Exporters will never have a perfect product. Their products will always be at the mercy of competitive pressures, changing market preferences and emerging new technologies. Success depends on understanding and anticipating change through continual improvement. Developing products for new international markets is a continual process.
Staying competitive and increasing sales in international trade means investing in new product development and product adaptation. This investment ensures products meet the regulations, needs and expectations of the new markets, better positioning the venture for success.
New product development for foreign markets
In international trade, product development refers to the creation of new products specifically designed for foreign markets. Product adaptation refers to the redesign or modification of an existing product to meet the needs of one or more overseas markets. This includes any customization required for the consumer.
The steps to develop a new product and those to adapt an existing product are fundamentally the same, with only slight differences. Although product adaptation can be simpler since an elemental design already exists, adaptations must also be designed, employing the same rigour and strategies used when designing or developing a new product.
Product development and adaptation is the continual process of bringing goods to the marketplace as products move through their life cycle, such as replacing discontinued products with new or adapted products.
Different types of products can serve different purposes:
- Innovative products are a means to enter an existing market
- Additions to existing product lines supplement and expand options for consumers
- Improvements or revisions to an existing product line can improve market share and re-engage past consumers
- Repositioning products allows companies to target new markets
- Product development and adaptation can be used to reduce production costs and sometimes reduce prices for consumers when a similar product can meet the same needs at a lower cost
Using market research to make the right decisions for your products
Organizations selling products internationally to multiple markets need to know exactly where the product they sell is in the product life cycle, for each market. This knowledge, combined with research on competitors’ products, current regulations and market demand, helps to determine whether they need to adapt a current product or develop a new product before entering a new target market.
In many cases, products need to be changed before they can be introduced into new markets. Depending on the life cycle stage, this may involve marginal changes to product labelling or packaging, or involve alterations to design and functionality.
For example, infant car seats have reached the maturity period in North America, but the pioneer period in China. A French manufacturer looking to expand into the U.S. may need to adapt its product based on regulatory differences, as well as on competitors’ products, trends and consumer preferences. It may need to considerably differentiate its product to break into the competitive American market, and perhaps even look at developing a new, cutting-edge car seat.
To establish sales in China, the manufacturer would also explore whether regulations would require adapting its seat, but would face far less competition and lack consumer feedback. It may wish to conduct surveys or focus groups, and it may need to change its packaging to outline how car seats reduce injury and death.
When introducing a product into a foreign market, an organization can choose from several options:
- Sell the product as is, with no modifications or changes
- Create modified versions of the existing product, each one aimed at a different market. For example, modifying products for safety and functional requirements like power requirements that need to change from 110 volts to 220 volts
- Incorporating locally induced differences into product offerings, known as “glocalization”
- Create new products for different markets
- Modify the services accompanying the product to better accommodate market requirements
The mode of product introduction will depend on the information gathered about the target market as well as market intelligence findings.
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When is product adaptation necessary?
Occasionally, modifications to products or processes might not be necessary. The company might be able to export the same product and use the same processes as it does for its domestic market, as in cases where the company:
- Deals with customers who want a product because it is the same in all worldwide markets, such as jeans, records, photographic equipment
- Supplies generic components for export without modification, such as tires or computer chips
- Produces a unique product that is sold based on its status or foreign appeal such as brand-name luxury items
- Produces a product that is sold exclusively on a commodity or price basis, such as iron ore or wheat
In other cases, intelligence gathered with research will indicate that a product is unsuitable for a market and cannot be modified to make it suitable.
In some markets, companies have no choice but to adapt a product before exporting it. Climate and geography are perhaps the most fundamental factors – for example, cereal must be sold in foil packaging in humid climates. Adaptation may also be necessary due to legal requirements, tariff structures, taxation or other types of government regulations that affect components, raw materials, technical specifications, product standards, quality control, brand protection, testing and approval procedures. For example:
- Perfumes sold in the Middle East cannot contain alcohol
- Germany’s beer purity regulations forbid the sale of beer containing anything but water, hops, malt and yeast
- Fertilizer formulas must be adjusted to match soil conditions in the importing country
Some product-market mismatches might be eliminated over time. For example, many Asian countries do not commonly use milk or milk products, but this could change with the right product and marketing approach. However, such an attempt would likely require a lot of time and investment and would have no guarantee of success.
Research and the resulting product adaptation processes are not a one-time project. Applying market intelligence should be a process of continual improvement.
The relationship between market research findings and production operations is crucial for maximizing product life cycles and to build upon product platforms, enabling the successful development of products for new and existing markets.