Join Doug Ladd for an in-depth discussion in this video Product adaptation and development, part of Marketing Foundations: International Marketing.
- Sometimes when you have a product that works really well within your home market, you may be surprised to learn that it doesn't sell in a different country. If you live in the United States, and you drink one of the major colas, you will notice a difference if you drink one that comes from Central America. The source of the sugar is different, as well as the taste. In China, Kentucky Fried Chicken is a very popular restaurant, but the menu and the food available in Bejing is very different from what you would find in, well, Kentucky. Even within China, the spiciness of the menu items at KFC varies from region to region.
Heinz, the makers of the most popular ketchup in the world, also adapts their flavorings and spices to local taste in different global regions. Not all product adaptations require new formulations or recipe changes. Multinational companies Procter & Gamble and Unilever learned when they expanded into developing markets that consumers didn't have enough cash to buy enough shampoo to last them three months. And the local retail outlets didn't have the shelf space to carry big bottles either.
So some of their product adaptation efforts were focused on smaller packaging options that enabled them to make similar margins while addressing the retail constraints. As you learn more about the new market where you plan to enter, your analysis of the competitive offerings and what the consumers want in those markets, what they value, may lead to product adaptation and refinement of your offerings. But not every company is good at doing product adaptations. It's not uncommon for a company to struggle with the concept of revising the products that helped start the company.
You'll need to get an appreciation for the culture and values within your company, to determine if product adaptation is the right approach for you to take. Some companies have found their best opportunity is to develop completely new products to enter new geographies, rather than try to adapt their legacy lines. This may be the best option for you if your company is highly regulated, if it's expensive or time consuming for you to switch production lines between batches, or if your company struggles with change and highly values things staying the same.
The challenge with developing all new products to enter a new market can be the expense. New products require new tools, new processes, suppliers, and systems. Making the decision to create a new product to enter a new market, is one that requires thoughtful analysis. But this can also lead to the greatest reward. A useful way to guide your company through the decision making process is to create a grid that identifies the issues you need to address.
Start by listing your products in a column, filling out the table across the top with the Product, Price, and Place components of the marketing mix. Then you populate the cells with comments about how well your current offering matches the needs of the customer for each of the P's. If there's a mismatch between the customer's needs or wants and your current offering, you can then have the discussion of the time and expense required to adapt, compared to the value, time, and expense to develop a new product.
I encourage you to include multiple stakeholders in your organization in this exercise. Will your company get the best results by adapting your current products, or developing new ones? Answering this question will help you save time, money, and frustration, by ensuring you're on the right path.
The course also investigates options for global expansion, such as exporting, licensing, joint ventures, and direct investment, and details how to put together a successful marketing mix using distribution, promotional methods, and translation. Plus, learn where to turn for more information about your specific target markets.
- The rise of the global consumer
- Learning about customers in global markets
- Accessing foreign markets
- Adapting products
- Balancing risks and rewards