Hello people, the question for today goes thus: Modification is a feature of international marketing because of the environmental differences that exist among and within the many nations. Discuss.
Read along as I provide some answers to it. If you have any other suggestion, kindly leave a comment. Thanks.
The aim of product modification is usually to increase worldwide sales of the firm’s core products via
- Satisfaction of different customer needs in various national markets
- Retention of existing customers through keeping the product up to date
- Matching the product attributes offered by competing firms; or
- Improving product features across the board
Complementary products might be introduced to stimulate sales of existing lines eh by improving the usefulness of currently produced items (gardening tools or DIY power accessories for example branded foodstuffs are frequently sold in complementary product lines so that a new variety can be conveniently “slotted” in to the line currently on offer) Entirely new products may be devised to replace existing outputs and / or to reach completely new markets abroad.
Factors encouraging product modification for foreign markets.
- Living conditions
- Compatibility with locally produced items
- Transport situation
- The uses to which the items might be put in different markets
- Literacy and technical skills of users
- Consumer care facilities
- National consumer taste
- Nature and extent of competition
- Desirability of foreign images for products
- Preferred package size
- Consumer buying habits
- Income levels (poor countries might need low quality products)
- Technical standards
- Patent laws
- Packaging requirements
- Local content rules
- Health and safety regulations
- Consumer production laws
- High tariffs that encourage potential local manufacture.
Cultural differences and variations in local tastes are obviously important, as are local education and literacy levels. For example, a “simple to use” version of a high tech product might be developed if local customers would have difficulty in understanding the original market.
The need for extensive product modification is a common impetus for firms to establish local manufacturing or assembly facilities in foreign countries; as it could well be cheaper to set up a new product near to end customers rather than make major changes to existing production lines and procedures at home. Note how the development of numerous product ranges and modifications necessarily causes the firm’s organization to become complicated, so that sophisticated management control have to be applied.
Reasons for standardized products
Several difficulties confront the firm that decides to modify substantially its product range and / or develop new products for foreign markets. These are:
- The company may possess insufficient experience and technical know-how of different products and how to market them.
- Technical research and development efforts become fragmented as increasing amounts of resources are devoted to issues pertaining to the special requirements of particular international markets.
- Extra promotion costs are involved
- There is duplication of efforts within the business
Supplying a single unmodified product leads to reduced stockholding costs (because demand in any market can be met from a single inventory of the same item), facilitates the development of technical expertise in a narrow area, and allows the interchangeability of spare parts and input components between supply points in various locations. Not surprisingly, therefore, most international businesses wish to alter their core products as little as possible.
If modification is obviously necessary (manifest perhaps in low sales in certain countries of an item that is highly successful in other parts of the world), the situation might be remedied through minor alterations such as packaging, size or color, length of warranty, carrying facilities etc.
Schewe, Charles D., and Alexander Hiam, The Portable MBA in Marketing
Gary Armstrong., and Philip Kotler, Marketing an Introduction
Philip Kotler., and Kevin Lane keller, Marketing Management (14th Edition)