based bottles and IKEA’s use of cardboard
instead of plastic.
Challenges in International Packaging
• Standardization vs. Adaptation – Balancing global
branding consistency with local preferences.
• Regulatory Variations – Adhering to different packaging
laws across countries.
• Environmental Concerns – Increasing demand for
sustainable packaging.
• Logistics and Costs – Managing shipping, warehousing, and
cost efficiency.
• Counterfeit Prevention – Using holograms, QR codes, and
tamper-proof seals to protect brand authenticity.
International Marketing: Labeling
• Labeling in international marketing is a critical component
of product packaging, as it provides essential information
about the product to consumers and ensures compliance
with legal and cultural standards in different markets.
• Importance of Labeling in International Marketing
• Regulatory Compliance – Ensures adherence to legal
requirements in different countries (e.g., ingredient lists,
safety warnings).
• Consumer Information – Provides details on product
usage, ingredients, expiration dates, and safety instructions.
Continued
• Branding and Marketing – Enhances brand identity
and product differentiation.
• Cultural Sensitivity – Avoids misinterpretations by
adapting language, symbols, and colors to local
cultures.
• Logistics and Supply Chain – Facilitates tracking,
handling, and inventory management through barcodes
and QR codes.
Types of Labels in International Marketing
• Brand Label: Displays the brand name and logo
prominently.
• Example: Coca-Cola’s label is recognizable worldwide,
even when translated into different languages.
• Descriptive Label: Provides detailed product
information, including ingredients, usage instructions,
and benefits.
• Example: Food packaging with nutritional values and
allergen warnings.
Continued
• Informative Label: Focuses on regulatory
information such as weight, volume, manufacturing
details, and expiration dates. Example: Medicine labels
with dosage instructions and side effects.
• Eco-Label: Indicates environmental sustainability and
eco-friendliness. Example: “Fair Trade,” “Organic,” or
“Recyclable” certifications on product packaging.
• Private Label: Used for store-branded or retailer-
branded products. Example: Walmart’s “Great Value”
products.