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Chapter 11

Chapter 11. Global Product Policy Decisions I: Developing New Products for Global Markets. Chapter Overview. 1. Global Product Strategies 2. Standardization Versus Customization 3. Multinational Diffusion 4. Developing New Products for Global Markets 5. Global NPD and Culture.

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Chapter 11

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  1. Chapter 11 • Global Product Policy Decisions I: Developing New Products for • Global Markets

  2. Chapter Overview 1. Global Product Strategies 2. Standardization Versus Customization 3. Multinational Diffusion 4. Developing New Products for Global Markets 5. Global NPD and Culture

  3. Introduction • A cornerstone of a global marketing mix program is the set of product policy decisions that multinational companies (MNCs) constantly need to formulate. • The range of product policy questions may include: • What new products should be developed for what markets? • What products should be added, removed, or modified for the product line in each of the countries in which the company operates?

  4. Introduction (contd.) • What brand names should be used? • How should the product be packaged and serviced? • Examples of improper product policy decisions in global marketing: • Ikea in the United States • Proctor & Gamble in Australia • U.S. Car Makers in Japan • Ford in Brazil

  5. 1. Global Product Strategies • Three global strategies to penetrate foreign markets: • Extension strategy • Adaptation strategy • Invention strategy • Five strategic options for the global marketplace: • Strategic Option 1: Product and Communication Extension -- Dual Extension • Strategic Option 2: Product Extension -- Communications Adaptation

  6. 1. Global Product Strategies (contd.) • Strategic Option 3: Product Adaptation -- Communications Extension • Strategic Option 4: Product and Communications Adaptation -- Dual Adaptation • Strategic Option 5: Product Invention

  7. 2. Standardization Versus Customization • Five forces favoring a globalized product strategy: 1. Common customer needs 2. Global customers 3. Scale economies 4. Time to market 5. Regional market agreements • Degree of Standardization • Modular Approach

  8. 2. Standardization versus Customization (contd. ) • Core-Product (Common Platform) Approach • Balancing act between standardization and adaptation • Overstandardization vs. overcustomization

  9. 3. Multinational Diffusion • Examples: • Microsoft’s Xbox videogame • NTT DoCoMo’s iMode • The Adoption of new products is driven by three types of factors: • Individual Differences • Personal Influences • Product Characteristics 1. Relative advantage 2. Compatibility

  10. 3. Multinational Diffusion (contd.) 3. Complexity 4. Trialability 5. Observability • Other country characteristics used to predict new product penetration patterns include: • Homogeneous population • Lead countries • Lag countries

  11. 3. Multinational Diffusion (contd.) • Cosmopolitanism • Mobility • Labor force profile • Individualism and national innovativeness (see Exhibit 11-4)

  12. 4. Developing New Products for Global Markets • Identifying New Product Ideas • 4 C’s: • Company • Customers • Competition • Collaborators • New Product Development (NPD) Process • Screening (see Exhibit 11-5) • Concept Testing

  13. 4. Developing New Products for Global Markets (contd.) • Conjoint Analysis • To Standardize or not to Standardize • Test Marketing • Timing of Entry: Waterfall versus Sprinkler Strategies (see Exhibit 11-11) • Waterfall Strategy: Global phased rollout where new products trickle down in a cascade-like manner • Sprinkler Strategy: Simultaneous worldwide entry

  14. 5. Global NPD and Culture • Global linkages between the new product development process and national cultures where cultural differences heavily influence the NPD process. • Differences between European and North American new product development programs: • The NPD process among European firms is much more formalized. • European Go/No Go standards tend to be far stricter than American norms.

  15. 5. Global NPD and Culture (contd.) • NPD projects within European firms are more likely to have a well-defined project leader and an assigned team of players than projects run by North American companies; European teams are much more multifunctional than American teams. • European companies punish project leaders less in case of failure, reward intrapreneurs more generously, and offer more seed money for pet projects.

  16. 5. Global NPD and Culture (contd.) • Japanese Companies and Product Churning: • Japanese companies strongly believe in rushing new products to the markets with little or no market research and then gauge the market’s reaction. • Japanese NPD managers constantly listen to the “voice of the customers.”

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