Evaluate the factors of Standardization and Adaptation of the product.
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.
- Brand name or mark.
- 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.
Stage of market development will have implications for product design in respect of product form, packing, product simplification and after sales service.
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:
- 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:
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- Packaging protection.
- Package size.
- Product storage.