Kotabe gmm4 p_pt_ch11

Chapter 11Chapter 11 Copyright (c) 2007 John Wiley & Sons, Inc.Copyright (c) 2007 John Wiley & Sons, Inc. 11

Global Marketing Management, 4eGlobal Marketing Management, 4e

Chapter 11Global Product Policy Global Product Policy

Decisions I: Developing Decisions I: Developing New Products for New Products for

Global MarketsGlobal Markets


Chapter OverviewChapter Overview

1.Global Product Strategies1.Global Product Strategies

2.Standardization Versus Customization2.Standardization Versus Customization

3.Multinational Diffusion3.Multinational Diffusion

4.Developing New Products for Global 4.Developing New Products for Global MarketsMarkets

5.Truly Global Innovation5.Truly Global Innovation


IntroductionIntroduction A cornerstone of a global marketing mix program A cornerstone of a global marketing mix program

is the set of product policy decisions that is the set of product policy decisions that multinational companies (MNCs) constantly need multinational companies (MNCs) constantly need to formulate.to formulate.

The range of product policy questions may The range of product policy questions may include: include: – What new products should be developed for What new products should be developed for

what markets?what markets?– What products should be added, removed, or What products should be added, removed, or

modified for the product line in each of the modified for the product line in each of the countries in which the company operates?countries in which the company operates?

– What brand names should be used?What brand names should be used?– How should the product be packaged and serviced?How should the product be packaged and serviced?


IntroductionIntroduction

Examples of improper product policy decisions in Examples of improper product policy decisions in global marketing:global marketing:– IkeaIkea in the United States in the United States– Proctor & GambleProctor & Gamble in Australia in Australia– U.S. Car MakersU.S. Car Makers in Japan in Japan


1. 1. Global Product StrategiesGlobal Product Strategies

Three global strategies to penetrate foreign Three global strategies to penetrate foreign markets:markets:– Extension strategyExtension strategy– Adaptation strategyAdaptation strategy– Invention strategyInvention strategy


1. Global Product Strategies1. Global Product Strategies

Five strategic options for the global marketplaceFive strategic options for the global marketplace::– Strategic Option 1Strategic Option 1: Product and Communication : Product and Communication

Extension -- Dual ExtensionExtension -- Dual Extension– Strategic Option 2Strategic Option 2: Product Extension -- : Product Extension --

Communications AdaptationCommunications Adaptation– Strategic Option 3Strategic Option 3: Product Adaptation -- : Product Adaptation --

Communications ExtensionCommunications Extension– Strategic Option 4Strategic Option 4: Product and Communications : Product and Communications

Adaptation -- Dual AdaptationAdaptation -- Dual Adaptation– Strategic Option 5Strategic Option 5: Product Invention: Product Invention


1. Global Product Strategies1. Global Product Strategies


2. Standardization versus Customization2. Standardization versus Customization

Five forces favoring a globalized product strategy:Five forces favoring a globalized product strategy:

1. Common customer needs1. Common customer needs

2. Global customers2. Global customers

3. Scale economies3. Scale economies

4. Time to market4. Time to market

5. Regional market agreements5. Regional market agreements


2. Standardization versus Customization2. Standardization versus Customization

Degree of StandardizationDegree of Standardization– Modular ApproachModular Approach– Core-Product (Common Platform) ApproachCore-Product (Common Platform) Approach

Balancing act between standardization and Balancing act between standardization and adaptationadaptation

Overstandardization vs. overcustomizationOverstandardization vs. overcustomization


3. Multinational Diffusion3. Multinational Diffusion

ExamplesExamples:: – Microsoft’s Xbox videogameMicrosoft’s Xbox videogame– NTT DoCoMo’s iModeNTT DoCoMo’s iMode

The Adoption of new products is driven by three types of The Adoption of new products is driven by three types of factors:factors:– Individual DifferencesIndividual Differences– Personal InfluencesPersonal Influences– Product Characteristics Product Characteristics

1. Relative advantage1. Relative advantage2. Compatibility2. Compatibility3. Complexity3. Complexity4. Trialability4. Trialability5. Observability5. Observability


3. Multinational Diffusion3. Multinational Diffusion

Other country characteristics used to predict Other country characteristics used to predict new product penetration patterns include:new product penetration patterns include:– Homogeneous populationHomogeneous population– Lead countriesLead countries– Lag countriesLag countries– CosmopolitanismCosmopolitanism– MobilityMobility– Labor force profile, Developing vs. Labor force profile, Developing vs.

