The testing of new-product concepts

Depending on the product, testing procedures range from reliability test in the pilot plant to the mini-
launches, from which the product’s performance in the world markets will be estimated.
Testing prolongs full-scale commercialization and increase the possibility of competitive reaction.

Due to high rate of new product failure, most companies want to be assured that their product will gain
customer acceptance so they engage in testing or a limited launch of the product. When abroad
marketers rely most of the time to their instincts while locally they make extensive use of research and
testings.

other reason for failure are: Lack of product distinctiveness, unexpected technical problem and
mismatches between product functions.

The trend is toward a complete testing of the marketing mix. But because test marketing in Europe and
elsewhere is risky or even impossible researchers have developed three research methods to cope with
the difficulty; Laboratory test markets, Microtest marketing and Forced distribution.

The Global Product Launch

A global product launch means introducing a product into countries in three or more regions within a
narrow time frame. To achieve this a company must undertake a number of measures. The country
managers should be involved in the first stage of product strategy formulation to ensure that local and
regional considerations are part of the overall corporate and product messages. A product launch team
can also approach problems from an industry standpoint, as opposed to a home country perspective,
enhancing product competitiveness in all markets.

Global Management of the Product Portfolio

As a result of development efforts, most marketers may have a considerable number of individual items
in their product portfolios, consisting of different product lines- - that is, groupings of products managed
and marketed as a unit. Added to this, environmental differences will make the strategic planning
process challenging. For global companies planning on a country-by-country basis can result in spotty
worldwide market performance, despite the challenge of the task , the multinational marketer needs to
have a balanced product portfolio—a proper mix of new, growing and mature products to provide a
sustainable long term competitive advantage for the firm

Analyzing the product portfolio

Using the product portfolio approach to analyze international markets requires the inclusion of
additional dimensions to the excercise. These dimensions would include countries, modes of operation,
product markets target segments, and marketing strategy. The specific approach and variables used
will vary company according to corporate objectives and characteristics as well as the nature of the
product market. Various portfolio models have been developed as tools for the analysis. They typically
involve two measures—internal strength and external attractiveness—and the international extension
includes the developments of either (A) a worldwide matrix in which the units classified are products
by countries or (b) a separate classification matrix for each country

Advantages of the product portfolio approach the major advantages provided by the product portfolio
approach are as follows:

1. A global view of the international competitive structure, especially when longer term
considerations are included.
2. A guide for the formulation of a global international marketing strategy based on the suggested
allocation of scarce resources between product lines.
3. A guide for the formulation of marketing objectives for specific international markets based on
an outline of the role of each product line in each of the markets served—for example, to
generate cash or to block the expansion of competition
4. A convenient visual communication goal, achieved by integrating a substantial amount of
information in an appealingly simple format.

Disadvantages of the Product portfolio approach

The application of the product portfolio approach has a number of limitations. International competitive
behaviour does not always follow the same rules as the firm’s domestic market; for example the major
local competitor may be a government-owned firm whose main objective is to maintain employment .
the relationship between market share and profitability may be blurred by a number of factors in an
international environment. Government regulations in every market will have an impact on products a
company can market. Product lines offered will also be affected by various local content laws—those
stipulating that a prescribed percentage of the value of the final product must be manufactured locally.

The fact that multinational firms produce te same products in different locations may have an impact on
consumer perceptions of product risk and quality. If the product is produced in a developing country, for
example the international marketer has to determine whether a well-known brand name can
compensate for the concern a customer might feel. The situation may be more complicated for retailers
importing from independent producers in developing nations under the retailers’ private labels. In
general, country-of-origin effects on product perceptions are more difficult to determine since the
introduction of hybrid products