Global Marketing Management, 5e
1
Chapter 10
Global Product Policy
Decisions I: Developing
New Products for
Global Markets
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Chapter Overview
2
1.Global Product Strategies
2.Standardization Versus Customization
3.Multinational Diffusion
4.Developing New Products for Global Markets
5.Truly Global Product Development
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Introduction
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

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?
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Introduction
4

Examples of improper product policy decisions in
global marketing:
 Ikea
in the United States
 Procter & Gamble in Australia
 U.S. Car Makers in Japan
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
1. Global Product Strategies
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
Three global strategies to penetrate foreign markets:
 Extension
strategy
 Adaptation strategy
 Invention strategy
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
1. Global Product Strategies
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
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

Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Exhibit 10-1: Global Expansion Strategies
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
2. Standardization versus Customization
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
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
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
2. Standardization versus Customization
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
Degree of Standardization
 Modular
Approach
 Core-Product (Common Platform) Approach
 Balancing
act between standardization and
adaptation
 Overstandardization vs. overcustomization
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Exhibit 10-2: 2008 Automotive Color
Popularity
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
Exhibit 10-2 (cont): 2008 Automotive Color
Popularity
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
Exhibit 10-2 (cont): 2008 Automotive Color
Popularity
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
3. Multinational Diffusion
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

Example:
 Microsoft’s Xbox videogame
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
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
3. Multinational Diffusion
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
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
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
3. Multinational Diffusion
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Time to “Take off”
- Most new products display a distinct period of time to
takeoff
- Varies a great deal across product categories,
between countries, previous takeoff experience
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Exhibit 10-3: Mean Time to Take Off Across
Product Categories within a Country
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
4. Developing New Products
for Global Markets
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
Identifying New Product Ideas
4
C’s:
 Company
 Customers
 Competition
 Collaborators



New Product Development (NPD) Process
Screening
Concept Testing
Conjoint analysis
 To Standardize or not to standardize

Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
4. Developing New Products
for Global Markets
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
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

Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
Exhibit 10-4: Examples of Test Market
Countries
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Chapter 11
Exhibit 10-5: Waterfall versus Sprinkler
Models
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Chapter 10
Exhibit 10-6: Roll-Out of Xbox 360 and
Sony Playstation 3
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 11
5. Truly Global Product Development
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

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).
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
5. Truly Global Product Development
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 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.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
5. Truly Global Product Development
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
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 colocation
(See Exhibit 10-7.)
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10
Exhibit 10-7: Mobilizing Knowledge
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 10