Manufacturers may need to adapt their products to foreign markets to gain a desired level of buyer acceptance. Adaptation may be called for in the physical product, the way in which the physical product is identified and presented to final buyers (product package), or the way in which the use of the physical product is facilitated and made effective (product services). Whether—and how—the several dimensions of a product should be adapted to the requirements of international markets should be decided only after answering many questions relating to potential consumers and users, environmental conditions, government regulations, competition, and the expected profit contributions of specific adaptation. Some issues to be addressed are:
The Target Market
Who buys the product?
Who uses the product?
How is the product used?
Where is the product bought?
How is the product bought?
Why is the product bought?
When is the product bought?
The Macroenvironment
Geography
Climate
Economic
Sociocultural
Political/legal
Government Regulations
Tariffs Labeling
Patents/trademarks
Taxes
Other
Competition
Price
Performance
Design or style
Patent protection
Brand name
Package Services
Company’s Product
What should be its physical attributes (size, design, materials, weight, color, other)?
What should be its package attributes (protection, color, design, brand name, other)?
What should be its service attributes (use instructions, installation, warranties, repair/maintenance, spare parts, other)?
What is the expected profit contribution of each product adaptation?
Although some product adaptation may be mandated by legal/technical requirements or by climate, it is seldom an either-or proposition in all of the product’s different dimensions. Ordinarily, managers have considerable discretion in deciding how far to carry product adaptation. How they use that discretion depends on the other elements of their international market entry strategy. That is why two companies with the same generic product may follow different product strategies in the same target market.
A product policy that limits adaptation to foreign markets may be called a product standardization strategy. This strategy conceives a global market for the product. Although national differences may be recognized, managers assume that they can be overcome with a promotional effort that adapts consumers and users to the company’s product rather than the other way around. With this strategy, products are the same across national markets. Standardization keeps down the costs of adaptation, but incurs higher costs of promotion intended to bring about a convergence of dispar- ate national demands on the company’s product. At the other extreme, a product adaptation strategy conceives multiple national markets, taking account of differences that distinguish those markets from one another and from the home market. With this strategy, managers adapt a product to the preferences of each national market or national submarkets. As compared to standardization, this strategy carries higher costs of adaptation but incurs lower costs of promotion that is intended to inform buyers how well the product matches their preferences rather than to change those preferences.
Few companies can profitably follow a pure version of either of these strategies. Some adaptation is nearly always desirable in one or more product dimensions. Complete product adaptation implies a different product for each individual buyer, a strategy that is out of the question for the vast majority of products. Generally, therefore, companies end up with a hybrid product strategy, whether or not they started that way. Because user needs and preferences are more similar across national markets for industrial products than for consumer products, strategies biased toward standardization are more common for the former, while the latter favor strategies based on adaptation. But industrial products can benefit from discretionary adaptation (particularly in after-sales services), and consumer products can benefit from standardization.2 The issue of adaptation versus standardization is examined in a multiple product/market context in Chapter 8.
Decisions on product adaptation should be made in reference to a specific target market. At the early planning stage of choosing a candidate product, therefore, managers can make only preliminary judgments on adaptation, drawn from a general knowledge of foreign markets. But this knowledge must be precise enough to indicate whether or not adaptation is necessary (or desirable) with respect to the physical, package, or service dimensions of the product. At times, mandatory adaptation may be so costly as to disqualify a product, but for most candidate products adaptation is seldom a black-and-white proposition. Some adaptations are nearly always desirable—for instance, the printing of package materials (and sales literature) in a language understood by foreign buyers. The language need not be a buyer’s native tongue: English is satisfactory for former British colonies, French for former French colonies, and so on. Hence a label printed in three major languages can be understood in most country markets.
Source: Root Franklin R. (1998), Entry Strategies for International Markets, Jossey-Bass; 2nd edition.
There is clearly a bunch to identify about this. I suppose you made various nice points in features also.