Transcript UNIT-3

UNIT-3
Product, Price, Promotion & Distribution
Policy
By
Shantanu Krishna
Product policy
• Product policy has two dimensions:
a.) Product planning and development
b.) Product strategy-product adaptation & standardisation.
• Components of product:
1.) physical product: functional features (style, presentation)
2.) product package: packaging, brand name, trademark
3.) Auxiliary services: warranties, use instructions, installation,
after-sales services.
Product planning and development:
In international marketing, there are 4 major forms of product
development:
1.) NPD, 2.) changes in existing products, 3.) finding new
uses for existing products, 4.) product elimination.
Product policy
• Adding new products (NPD):
a.) Export Domestic Products
b.) Acquire a firm : E.g. M&A’s happening in Europe in
1980’s acquiring firms for greater innovation.
E.g. unilever and nestle going into JV for frozen foodscan be a costly affair.
E.g.. TATA motors going acquiring jaguar and landrover
in 2007-08
c.) Copying products: Imitation of the product offerings,
developed successfully by the others.
d.) Internal product development (NPD process)
Product policy
Idea Generation
Initial screening
Business Analysis
Develop the product
Market testing
Commercialisation
Product policy
Other additional issues that are relevant to the internal
development of new products merit brief discussion:
a.) Location of R&D facilities and firms
b.) process of screening new product ideas
c.) diffusion of new product innovations
d.) quality management-Concept of TQM ( To get products from
the market faster,with fewer defects and at a lower cost. E.g.
ISO 9000: specifies design, manufacturing, manufacturing,
logistics, standards etc.)
Changes in existing products: e.g. of US cars being right
handed when exported to UK.
New Uses for existing products: Finding new uses for the
existing product. Extending the length and breadth of the
product to be used in a no. of ways e.g. of Cornflakes being
used as a snack in the evening.
Product policy
Product elimination:
Keeping weak products can add substantially to overhead costs. 8020principle: certain % of products in the product mix and product lines
beings in a disproportionately greater or lesser % of sales and profits.
Product policy:
• Product Portfolio Matrix:
Determinants of product line decisions:
• Internal determinants: factors emerging from the firm itself. These are
concerned with the company objectives, resources and potential profitability.
• Answers questions related to firm’s strategy, growth, market share,
resources and differential advantages.
• External Determinantsa.) Customer Influences: Nature of customer needs and wants in
each market affects the marketing effort of the firm. In US,
bicycles being used for recreation, as compared to EU where
it’s a means of transportation.
b.) Country of Origin Effect: extent to which the place of
manufacture influences product evaluations. COE effect affects
consumer perceptions of product quality.
c.) Competition: PLC
d.) Other factors: Marketing structure, distribution, import
regulations, govt. regulations, level of economic dev.
Selection of Export Markets
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Other Bases of Division of World Markets:
Population : Age Groups, Social Class, Educational background, Geographic
Concentration
Standard of living., GDP, Level of Political Involvement, Risks associated,
Industrial development & Market Size.
Per Capita Real Income, Gini-Index-measures the equality of wealth
National Income: Production, Income & Expenditure.
Analyzing Factors of Production: Land, Labour, Capital, Entrepreneur.
Market Entry Conditions:
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GSP ( Generalised System of Preferences): Countries with relaxed rules, Duty
Free imports, export subsidies, SEZ’s are favored more for a trade engagement.
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Setting up of Export Promotion Centres
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Import Promotion Centres:
Export marketing strategy-Product
• "Its not what the business provides that expands the business, its what the customers
need and to what extent do we cater to their requirements that differs from market to
market”. Shantanu Krishna
• Identifying the needs: Japan Automobile Importers Association identifying 4 types
of people who buy imported cars- the quality seekers, status seekers, enthusiasts &
the followers.
• Changing consumer habits, less price difference, general attitude of people
changing towards foreign products, greater trade & liberalization.
• Product V/s Product Type: Product type is the aggregate of various products,
performing same kind of function or giving same kind of satisfaction.
• Product Adaptation: Product that is good for one market, may not be good for
another. Driving forces of using the product is different in different markets.
• Need to understand:
• Who buys the product, Who uses the product, How is the product used, where is it
bought, how is it bought, why is it bought, when is it bought???
• Need for adaptation: for products to gain acceptance in the foreign markets. For
Export marketing
strategy-Product
Economic Goods: Consumer Goods &
13 Environmental factors by
Robinson:
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producer goods.
Consumer goods: those that satisfy the
wants of the consumers directly are
level of technical skills
called consumer goods.
Level of Labor cost
They are of different types:
Level of Literacy
• Durable Goods: Life span of
Level of Income
different years. Eg. Car, TV
Level of Interest Rates
• Semi-Durable Goods: Life span of
one year or more. Eg. Furniture,
Level of Maintenance
clothes, shoes.
Climatic Differences
• Non-Durable Goods: Single use
Isolation
consumer goods. E.g. milk, eggs,
Differences in Standards
fruits, food grains etc.
Availability of other products • Producer Goods: The goods which
Availability of Materials
help in the production of other
goods & services are known as
Power Availability
producer goods. E.g. machines,
Special Conditions
roadways, railways, highways.
Export marketing strategy-Product
Standardization
6 factors favoring International Product Standardization:
• Economies of Scale: Larger Production runs having economies of scale, resulting in
lower manufacturing cost.
• Economies in product research & Development: Allows recovery of the cost
incurred in product R&D. Additional expenditure on adapting product to each
individual market can be avoided.
• Economies in Marketing: Marketing of the same product for marketing it in
different markets. Same sales literature, sales force training, inventory management,
advertising & after-sales service requirements.
• Increasing Brand Loyalty
• Impact of Technology: Not much in case of Industrial products.
Export marketing strategy-International
Product Life Cycle