Developing Products for the Foreign Market

INTERNATIONAL MARKETING

Section 2 –E

Developing Products for the Foreign Market

          Some manufacturers perceive their products as mere goods made in factories and afterwards sold to the market.

          Buyers see these goods differently.  For them, a product is a combination of both physical and non-physical elements which are all included in the purchase.

The Product

          Three levels of a product:

1.       Core Product – the core benefit that a buyer gets from purchasing the product. It answers the question “What is the buyer really buying?” Thus, a consumer purchasing a suitable and good-quality face powder is not really buying cosmetic but hope.

2.       Actual Product – it refers to the product’s brand name, quality level, packaging, design and features.

3.       Augmented Product – the additional consumer services and benefits. These include post-sale services, warranties, repair services and a toll-free number to call in cased of problems.

          A product successful in one market may have to adapted to sell well in another market for the following reasons:

·         Difference in physical conditions

·         Difference in the purpose the product is intended for

·         Difference in local tastes

·         Difference in social values

·         Difference in the capacity to pay of the said market

The Product and Company Image

          The product reflects the company’s image. It also enhances the company’s reputation. But developing the product and company image is very costly. But there are some useful and inexpensive steps to be undertaken, here are some:

         

·         Deal only with reputable sales agents or importers/wholesalers. It is likely that the respect rubs off on the goods they are selling and the company they are representing.

·         Give importers your best possible service to ensure that they will sell your products with enthusiasm.

·         Supply helpful, well written sales literature. Sometimes, the cost can be defrayed by your foreign associates.

The Product’s Life Cycle  

          A manufactured product has a life cycle (birth, growth, maturity, decline)- a sequence of stages in the life of a product brought about by changes in the marketing situations that impact both the marketing strategies and the marketing mix.

Shown below is the life cycle of a product in the garments industry as detailed in seven stages:

Stage 1: Creation

Stage 2: Acceptance by fashion trendsetters

Stage 3: Adoption by manufacturers

Stage 4: High-fashion distribution

Stage 5: Mass acceptance, production and distribution

Stage 6: Popularity decline

Stage 7: Abandonment

Product Line Alternatives

          The different options to the exporters pertinent to product and promotion adaptations necessary in global marketing.

          The product line alternatives are:

1.       Straight Extension – This refers to attempts to sell the product using local promotion strategy in a foreign country. This method will mean no additional research, development and promotion expense for the exporter. But this might prove very costly in the long run because a single mistake results in bigger losses.

2.       Communication Adaptation – The product remains basically the same but the promotion differs. The promotion modification cost is lower compared with the cost of redeveloping or physically changing the product.

3.       Product Adaptation – This means modifying a product to meet local conditions or preferences without changing the promotion strategy. This method is used by most soap and detergent manufacturers.

4.       Dual Adaptation – This means that both the product and the promotion have to be changed to adapt to local situations.

5.       Product Invention – This practically calls for the creation of an entirely new product which will serve the unmet need or demand in the market.

The Need for Product Development

          Constant changes in the market requirements, technology, consumer preferences and lifestyles dictate the need for continuous product development. Therefore, product development is essential to keep the exporting company on the competitive edge.

          The following are some misconceptions and assumptions on the meaning of product development:

-          Product development is a sure solution to business problems.

-          It is identical to developing new designs.

-          It is the sole responsibility of the designer

-          It is purely a creative activity.

With these unqualified notions, there is a need to rationalize the product development process as follows:

1.       Product Development as a Business Tool –product development aims to achieve the business objectives. It should be viewed as a function of marketing and production, depending on the company’s orientation. As such, product development can help:

-          Develop current products for existing markets

-          Develop new products for existing markets

-          Develop new product for new markets

2.       Product Development as a Group Effort – product development cannot be done by a single person, but by a team with ideas in order to reach the best possible innovative concept. The team is usually composed of members belonging to the management, marketing, production and design departments.

3.       Product Development as a Process – product development undergoes a process. It requires close coordination of individual activities that will translate into a successful end product. Product development is a process of developing new products, and/or updating or abandoning existing products to meet changing market requirements or production capacity.

Sustainable Product Development Program

          Because product development is a continuing concern, a company will be successful if it has a sustainable product development program. A company is said to be ready if it has a clear business plan, well established objectives and programs as well as the sources needed for product development.

Product Development Program in the Philippines

          If you are considering what product to export, below are the ways to help:

·         Find out what you are really interested in.

·         Scout for products that are readily available. Identify them and you will be surprised at the number of products that you can choose from.

·         Once the product is available, you still have to make the modifications and adaptations to make sure that you product suits your market.

The Product Development and Design Center of the Philippines (PDDCP) – is an agency under the Department of Trade and Industry. It aims to promote product development as a tool for improving the quality and competitiveness of Philippine products.

          The following are PDDCP’s services:

1.       Product Design

2.       Package Design

3.       Product Technology Demonstration

4.       Design and Technical Information

5.       Library