Developed countriesDeveloped countries


3. Multinational Diffusion3. Multinational DiffusionTime-to-TakeoffTime-to-Takeoff

- Most new products - Most new products display a distinct display a distinct tradeoff-average 6 tradeoff-average 6 years from launchyears from launch

- Varies a great deal - Varies a great deal across product across product categories, between categories, between countries, previous countries, previous takeoff experiencetakeoff experience


4. Development of New Products4. Development of New Products for Global Markets for Global Markets

Identifying New Product IdeasIdentifying New Product Ideas– 4 C’s4 C’s::

CompanyCompany CustomersCustomers CompetitionCompetition CollaboratorsCollaborators

New Product Development (NPD) ProcessNew Product Development (NPD) Process Screening (see Exhibit 11-3 in your text)Screening (see Exhibit 11-3 in your text) Concept TestingConcept Testing

– Conjoint AnalysisConjoint Analysis– To Standardize or not to StandardizeTo Standardize or not to Standardize



Test MarketingTest Marketing Timing of EntryTiming of Entry: : Waterfall versus Sprinkler Waterfall versus Sprinkler

StrategiesStrategies (see Exhibit 11-9) (see Exhibit 11-9)– Waterfall StrategyWaterfall Strategy: Global phased rollout where : Global phased rollout where

new products trickle down in a cascade-like new products trickle down in a cascade-like mannermanner

– Sprinkler StrategySprinkler Strategy: Simultaneous worldwide : Simultaneous worldwide entryentry




5. Truly Global Innovation5. Truly Global Innovation

Scores of companies have research centers Scores of companies have research centers spread across the world. Challenge is to establish spread across the world. Challenge is to establish a truly global innovation process that transcends a truly global innovation process that transcends local clusters, i.e., to become a local clusters, i.e., to become a metanational metanational innovatorinnovator..

To harvest the benefits of metanational innovation:To harvest the benefits of metanational innovation:– Prospecting- find valuable new pockets of Prospecting- find valuable new pockets of

knowledge around the world.knowledge around the world.– Assessing- decide on an optimal footprint Assessing- decide on an optimal footprint

(number and dispersion of knowledge sources).(number and dispersion of knowledge sources).



– Mobilizing- to harness the benefits of global Mobilizing- to harness the benefits of global innovation, companies must find ways to innovation, companies must find ways to mobilize pockets of knowledge (e.g., technical mobilize pockets of knowledge (e.g., technical blueprints, patents, equipment, market blueprints, patents, equipment, market knowledge). knowledge).

– The optimal strategy for mobilizing knowledge The optimal strategy for mobilizing knowledge depends on the type (simple vs. complex) and depends on the type (simple vs. complex) and nature (technical vs. market) of the knowledge nature (technical vs. market) of the knowledge involved.involved.



4 possible strategic scenarios for mobilizing 4 possible strategic scenarios for mobilizing knowledge: knowledge: – Exchange information (arm’s length, digital Exchange information (arm’s length, digital

transfer is sufficient).transfer is sufficient).– Move information about the market where the Move information about the market where the

technology is.technology is.– Move information about the technology to where Move information about the technology to where

the market knowledge isthe market knowledge is– Move knowledge by rotating people and by Move knowledge by rotating people and by

temporary co-locationtemporary co-location



Business

Kotabe gmm4 p_pt_ch11