Thursday, May 20, 2021

Straight Extension

 Straight Extension 

In straight extension the same product is marketed to all countries (a "world" product), except for labeling and language used in the product manuals. The assumption behind this strategy is that consumer needs are essentially the same across national boundaries. Straight extension can be successful when products are not culture sensitive and economies of scale are present. The Philip Morris USA tobacco company used this strategy successfully with its Marlboro brand cigarette. The strategy has also been successful with cameras, consumer electronics, and many machine tools.


Straight product extension. Straight product extension means marketing a product in a foreign market without any change. “Take the product as is and find customers for it.” The first step, however, should be to find out whether foreign consumers use that product and what form they prefer.

In straight extension the same product is marketed to all countries (a "world" product), except for labeling and language used in the product manuals. The assumption behind this strategy is that consumer needs are essentially the same across national boundaries.

It is extremely difficult to standardize advertising across countries because of variations in economic, social, and political environments. Companies, however, can use one message everywhere, varying only the language or color. Marlboro and Camel cigarettes, for example, essentially use the same message in their international promotion programs. Transferability of an advertising message is still a difficult problem even when the primary benefits of the product remain intact across national boundaries. Some promotional blunders are well known to marketing students. Coors's slogan "Turn it loose" in Spanish was read by some as "suffer from diarrhea"; in Spain, Chevrolet's Nova translated as "it doesn't go"; and a laundry soap ad claiming to wash "really dirty parts" was translated in French-speaking Quebec to read "a soap for washing private parts."

Multinational companies find it difficult to adopt a standardized pricing strategy across countries because they have to deal with fluctuating exchange rates, differences among countries in transportation costs, governmental tax policies, and controls (such as dumping and price callings). Keegan proposed three global pricing alternatives. The first policy is called extension/ethnocentric. Under this policy, the firm sets the same price throughout the world and the customers absorb all freight and import duties. The main advantage of this policy is its simplicity, but its weakness is its failure to take into account local markets' demand and competitive conditions. The second alternative is called adaptive/polycentric. Under this policy, local management establishes whatever price it deems appropriate at any particular time. This policy is sensitive to local conditions; nevertheless, it may favor product arbitrage where differences in price between markets exceed the freight and duty cost separating the markets. The last alternative is called invention/geocentric pricing. This policy is an intermediary position. It neither sets a single worldwide price nor relinquishes total control over prices to local management. This policy recognizes both the importance of local factors (including costs) and the firm's market objectives.

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