Page 167 - International Marketing

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BRILLIANT'S Overseas Market 169

there was a practice to hang clothes outside Factors Encouraging
to dry. Thus, adding a different drying module Standardization
affected the cost of the product.
2. Industrial products: Generally, 1. High cost of ada-
industrial products tends to be more ptation
standardized than consumer goods. Even if 2. Industrial products
they are modified, the changes are likely to 3. Use in urban envi-
be minor. For example, an adaptation of ronments
the electric voltage or the use of metric 4. Economies of scale
measures. 5. Convergence and
3. Use in urban environments: It has similar tastes
been observed that products targeted at urban
markets in developing countries tends to be similar to those marketed in
developing countries. Products targeted at semi-urban markets require
more changes. It suggests that urban environments are similar across
countries. For example, cars designed for large cities or urban people,
can be standardized across group's of countries that share similar levels
of income.
4. Economies of scale: Standardization demands high volumes of
production, which results in economies of scale. It helps in minimizing the
cost and price of products.
5. Convergence and similar tastes: The convergence and similar
tastes in various markets leads to standardization. As countries attain
economic development, their consumption patterns are likely to converge.
For example, the European region has emerged as a single market with
similar consumption patterns and per-capita incomes. This allows the
firms to sell a standardized product throughout the Europe.
Factors Encouraging Adaptation
There are a number of factors which force an MNC to resort to product
adaptation. Modifying products to meet the local needs tends to raise
sales revenue. These various factors are as follows:
1. Difference in technical standards: Every country has its own
technical specifications and a particular product must meet these
specifications if it is to be marketed there. For example, Saudi Arabia
requires two meters long electrical connecting cords on consumer
appliances. GE suffered the embarrassment and loss of profit at a Saudi
port, when an inspector rejected their connecting cords because of mere
17 cm discrepancy.