What are the five factors that influence product adaptation in new markets

Standardization involves offering a common product on a worldwide basis. However, a product may have huge potential for export in one market yet the same product offered in another market may draw a blank. The reasons for this may be as under:

• Different physical conditions.
• Different functional requirements.
• Different cultural factors.
• Different tastes.
• Different levels of skills and levels of technical development.

Due to above factors, a product would require changes-to be made in the product offered in another market. The product to be successful in other markets must be capable of the suitable changes in its design, color, size, taste, packaging etc. This process of change is known as product adaptation. Adaptation involves offering different product versions to meet the specific needs of each of its different global markets.

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The important factors that influence the exporting firm decision in favor of product standardization and adaptations:

• Customer Orientation.
• Stage of Market Development.
• Legal Considerations.
• Climate Conditions and Physical Environment.

Customer Orientation: The most important factor influencing the exporting firm’s decision in favor of product standardization and adaptation is customer orientation i.e., customer’s response to the product. Customer orientation encompasses following elements:

• Purchasing power.
• Tastes, preferences and habits.
•  Socio-cultural factors.
• Literacy and education levels.

The implications of customer orientation for product design would be as under:

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• Product range.
• Size.
• Brand name or mark.
• Labels.
• Package color.
• Use instructions.

Stage of Market Development: Another factor affecting the firm’s decision in favor of standardization or adaptation is stage of market development. Stage of market development is characterized by the following factors:

• Availability of infrastructure support facilities such as transportation, communication etc.
• Level of technical skills.
• Maintenance.

Stage of market development will have implications for product design in respect of product form, packing, product simplification and after sales service.

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Legal Considerations: A number of countries have specified product, packaging, and labeling standards for certain commodities. Such regulations have to be followed in all the cases. Legal considerations include the following:

• Patent.
• Safety standards.
• Commercial terms.
• Control requirements.

Legal considerations affect the product in terns of brand name/mark, label, language, measurement units and sizes, packaging and instructions for use.

Climatic Conditions and Physical Environment: Product decisions are also influenced by climatic conditions and physical environment of foreign countries. Physical environment consists of hot or cold climate, plains or hilly areas, living environment in home etc. Physical environment affects the product in following respect:

The following are the factors that favour product adaptation/differentiation:

• Maximisation of profits is usually the primary motivation for going to the expense of modifying a product and is in direct contrast to the policy of cost reduction through standardisation.
• Differing consumer tastes affect food, fashion, and household products, in particular. However, they also have a strong influence on the design and manufacture of items such as motor cars. For example, the French normally show a strong preference for 4-door models whereas the Germans prefer 2-door models.
• Inadequate consumer purchasing power may necessitate a low price and a corresponding reduction in the quality (e.g. finish or grade) of a product. Packaging, in particular, would be affected in such a case.
• Variations in national conditions, such as different approaches to wearing and washing clothes may necessitate different kinds of washing machines, or soaps and detergents. In some European countries, boiling water is used for washing and, consequently, washing machines must have special built-in heaters. In developing countries, on the other hand, washing is done in streams or rivers and bar soap is much preferred to packaged soap powders which are ineffective if the water used for washing is not confined to a washing machine or other container
• Where the level of technical ability is generally low, a product may have to be simplified or provided with good back-up. Poor maintenance standards in developing countries may give rise to the need for improvements to product reliability or the simplification of the product.
• Tariff levels may dictate local manufacture or assembly, or local purchase of components, thus preventing standardisation.
• Government taxation policy may necessitate changes to the product in order to reduce the amount of tax payable, e.g. car tax related to engine size.
• Due to varying road and traffic conditions, cars, trucks and tyres may need to be modified depending on whether they are destined for industrialised or developing countries.
• Sometimes climatic conditions dictate that modifications be made to products that are sensitive to temperature or humidity, e.g. the composition of car tyres will vary from one market to another depending on the extremes of climate. Similarly, the inclusion of heaters or air conditioners in certain car models will depend on the climatic conditions of the markets concerned.
• When a product is perceived as new in a particular market, it may have to be adapted in order that consumer resistance and slow market growth may be overcome.
• Local labour costs may influence the extent of automation in the production process.

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