International Business and International Marketing

Chapter 10 : Product Decisions

Chapter Summary

A product can be defined in terms of its physical attributes such as weight, dimension, or material. It can also be defined in terms of color, texture, style, shape, or contour. However, marketers consider these definitions to be incomplete because the definition must also clarify what needs a product fulfills. Products are, in general, classified on the basis of their characteristics like usage, durability and tangibility.

Marketers use various marketing mix strategies for each product type. Products are also classified depending on who the final purchaser is and how he uses them. They are thus divided into (i) consumer products and (ii) industrial products. Consumer products are products that are bought by a consumer for personal, family, or household use. Industrial products are products that are purchased to produce other products or facilitate the smooth functioning of an organization.

They are purchased to satisfy organizational needs. International marketing product decisions need to take 5 important characteristics into consideration. They are primary functional purpose, secondary purpose, durability and quality, method of operation, and maintenance. Product design plays a key role in the success of global marketing. Product design decisions address questions, such as whether to design different products for different national markets or to design a single product for the global market.

Four factors influence the product design decisions of international marketers: preferences, cost, laws & regulations, and compatibility. International product mix is a set of all product lines & items meant for sale in overseas markets. The issues that need to be addressed while taking decisions on the international product mix are, the number of product lines, the degree of consistency in these product lines, and their length and depth. The major characteristics of services are intangibility, inseparability, heterogeneity, and perishability.

Many factors, such as innovation, excellence in customer service, and efficient operations contribute to the success of an organization at the global level. Before entering a foreign country, a service organization needs to check if it has sufficient resources to venture into the market, whether the mode of entry is appropriate, the demand in the market is adequate, the management style is appropriate, and it has the right people to deal with suppliers and the local authorities.

Takeovers, Joint ventures, and Contractual agreements are some of the ways in which international R&D capabilities can be acquired. International diffusion process involves shifting of products to overseas markets. Several factors influence the speed with which diffusion takes place. These are: nature of the product, characteristics of the overseas markets, strategy of the firm, competition, degree of product adaptation necessary, and propensity of consumers to change from the current pattern of consumption to a new pattern of consumption.

A product suitable for one market may not be suitable for other markets. Factors that encourage or restrain product adaptation in different countries are: different use conditions, other market factors, and influence of government. International Product Life Cycle describes international trade and production patterns. According to this concept, products have to go through a trade cycle where a country is initially an exporter, then loses its export markets, and then becomes an importer of the product.

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