Global Marketing Management, 4e
Chapter 11
Global Product Policy
Decisions I: Developing
New Products for
Global Markets
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
1
Chapter Overview
1.Global Product Strategies
2.Standardization Versus Customization
3.Multinational Diffusion
4.Developing New Products for Global
Markets
5.Truly Global Innovation
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
2
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 11
Copyright (c) 2007 John Wiley & Sons, Inc.
3
Introduction
 Examples of improper product policy decisions in
global marketing:
– Ikea in the United States
– Proctor & Gamble in Australia
– U.S. Car Makers in Japan
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
4
1. Global Product Strategies
 Three global strategies to penetrate foreign
markets:
– Extension strategy
– Adaptation strategy
– Invention strategy
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
5
1. Global Product Strategies
 Five strategic options for the global marketplace:
– Strategic Option 1: Product and Communication
Extension -- Dual Extension
– Strategic Option 2: Product Extension -Communications Adaptation
– Strategic Option 3: Product Adaptation -Communications Extension
– Strategic Option 4: Product and Communications
Adaptation -- Dual Adaptation
– Strategic Option 5: Product Invention
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
6
1. Global Product Strategies
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
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
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
8
2. Standardization versus Customization
 Degree of Standardization
– Modular Approach
– Core-Product (Common Platform) Approach
 Balancing act between standardization and
adaptation
 Overstandardization vs. overcustomization
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
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
3. Complexity
4. Trialability
5. Observability
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
10
3. Multinational Diffusion
 Other country characteristics used to predict
new product penetration patterns include:
– Homogeneous population
– Lead countries
– Lag countries
– Cosmopolitanism
– Mobility
– Labor force profile, Developing vs.
Developed countries
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
11
3. Multinational Diffusion
Time-to-Takeoff
- Most new products
display a distinct
tradeoff-average 6
years from launch
- Varies a great deal
across product
categories, between
countries, previous
takeoff experience
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
12
4. Development of New Products
for Global Markets
 Identifying New Product Ideas
– 4 C’s:
 Company
 Customers
 Competition
 Collaborators
 New Product Development (NPD) Process
 Screening (see Exhibit 11-3 in your text)
 Concept Testing
– Conjoint Analysis
– To Standardize or not to Standardize
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
13
4. Development of New Products
for Global Markets
 Test Marketing
 Timing of Entry: Waterfall versus Sprinkler
Strategies (see Exhibit 11-9)
– Waterfall Strategy: Global phased rollout where
new products trickle down in a cascade-like
manner
– Sprinkler Strategy: Simultaneous worldwide
entry
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
14
4. Development of New Products
for Global Markets
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
15
5. Truly Global Innovation
 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 11
Copyright (c) 2007 John Wiley & Sons, Inc.
16
5. Truly Global Innovation
– 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 11
Copyright (c) 2007 John Wiley & Sons, Inc.
17
5. Truly Global Innovation
 4 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
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
18
5. Truly Global Innovation
Chapter 11
Copyright (c) 2007 John Wiley & Sons, Inc.
19