Product and service ppt @ bec doms mba 2010

1. Product and Service
Strategies

2. Chapter Objectives
 Evaluate the stages of the international
product life cycle identify locus of operations
and target markets at each stage
 Identify the different dimensions of the
international product mix with company
illustrations
 Examine the new product development
process and the activities involved at each
stage in international markets
 Examine degrees of product newness and

3. The International Product Life
Cycle
Introduction Early Late Decline
and Growth Maturity: Maturity
Stages:
MNC Manufactures MNC Moves Developing Developing Country
Product in Developed Production to Country Markets Remain Viable
Countries; Exports to Developing Competitor Target Markets for
Developing Countries Country; Begins Exports Product MNC; MNC Home
Importing to To MNC Home Country Market Is
Home Country Country; Diminishing
Competes
with MNC
Imports
Sales
Time

4. International Product Life Cycle,
continued
 The Product Introduction Stage
 Products are developed and marketed in developed countries

5. International Product Life Cycle,
continued
 The Growth Stage
 Increasing competition and rapid product adoption
 Marketed primarily in developed countries
 Product is exported to developing countries

6. International Product Life Cycle,
continued
 The Maturity Stage
 Product is adopted by most target consumers
 Sales are leveling off
 Profits decline due to intense competition
 Manufacturing operations move to developing countries to take
advantage of cheap labor
 New competitors: firms from developing countries

7. International Product Life Cycle,
continued
 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

8. Dimensions of the International
Product Mix
 Product length
 Total number of brands
 Product width
 Total number of product lines
 Product depth
 Total number of different offerings for a product category

9. New Product Development
 Substantial risk and costs
 Complex in international markets
 Competition can appropriate the product/service idea and deliver final
product or service to the market more swiftly than the initial
developer
 International consumers might not respond as anticipated
 Local and/or home-country government might impose restrictions on
product testing
 Technological infrastructure of individual markets may be
substandard and unable to support the product

10. Generating New Product Ideas
 Most product and service firms are driven
by the marketing concept
 Product development decisions are based on identifying the needs,
wants, and desires of consumers
 Technology firms focus on the products
 Focus on research and development

11. Product Ideas
 Consumers
 Competitive Analyses
 Channel Members
 Employees
 Top Management
 Inventors
 Consultants
 University Research

12. Screening Ideas
 Consider:
 Fit with target consumers and the overall mission of the organization
 The extent to which product offers unique benefits
 The extent to which target market is large and/or is likely to grow
 Fit between new product requirements and resources, skills,
experience of the firm

13. Developing and Evaluating Product
Concepts
 Develop detailed description of product
 Ask consumers to evaluate and indicate
willingness to buy
 Use:
 Focus Groups
 Conjoint Analysis

14. Product Business Analysis
 Estimate:
 Project costs
 Return on investment
 Cash flow
 Fixed/variable costs

15. Product Development
 Create prototypes
 Create brand identity and marketing mix
 Coordinate strategy across international
subsidiaries

16. Test Marketing
 Involves testing new product performance in
a limited area of a national or regional target
market
 Provides estimate of product performance in
the respective country or region
 Expensive
 Time consuming
 Open to competitive sabotage

17. Types of Test Marketing
 Simulated Test Marketing
 Test marketing simulating purchase environment where samples of
target consumers are observed during the decision-making process
 Controlled Test Marketing
 Test marketing that involves offering a new product to a group of
stores and evaluating market reaction
 Test Marketing
 Full-blown test marketing
 Focus on cities appropriate for the test; involves selecting distributors
and the ancillary marketing infrastructure
 Most costly
 Leaves the company most exposed to competitive sabotage

18. Launching Product Internationally
 Quality of launch
 High service quality
 On-time shipment
 Appropriate product availability
 Quality sales force and support
 Quality and amount of promotion

19. International Launch Decisions
 Timing of launch
 Consumers and countries
 Marketing mix decisions
 Product mix
 Place
 Price
 Promotion

20. Degree of Product/Service
Newness
 New product to existing market
 New product to existing company
 New line
 New item in an existing product line
 Modification of an existing company product
 Innovation

21. Product Diffusion
 Product Factors
 Relative advantage compared to competitive products
 Compatibility with the needs of the consumers
 Observability, or communicability to other consumers
 Trialability – the ability of consumers to experience the product with
only minimal effort
 Country (Market) Factors – the country may be a
 Lead country – wealthy industrialized country where the product is
adopted first
 Lag country – developing country that adopts the product later

22. Adopters
 Innovators
 Risk takers who can afford to pay a higher price during the
introduction stage (2.5% of the total market)
 Primarily consumers in developed countries
 Early adopters
 Consumers who purchase the product early in the lifecycle stage and
who tend to be opinion leaders in their community
 (13.5% of the total market)
 Primarily consumers in developed countries

23. Adopters, continued
 Early majority
 Consumers who enjoy status of being among the first to purchase a
popular product (34% of the total market)
 Consumers are primarily from developed countries
 Late majority
 Consumers who adopt popular products when the risk associated with
them is minimal (34% of the total market)
 Consumers are from both developed and developing countries
 Laggards
 The last consumers to adopt a product; they are risk averse and
conservative in their spending (16% of the total population)
 Consumers are primarily from developing countries