A product is often considered in a narrow sense as something tangible that can be described in

terms of physical attributes, such as shape, dimension, components, form, color, and so on. This
is a misconception that has been extended to international marketing as well, because many
people believe that only tangible products can be exported. Actually, intangible products are a
significant part of the American export market. For example, American movies are distributed
worldwide, as are engineering services and business-consulting services. In the financial market,
Japanese and European banks have been internationally active in providing financial assistance,
often at handsome profits. Even when tangible products are involved, insurance services and
shipping are needed to move the products into their markets.
Therefore, a complete product should be viewed as a satisfaction derived from the four Ps of
marketing (product, place, promotion, and pricing) and not simply the physical product
characteristics. Since a product can be bundled, it can also be unbundled. One problem with a
bundled product is the increased cost associated with the extra benefits. With the increased
cost, a higher price is inevitable. Thus a proper marketing strategy, in some cases, is to unbundle
a product instead so as to get rid of the frills and attract price-sensitive consumers

NEW PRODUCT DEVELOPMENT
There are six distinct steps in new product development. The first step is the generation of new
product ideas. Such ideas can come from any number of sources (e.g., salesperson, employees,
competitors, governments, marketing research firms, customers).
As in the case of Japan, already one out of
five Japanese is age 65 or older, and the trend
has adversely affected baby food. Japanese food companies were intrigued to
learn that the same characteristics which make baby
food appealing to babies (soft, small morsels, low
salt, easy preparation) also attracted old people.
The second step involves the screening of ideas. Ideas must be acknowledged and reviewed to
determine their feasibility. To determine suitability, a new product concept may simply be
presented to potential users, or an advertisement based on the product may be drawn and
shown to focus groups to elicit candid reactions. As a rule, corporations usually have
predetermined goals that a new product must meet.
Kao Corporation, a major Japanese manufacturer of
consumer goods, is guided by the following five
principles of product development: (1) a new product
should be truly useful to society, not only now
but also in the future, (2) it should make use of Kaos
own creative technology or skill, (3) it should be
superior to the new products of competitors, both
from the standpoint of cost and performance, (4) it
should be able to stand exhaustive product tests at all
stages before it is commercialized, and (5) it should be capable of delivering its own message at
every
level of distribution.3
The third step is business analysis, which is necessary
to estimate product features, cost, demand, and
profit. Xerox has small so-called product synthesis
teams to test and weed out unsuitable ideas. Several
competing teams of designers produce a prototype,
and the winning model that meets preset goals then
goes to the product development team.
The fourth step is product development, which
involves lab and technical tests as well as manufacturing
pilot models in small quantities. At this
stage, the product is likely to be handmade or produced
by existing machinery rather than by any new
specialized equipment. Ideally, engineers should
receive direct feedback from customers and dealers.
Goldstar Co., by letting its engineers out of the lab into the market to see what Korean
customers want, got an idea to make a refrigerator
that can keep kimchi (fermented pickled cabbage or
radishes which are Koreas national dish) fresh and
odorless for a long time. The refrigerator was an
instant hit and enabled Goldstar to regain the top
position which it lost to Samsung in South Korea in
the late 1980s.4
The fifth step involves test marketing to determine
potential marketing problems and the optimal marketing
mix. Anheuser Busch pulled Budweiser out
of Germany after a six-month Berlin market test in
1981. Its Busch brand was another disappointment
in France, where this type of beer did not yet correspond
to French tastes.
Finally, assuming that things go well, the
company is ready for full-scale commercialization by
actually going through with full-scale production
and marketing.
It should be pointed out that not all of these
six steps in new product development will be
applicable to all products and countries. Test marketing,
for example, may be irrelevant in countries
where most major media are more national than
local. If the television medium has a nationwide
coverage, it is not practical to limit a marketing
campaign to one city or province for test marketing
purposes.
Unfortunately, it is easier for a new product to
fail than to succeed. Naturally, so many things can
go wrong. Therefore, it is just as crucial for a
company to know when to retreat as when to launch
a product. Coca-Colas Ambasa Whitewater, a lacticbased
drink, was removed from the market after
eighteen months when sales started to decline.
MARKET SEGMENTATION
Market segmentation is a concept to which marketers
and academics like to pay a great deal of
attention.