A product is multidimensional and the sum of all its features determines the bundle of satisfaction (utilities) received by the consumer. To identify all the possible ways a product may be adopted to anew market, it helps to separate its many dimensions into three distinct components as illustrated, the product component model. By using this model the impact of the cultural, physical and mandatory factors that affect a market’s acceptance of a product can be focused on the core component packaging component and support services component. These components include all a product’s tangible and intangible elements and provide the bundle of utilities the market receives from use of the product.
The core component consists of the physical product – the platform that contains the essential technology – and all its design and functional features. It is on the product platform that product variations can be added or deleted to satisfy local differences. Major adjustments in the platform aspect of the core component may be costly because a change in the platform can affect product processes and thus require additional capital investment. However, alterations in design, functional features, flavors, color, and other aspects can be made to adapt the product to cultural variations. In Japan, Nestle originally sold the same kind of corn flakes it sells in the United States but Japanese children ate them mostly as snacks instead of for breakfast. To move the product into the larger breakfast market Nestle reformulated its cereals to more closely fit Japanese taste. The Japanese traditionally eat fish and rice for breakfast, so Nestle developed cereals with familiar tastes – seaweed, carrots and zucchini and coconuts and papaya The result was a 12 per cent share of the growing breakfast cereal market.
For the Brazilian market, where fresh orange juice is plentiful, General Foods changed the flavor of its presweetened powdered juice substitute Tang from the traditional orange to passion fruit and other flavors. Changing flavor or fragrance is often necessary to bring a product in line with what is expected in a culture. Household cleansers with the traditional pine odor and hints of ammonia or chlorine popular in US markets were not successful when introduced in Japan. Many Japanese sleep on the floor on futons with their heads close to the surface they have cleaned, so a citrus fragrance is more pleasing. Rubber maid could have avoided missteps introducing its line of baby furniture in Europe with modest changes in the core component. Its color were not tailored to European tastes, but worst of all, is child’s bed didn’t fit European made mattresses!
Functional features can be added or eliminated depending on the market. In markets where hot water is not commonly available, washing machines have heaters as a functional feature. In other markets, automatic soap and bleach dispensers may be eliminated to cut costs or to minimize repair problems. Additional changes may be necessary to meet safety and electrical standards or other mandatory (homologation) requirements. The physical product and all its functional features should be examined as potential candidates for adaptation.
Production of Innovation
Some consideration must be given to the inventiveness of companies and countries. For example it is no surprise that most of the new ideas associated with the internet are being produced in the United States. The 160 million American users of the Internet far outnumber the 62 million Japanese users. Similarly America wins the overall R&D expenditure contest. Expenditures are about the same across member countries of the Organization for Economic Cooperation and development at about 2 to 3 per cent of GDP, so America’s large economy supports twice the R&D spending as does Japan for example. This spending yields about three terms the US patents granted to American firms versus Japanese firms. Most interestingly the Japanese government had diagnosed the problem as a lack of business training. Japanese engineers are not versed in marketing and entrepreneurship and American style educational programs are being created at a record pace to fill the gap Many Japanese firms also take advantage of American innovativeness by establishing design centers in the United States – most notable are the plethora of foreign auto design centers in southern California. At the same time American automobile firms have established design centers in Europe. Recent studies have shown that innovativeness varies across culture and companies are placing design centers worldwide. Indeed, the Ford Taurus the car that saved Ford in the 1980s was a European design.
While increasing numbers of Japanese at the largest and most diversified firms are going back to business school, their Korean conglomerate competitors are leveraging their vertical integration more successfully at the lower end of the consumer electronics business. Samsung has created a number of very successful innovations by tying together product development teams across semiconductors telecom digital appliance and digital media units. Finally, it must be recognized that new ideas come from growing variety of sources countries acquisitions and even global collaborations.