Product Decision

The product decision is among the first decision that an international marketer makes in order
to develop a marketing mix. A product can be defined as a bundle of attributes that is able to
satisfy a customer demand. It may be offered to the customer in the form of a tangible item, a
service, or an idea. The customers do not simply purchase a product in the physical sense;
they buy satisfaction, which is derived from the product’s attributes, a variety of features and
characteristics. Thus, among the early and critical decisions to be made by a firm going for
international marketing is the choice of products to be offered, as each product must meet the
needs of the potential user. It must be subjected to extreme scrutiny from the user’s viewpoint
before committing the firm’s resources for the development of the product.

New Product Development for International Market

There are six distinct steps involved in new product development, which can be enumerated
as follows:

(1) Generation of new product ideas

(2) Screening of ideas

(3) Business analysis

(4) Product development

(5) Test marketing

(6) Full scale commercialization

(1) Generation of new product ideas

The first step involves generation of new product ideas. Such ideas can come from any
number of sources, such as, salespersons, employees, competitors, governments, marketing
research firms, customers etc. For example, a 3M company chemist, after spilling some liquid
on her tennis shoes, discovered that that they had become capable of repelling water and dirt,
leading to the birth of Scotchgard fabric protector.
(2) Screening of ideas

Once various ideas have been thought of, the next step is the screening of ideas. The purpose
of screening is to eliminate those ideas that are prima-facie not practical. After preliminary
screening, these impractical ideas are left out and a few ideas are chosen for detailed study.
Ideas must be acknowledged and reviewed in order to determine their feasibility. Thus, the
ideas received go through the screening process to select the promising ideas for detailed
consideration. To determine suitability, a new product concept may simply be presented to
potential users, or an advertisement based on the product can be drawn and shown to focus
groups to obtain candid reactions. As a rule, corporations generally have predetermined goals
that a new product must meet. For example, Kao Corporation, a major Japanese manufacturer
consumer goods is guided by five principles of product development, that is, firstly, the new
product should be truly useful to society, not only currently but also in the future. Secondly, it
should make employ Kao’s own creative technology or skill. Thirdly, it should be superior to
the new products of competitors, from the perspective of both cost and performance.
Fourthly, it should be able to stand exhaustive product tests at all stages prior to its
commercialization, and lastly, it should be capable of delivering its own message at each
level of distribution. Thus, various aspects like, utility in the present and future, whether it
necessitates new skills and technology and whether exhaustive product tests are required etc.,
are taken into consideration.

(3) Business Analysis

The third step is business analysis, which is essential to estimate product features, cost,
demand and profit. For example, Xerox has small so-called product synthesis teams to test
and discard unsuitable ideas. Numerous competing teams of designers produce a prototype,
and the winning model that meets present goals then goes to the ‘product development’ team.

(4) Product development

The fourth step is product development, which comprises of lab and technical tests as well
manufacturing pilot models in small quantities. At this stage, the product is likely to be
handmade or produced by existing machinery instead of using any new specialized
equipment. Ideally, engineers should receive direct feedback from both customers and
dealers. For example, Goldstar Co., by letting its engineers out of the laboratories and into the
market to recognize what Korean customers want, got an idea to make a refrigerator that can
keep ‘Kimchi’, Korea’s national dish, fresh and odourless for a long time. The refrigerator
witnessed an instant success and enabled Golstar to regain the top position, which it lost to
Samsung in the late 1980s.
(5) Test marketing

The product at this stage is manufactured in small quantity and is introduced in small
segment of the market in order to check whether the consumers accept it or not. The purpose
behind market testing is to know consumers’ reaction to the product. Feedback from test
marketing will help the firm in removing shortcomings in the product and improving it as per
the needs to increase consumer acceptance. In the case of international marketing, market
testing should be carried out in the particular target market. Services of marketing research
agencies can also be utilized for market testing in foreign countries. Test marketing is also
done to determine potential marketing problems and the optimal marketing mix. However,
test marketing may be irrelevant in countries where most major media are more national than
local. If the television medium has a nationwide coverage, it is impractical to limit a
marketing campaign to one city or province for test marketing purposes.

(6) Full-scale commercialization

Finally, assuming that things go well, the company is ready for full-scale commercialization
by actually undergoing full-scale production and marketing. Based on the market testing
reports, the firm will make necessary modifications in the product, manufacture on
commercial scale and launch it in the market. Some important marketing decisions are as
follows:

(i) Time of launching the product

(ii) Market for launching the product

(iii) Whom to target for initial sales

(iv) Type of marketing channels used

It should be noted that not all of the above six steps in new product
development will be applicable to all products and countries.

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