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CHAPTER 10
Global Product Strategies
CHAPTER OUTLINE
LXII. Product Design in a Global Environment
A. Benefits of Product Standardization
B. Global Product Service
LXV. Managing a Global Product Line
A. Exploiting Product Life Cycles
LXVI. Global Products
A. Modularity
B. Global-Product Development
LXVII. Managing Global Research and Development
A. Centralized Research and Development
LXVIII. Introducing New Products to Global Markets
A. Concept Tests
B. Test Marketing
C. Timing of New Products Introductions
LXIX. Conclusion
CHAPTER OBJECTIVES
At the end of this chapter, students should be able to do the following:
List the advantages of product standardization and product adaptation.
Differentiate between mandatory and discretionary product adaptations.
Explain the concepts of global product standards and generic management system standards.
products from other firms.
Discuss the use of acquisitions and alliances for the purpose of product development.
Explain the process of introducing new products to global markets, including concept testing,
test marketing, and the timing of new product introduction.
QUESTIONS FOR DISCUSSION
1. Compare probable product adaptations for consumer products versus high-technology
industrial products. What differences exist? Why?
Pressures to adapt high-technology industrial products are often less than adaptation pressures
for consumer products. Demand for and use of high-technology products, particularly among
2. American fast food, music, and movies have become popular around the world with
little product adaptation, whereas U.S. retailers, banks, and beer companies have had to
adapt their products more to global markets. Why?
When consumers outside the United States eat American fast food, listen to American music,
or watch an American movie, they often are seeking to experience a slice of American life.
3. What, in your opinion, will be the future for global products?
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Global products rely on a standardized base to which local adaptations can be added. The
4. What is the impact of a loss of lead-market position in several industries for U.S.-based
corporations?
U.S. company losses of lead-market positions in several industries is a sign of increasing
5. If you were to test-market a new consumer product today for worldwide introduction,
how would you select test countries for Europe, for Asia, and for Latin America?
Smaller markets within each region should be chosen as test markets. For example, the
CASE 10.1: “ETHICAL” PRODUCTS
Consumer concern over products made in sweatshops has soared as activists expose the difficult
and in some cases inhumanelabor conditions in the production facilities of many global
companies, such as Wal-Mart and Nike. This case describes how companies have responded to this
negative publicity, seeking ways to increase their credibility and brand image. It also explains the
emerging role of social auditing in international business.
Before tackling the questions posed at the end of the case, it can be useful to first ask the students
to describe what they think of when they visualize a global brand factory in a developed and a
developing country. For example, students can be asked, Imagine a Nike shoe factory in
Frankfurt, Germany. What images come to mind? Is this a good place to work? Would you like to
work there? Why or why not? Then ask the students, Now imagine a Nike shoe factory in
Jakarta, Indonesia. What images come to mind? Is this a good place to work? Would you like to
work there? Why or why not?
Next, it can be interesting to probe the dissimilarities in the students observations: Why do you
DISCUSSION QUESTIONS
1. What can global firms do to make their products more socially acceptable?
They may seek Social Accountability 8000 certification. Also, they may invest in the human
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2. What do you think they should do? Why?
After listing on the board suggestions such as those noted above, you might want to ask for a
vote on each of the options. A discussion of the pros and cons of each could then follow.
Evaluations may be based on an economic cost-benefit analysis. For example, how expensive
3. What are the costs to global firms of keeping their products sweatshop-free?
In-house and outsourced monitors of factory labor conditions around the globe require
4. What are the possible costs of not complying with SA 8000?
Companies lacking SA 8000 certification may be assumed to be unethical and socially
unacceptable; therefore brand equity may be diluted if the failure to seek or receive SA 8000
5. What ethical issue is more important to you—labor conditions or environmental
sustainability? Why?
CASE 10.2: LAUNCHING INTUITION
At the time of the case, Estée Lauder dominated the U.S. department store fragrance market,
owning five of the top ten department-store scents. Previous new Estée Lauder products were
developed in the U.S. market and then sent into international markets. Estée Lauders Intuition
fragrance was developed through the first-ever collaborative effort between Estée Lauders U.S.
and European development centers. The product will first be launched in Europe and then rolled
out to Asia and Latin America before being introduced in the United States as a product previously
available only in Europe.
DISCUSSION QUESTIONS
1. What are possible reasons for the unconventional development and launch of Intuition?
Lauders traditional lead market, the United States, is in a slump. Attracting consumers to a
new product in this market may not be cost effective and even may be impossible.
2. What difficulties might the company face with such a launch?
Because Intuition has been developed to be a global fragrance, it possesses a scent that may
be successful in many markets. However, its light scent may not be extremely appealing to
European consumers, who are used to heavier fragrances.