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International Marketing (I): Product Policy Peter Kaminski Magdeburg

International Marketing (I): Product Policy

  • Dienstag, 07 September 2010 00:00
  • geschrieben von  Junghans, Wolfgang

A company can offer their products in their home market and in foreign markets. The first market is the market in the home country. The second market is every market which is outside of the home country. If a company decides now to expand their activities abroad it is faced with new problems when creating its marketing mix. Reasons for these problems are for instance different cultural, political or technical factors, which will be explained in a later article (Link). Because of these differences the question arise to adopt the marketing mix decisions to the new market like the product or the price decisions or to standardize it in all markets.[1] This article discusses this decision with respect to the product policy.

If it comes to the standardization of the product policy five areas[2] have to be considered:

(1) The core product

(2) The brand → name and logo

(3) The brand position

(4) The packaging and design

(5) Additional services beyond the core product

Ad (1): The core product describes the physical features of a product. These includes it quality attributes and functions. Here, Standardization depends strongly on the homogeneity of the customers’ needs. This means, if costumer have nearly the same needs, tastes, wishes, etc. then it is more likely that standardization will take place (uniform product). If this is not possible the company can adopt to the consumer needs of the country in two ways. The first is to modify the product (modification) and the second way is to create a country-specific product (differentiation and diversification).[3]

This policy can be illustrated with the following example. Imagine a producer of a sweet apple soft drink which he wants to sell in a foreign market. Now the following three scenarios are possible.

(1) The customers abroad also like sweet soft drinks with apple. In this case he should sell the identical product.

(2) The customers abroad like very sweet soft drinks. In this case he should sell the identical product but increase the amount of sugar.

(3) The customers abroad do not like sweet soft drinks. In this case he could create a country-specific product which does not include extra sugar or include other ingredients which make the taste of the soft-drink bitterer like citron.

Ad (2): The brand decision includes the decision about the standardization of the brand name and the brand logo. The reason for this decision is that names and symbols can create different association across different countries. Consequently, it is possible that the same product name or symbol can be seen as positive in one country but in another it is seen as an offence.[4]

This policy can be illustrated with the previous example. Therefore, it will be assumed that the producer is selling the product with a logo which shows 13 apples compatible with its name “The 13 apple drink”. Further it is assumed that this is not problematically in the home country since 13 is seen as a lucky number. If he now wants to export his soft drink with this logo and name to a country which is highly superstitious and 13 is seen an unlucky number it is likely that he will have troubles selling his soft drink. Consequently, he must change the logo and the name of the soft drink.

Ad (3): The brand position decision is the decision whether to change the definition of the target group and the promises which will be made to them in the foreign market or to use the same definition of the target group and the promises for them like in the home country. Standardization will be used if the values and attitudes of the target group are nearly the same between the target group in the home and in the foreign country.[5]

This decision can be illustrated again using the soft drink producer. Now assume that he sell his soft drink mostly to adolescents between the age of 14 and 18 because only this group like sweet drinks. He can know take the same target group abroad if they also like sweet potations. But if they do not like sweet soft drinks then he should change his target group. A new target group could be children for instance.

Ad (4): The packaging and design is related to the packaging of a product and is very important in the consumer goods sector. Here for instance the colour or the shape for the packaging can be standardized. Again several factors like tastes, habits or culture can prevent standardization. Furthermore, factors like social, legal or environmental requirements have to be considered when deciding about the standardization of the packaging.[6]

For the soft drink producer this sort of decision includes for example the material of the bottles he uses. If he applies plastic bottles in the home country he should also use them in the foreign country if they are accepted. But if an environmental law is banning all sorts of plastic bottles he has to change the material of his bottles.

Ad (5): Additional services beyond the core product mean all sorts of services the company offers their customers in addition to the product they bought. These services can be warranties or consulting services. In this decision about the standardization of a product the company has to decide whether it offers the costumer the same or different services in compare to the customer in the home country.[7]

If the soft drink producer offers his costumer in the home country additional information about the product using a hotline, he can also offer this to the new costumers abroad. He may change this service if telephone calls are very expansive in the foreign country or if very few costumers own a telephone.

The decision between standardization and differentiation of the products is generally no Yes-No decision. Moreover, it is a decision about the extent of the standardization and differentiation of the product. Consequently, no, some or all mentioned categories can be standardized or changed to a certain degree from slightly to a complete change.[8]


[1] See Homburg/Kuester/Krohmer (2009), p. 436.

[2] See Homburg/Kuester/Krohmer (2009), p. 436.

[3] See Homburg/Kuester/Krohmer (2009), p. 436.

[4] See Homburg/Kuester/Krohmer (2009), pp. 436-437.

[5] See Homburg/Kuester/Krohmer (2009), p. 437.

[6] See Homburg/Kuester/Krohmer (2009), p. 437 and Homburg/Krohmer (2006), S. 1022.

[7] See Homburg/Kuester/Krohmer (2009), p. 437.

[8] See Homburg/Kuester/Krohmer (2009), p. 437.


References

Homburg, C./Krohmer, H. (2006), Marketingmanagement, 2. Ausg., Gabler Verlag: Wiesbaden.

Homburg, C./Kuester, S./Krohmer, H. (2009), Marketing Management: A Contemporary Perspective, 1. ed., McGraw-Hill Education: Maidenhead, Berkshire.


k&k Consulting, Existenzgründerberatung, Existenzsicherung, Unternehmensberatung, Magdeburg

tags: international management, international marketing, product policy, standardization