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Chapter global product policy decisions. What you should learn from chapter 10: The importance of time zones for trade relationships and marketing operations, the political and economic changes affecting global marketing, the connection between the economic level of a country and the marketing task, the variety of stages of economic development among American nations,...
GLOBAL MARKETING MANAGEMENT Chapter 10 PowerPoint Global Product Policy Decisions MASAAKI KOTABKE | KRISTIAAN HELSEN I: Developing New Products for Global Markets Seventh Edition Chapter Overview Standardization Versus Customization Multinational Diffusion Developing New Products for Global Markets Truly Global Product Development Appendix: Using Conjoint Analysis for Concept Testing in Global New Product Development Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 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? – What brand names should be used? – How should the product be packaged and serviced? Chapter 10 Copyright © 2017 John Wiley & Sons, Inc Introduction • Examples of improper product policy decisions in global marketing: – Ikea in the United States – Procter & Gamble in Australia – U.S Car Makers in Japan Chapter 10 Copyright © 2017 John Wiley & Sons, Inc Standardization versus Customization • Five forces favoring a globalized product strategy: Common customer needs Global customers Scale economies Time to market Regional market agreements Chapter 10 Copyright © 2017 John Wiley & Sons, Inc Standardization versus Customization • Five forces pushing product adaption: Consumer preferences Cultural differences Strong local competition Managerial motivation Environmental conditions • Modular Product Design Strategies – – Chapter 10 Allows firms to modify product while keeping benefits of a uniform product policy Core product design strategy Copyright © 2017 John Wiley & Sons, Inc Standardization versus Customization • Back of the Envelope Calculations–Break-Even Analysis (IBEA) − Determines what the extra sales should be to justify the costs of adapting product or service for host market − Overstandardization – stifles initiative at local level − Overcustomization – runs risk of losing appeal of foreignness Chapter 10 Copyright © 2017 John Wiley & Sons, Inc Exhibit 10-2: Top Three Reasons for Buying a New Product Chapter 10 Copyright © 2017 John Wiley & Sons, Inc Multinational Diffusion • Example: – Microsoft’s Xbox videogame • The adoption of new products is driven by three types of factors: – Individual Differences – Personal Influences – Product Characteristics Relative advantage Compatibility Complexity Trialability Observability Chapter 10 Copyright © 2017 John Wiley & Sons, Inc Multinational Diffusion • Other country characteristics used to predict new product penetration patterns include: – – – – – – Homogeneous population Lead countries Lag countries Cosmopolitanism Mobility Percentage of women in the labor force Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 10 Multinational Diffusion Time-to-Takeoff - Takeoff marks turning point tween introduction and growth - stages of product life cycle Time-to-takeoff is declining over the years Country differences are strong Economic development and cultural differences explain cross-country variation Takeoff for “fun” products is much fast than “work” products Probability of takeoff in target country increases with previous takeoffs in other countries Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 11 Exhibit 10-3: Mean Time-to-Takeoff across Product Categories within Country Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 12 Developing New Products in the Global Marketplace • New Product Ideas – C’s: • • • • Company Customers Competition Collaborators • Screening • Concept Testing – Conjoint analysis Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 13 Developing New Products in the Global Marketplace • Test marketing – May be skipped to save money – Lead markets can be used as projections (Exhibit 10-4) • Timing of Entry (Exhibit 10-5) – Waterfall—staged rollout beginning with home country – Sprinkler—global rollout simultaneously • Often used for high tech goods Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 14 Exhibit 10-4: Waterfall versus Sprinkler Models Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 15 Exhibit 10-5: Roll-Out of Xbox 360 and Sony Playstation Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 16 Truly Global Product Development • Scores of companies have research centers spread across the world Challenge is to establish a truly global innovation process that transcends local clusters (i.e., to become a metanational innovator) • To harvest the benefits of metanational innovation: – Prospecting- find valuable new pockets of knowledge around the world – Assessing- decide on an optimal footprint (number and dispersion of knowledge sources) Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 17 Truly Global Product Development – Mobilizing: To harness the benefits of global innovation, companies must find ways to mobilize pockets of knowledge (e.g., technical blueprints, patents, equipment, market knowledge) – The optimal strategy for mobilizing knowledge depends on the type (simple vs complex) and nature (technical vs market) of the knowledge involved Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 18 Truly Global Product Development • possible strategic scenarios for mobilizing knowledge: – Exchange information (arm’s length, digital transfer is sufficient) – Move information about the market where the technology is – Move information about the technology to where the market knowledge is – Move knowledge by rotating people and by temporary co-location (See Exhibit 10-7.) Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 19 Exhibit 10-6: Estimated Foreign Susceptibility, Clout, and Takeoff Time in 20 Countries Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 20 Appendix: Using Conjoint Analysis for Concept Testing in Global New Product Development Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 21 ... temporary co-location (See Exhibit 1 0- 7.) Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 19 Exhibit 1 0- 6: Estimated Foreign Susceptibility, Clout, and Takeoff Time in 20 Countries Chapter 10 Copyright... takeoffs in other countries Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 11 Exhibit 1 0- 3: Mean Time-to-Takeoff across Product Categories within Country Chapter 10 Copyright © 2017 John Wiley... force Chapter 10 Copyright © 2017 John Wiley & Sons, Inc 10 Multinational Diffusion Time-to-Takeoff - Takeoff marks turning point tween introduction and growth - stages of product life cycle Time-to-takeoff