PRODUCT ADAPTATION

Ferry Rahman, MBA

Sutopo, MP
 What’s a product or services?

• A product or service is a complex combination of

tangible and intangible elements that distinguishes it
from other entities in the marketplace.

• Products can be differentiated by their composition,

country of origin, tangible features such as packaging
or quality, or augmented features such as warranty.
Elements of a Product
 • Three Strategies product and communication to
penetrate foreign market : 1st Extension; 2nd
Adaptation; 3rd Invention

• Basic alternatives for approaching international markets

are:

• Sell the product as it is internationally.

• Modify the product for different countries or regions.
• Design new products for foreign markets.
• Incorporate all differences into one flexible product
design and introduce it globally.
 Standardization versus Adaptation
Factors encouraging
standardization
• Economies of scale in
production
• Economies in product R&D
• Economies in marketing
• “Shrinking” of the world
marketplace/economic
integration
• Global competition
Factors encouraging
adaptation
• Differing use conditions
• Government and regulatory
influences
• Differing consumer
behavior patterns
• Local competition
• True to the marketing
concept

Standardization is mean offering uniform product on a regional or worldwide

basis with minor adjusting to meet local regulation.
Adaptation to make changes to the product or communication strategy to
suit local marketplace.
 Product Adaptation
Factors affecting product adaptation:

1. Market environment.

2. Product characteristics.

3. Company considerations.
 Product Adaptation:
The Market Environment
1. Government regulations.
• Example:
• Sweden was the first country in the world (1 January 1979) to
legislate against most aerosol sprays on the grounds that they
may harm the environment.
• Thousands of hair sprays, deodorants, air fresheners, insecticides,
paints, that use FREON were banned from entering Sweden.
• May be used to protect local industry from foreign competition.
• Early 2000, EU bans the use of ‘hush kit’ on their airplanes
engines due to noise pollution.
• US marketers sees this as a threat because most of their
airplanes use ‘hush kit’.
• This forces EU countries to buy only European Airbus airplanes,
not US made Boeing airplanes.
Product Adaptation:
The Market Environment
2. Non-tariff barriers; includes product standards, testing
or approval procedures, subsidies for local products,
and bureaucratic red tape.

• Example (1): France requires the use of French language in

any offer, presentation, advertisement, manual instructions,
product specifications and guarantees, as well as for invoices
and receipts.

• Example (2): BP (British Petrolium) deliver s a series of

adapted energy product in more than 100 countries with
different formulae of petrol to meet each country’s unique
regulation.
 Product Adaptation:
The Market Environment
3. Economic Development

• Management must consider the economic development of the

foreign market. As a country’s economy advances, buyers are in a
better position to buy and demand more sophisticated products.
• In some cases, the situation in a developing market may require
‘backward innovation’; that is a more simplified version of the full
product.
• Example: Low Price Edition text books in South Asia.
• Economic conditions may change rapidly, thus making a change in
product.
• Example: during the Asian economic crisis McDonalds replaced their
French fries with a rice and egg dish. Because potatoes were imported
into Indonesia.
 Product Adaptation:
The Market Environment
4. Competitive offerings.

• Monitoring competitors’ product features, as well as determining

what has to be done to meet and beat them, is very important.
• An analysis of competitors’ offerings may reveal holes in the
market.
 Product Adaptation:
The Market Environment
5. Climate and geography

• Climate and geography will usually have an effect on the total

product offering. Some products, by design, are vulnerable to the
elements.
• This is true for chocolate products. Example:
• Cadbury Schweppes has its own display cases in shops.
• Toblerone has confined its distribution to air conditioned outlets.
• Nestlé’s Kit Kat chocolate wafer for Asia has reduced fat content to raise
the wafer’s melting point.
• The product has to be protected against longer transit times and
possibly longer shelf life but on the other hand care has to be taken
that no nonallowed preservatives are used.
 Product Adaptation:
The Product Characteristics
1. Product contents

• The international marketer must make sure products DO NOT

contain ingredients that might be in violation of legal requirements
or religious or social customs.
• Example:
• In Islamic countries, animal fats have to be replaced by ingredients such
as vegetable fat.
• In respect of Hindu and Muslim beliefs, McDonald’s “Maharaja Mac” is
made with mutton in India.
 Product Adaptation:
The Product Characteristics
2. Branding
• Brand refers to a name, symbol, sign, or design used be a firm to
differentiate its offerings from those of its competitors.
• NameLab, a California-based laboratory for name development
and testing, suggests these approaches:
 Translation. Little Pen, Inc. would become La Petite Plume.
 Transliteration. This requires the testing of an existing brand name for
connotative meaning in the language of the target market. Toyota’s MR2
brand changed to Spyder due to difficulty in pronouncing MR2 in French
speaking countries.
 Transparency. Develop a meaningless brand name to avoid the
complexities of translation and transliteration. (Sony is an example).
 Transculture. This means using a foreign language name for a brand.
Example: perfumes should sound French.
 Product Adaptation:
The Product Characteristics
3. Packaging

• Packaging serves three major functions: protection, promotion and

user convenience.
• The major consideration for the international marketer is making
sure the product reaches the end user in the form intended.
• Because of the longer time that products spend in channels of
distribution, especially in food products, have had to use more
expensive packaging materials or transportation modes.
 Product Adaptation:
The Product Characteristics

4. Appearance

• Colors play an important role in the way consumers perceive a

product.
• International marketers must be sensitive in choosing the colors of
its brand or package in different foreign markets. They must be
aware of the signal being sent by the product’s colors.
 Product Adaptation:
The Product Characteristics
5. Service
• When a product sold overseas requires repairs, parts, or services,
the problem of obtaining, training, and holding a sophisticated
engineering or repair staff is not easy.
• If the product breaks down, and the repair arrangements are not up
to standard, the image of the product will suffer.
 TANTANGAN PROSES PELAYANAN
MASA KINI

• 40 % customer berpindah ke kompetitor, lebih disebabkan

oleh faktor Layanan yang buruk dan hanya 8 % kepindahan
mereka disebakan oleh faktor harga

• Frederick Reichheld, menyatakan dalam bukunya “The

Loyalty Effect”, jika lebih dari 5 % customer kita
pertahankan, maka keuntungan akan meningkat antara 25
% s/d 125 %

• Kalau kita bisa menahan lebih dari 2 % customer kita,

maka pengaruhnya sama dengan menurunkan biaya
sebanyak 10 %

Lisa Ford : How To Give Excellent Services

 Product Adaptation:
The Product Characteristics

6. Country of origin effects

• The country of origin of a product, typically communicated by the

phrase “Made in (country name)” has considerable influence on the
quality perceptions of a product.
• The perceptions is affected by a built-in positive or negative
stereotype of product quality.
• Example:
• Products made in Denmark.
• Products made in USA.
• Products made in Japan.
• Products made in China.
 Product Adaptation:
Company Considerations

1. The issue of product adaptation most often climaxes in

the question “Is it worth it?”.
2. The answer depends on the firm’s ability:
• Human and financial resource constraints
• Costs of developing and producing distinct product
3. Bottom line: is adaptation profitable, and how long will
it take for it to become profitable?