ADAPTATION OF PRODUCTS & SERVICES

For an International Market

MBA. Oscar Vilela Seminario

LEARNING OUTCOME

At the end of the session the students

understand the product & service adaptation

what allows them to create an adaptation

strategy for the product or service they are

working with.

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MBA. Oscar Vilela Seminario
¿WHAT IS PRODUCT & SERVICE ADAPTATION STRATEGY?

Case:

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MBA. Oscar Vilela Seminario
BE AWARE OF…

o Decisions that affect products are always

crucial to consider.

o Different countries, different perceptions.

o Ethnocentric orientation. o Companies focus on market research.

o Polycentric and multidomestic orientation. o Two extreme positions: Standardization and

o Geocentric or global orientation. Adaptation.

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MBA. Oscar Vilela Seminario
ALTERNATIVE STRATEGIES: ADAPTATION VS STANDARDIZATION

o Breakeven between standardization and

adaptation.
o Three alternatives to decide what products or
services sale in foreign markets.
o Evaluate the company’s international situation.
o Standardization.
o Adaptation.
o Conflict between standardization and adaptation.

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MBA. Oscar Vilela Seminario
WHAT TO ADAPT?

Philip Kotler states that the components or elements

that constitutes a product and differentiate one from
another are:

The adaptation could be focused on one

of the areas or the three at the same
time, depending on the market needs
and company policies.

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MBA. Oscar Vilela Seminario
WHAT TO ADAPT?

Price is very relevant. A product with the same characteristics

can be considered different because of the price.
Also, the intangible elements of the product or service contribute
to its differentiation.
o For instance, a well positioned product as luxury that is
physically inferior to a lower level product, would have more
value for the consumer and s/he would pay the established
price.

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

1. Political & Legal

International companies must consider the laws and rules established
by the government of the target market:
o Simple Modifications: Ex. The labeling rules that affect packaging
about the information and language used.
o Complex Modifications: Administrative rules that are strict and
difficult to comply. Ex. Changes in the ingredients (Muslim
countries).

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

Indian government demanded to the Coca Cola Company to

supply its formula to make sure citizens would be health. The

company refused and had to leave the market. It went back

when the problem was softened.

Even global products need some kind of adaptation to

introduce in new and different markets.

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

2. Characteristics of the Product & Consumer

These kind of modifications are identified by a detailed study

to understand market characteristics:

o Would these characteristics be homogeneous?

o Would the retail channel be the same in the target?

o Would the product satisfy the same needs and desires?

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

For instance,
o If the purchasing capacity is modest, the number of units per package may need to be
reduced in order to decrease the unit price of the product.
o Also, the price can be reduced by simplifying the product (cars with less attributes, less
sophisticated home appliances, etc).
o The design can be simplified to reduce the performance of the product and at the same
time to reduce breakdowns that are difficult to solve in developing countries.

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

3. Characteristics of the International Company

Companies must consider:

o Suitability of the products to be sold.

o Sales volume and pricing: Will they allow enough profit?

o Among others.

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

3. Characteristics of the International Company

3. 1 Domestic Market Extension Strategy:

o Sell the same products as in the national market (minimal

changes).
o Export to: Augmenting sales and reducing the production excess.
o Foreign demand like the one in the own market.
o Use the same marketing strategies than the one in the own market.

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

3. Characteristics of the International Company

3. 2 Multidomestic Strategy: Adapting the products to the target needs

o Marketing plans: Individualized for each market.

o Products, price, promotion and distribution are adapted for each market.
o International companies: Financial controls to subsidiaries.
o Local Management: Strategy is local and according to the market.

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MBA. Oscar Vilela Seminario
FACTORS THAT INFLUENCE THE DECISION

3. Characteristics of the International Company

3. 3 Global Strategy: Designing standardized products for all markets

o Every subsidiary carry out similar tasks and solve similar problems.
o Global performance focused on a single market.
o Headquarters: Great authority and places managers with responsibility
in all functional areas, seek efficiency through economies of scale.
o Gain efficiency: Standard products, Good quality and reasonable prices.

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MBA. Oscar Vilela Seminario
TAKEAWAYS

Understanding your target is a must!. If you fail with that, it could be

the end of your business.

Consider the strengths and weaknesses of your business to evaluate

if you will be able to satisfy the needs of the target.

Contrast your hypothesis with the information gathered and make the
best decisions.

Contact the right people in the target country to support the

introduction in that market.

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MBA. Oscar Vilela Seminario
THANKS SO MUCH!

MBA. Oscar Vilela Seminario