Abstract
This chapter provides an overview of the main issues related to the management of the PLC and the diffusion of innovation across different national markets. Marketing plays a strategic role in establishing the most appropriate actions concerning innovation management and marketing decisions in foreign markets. The relationship between transcultural marketing and the PLC is investigated from consumer and company perspectives to provide an overview of the main criticalities. The design of the chapter follows a three-stage structure. The first section discusses the main issues related to the different shapes of the PLC in different countries, with a particular focus on the analysis of the takeoff point and adoption rate. In the second section, the relationship between consumer culture and the development of the PLC in multiple cultures is analyzed. Finally, the last section is dedicated to marketing strategies developed to manage different phases of the innovation process in different countries, with a focus on the role of the government and public policy makers in pushing the innovation process.
TopPlc Variation Across Countries
When manufacturers of high powered motorbikes entered the Chinese market, they were convinced they were entering a market where opportunities for growth could be very high. China has always been a country of two wheels, and penetrating the Chinese market with a highly differentiated brand well-known all over the world presented an objective perceived to be easily reachable by many Western companies. US- and European-based companies were willing to invest, shifting their efforts from their mature markets where high powered and luxury motorbikes were facing a significant sales slowdown to a promising emerging market such as China. However, sales were far from expected.
In China, high powered motorbikes occupy the introduction phase and the PLC has faced difficulties developing for different reasons related both to consumer characteristics and local government. On the consumer side, potential buyers have a very limited knowledge of a product’s technical characteristics. Furthermore, in a country where bicycles and small motorbikes are the only transport mode for people who cannot afford a car, the transition to a higher social status is symbolically represented by owning “four wheels.” In other words, the choice of a luxury motorbike comes before the choice of a luxury car. In addition, the government does not favor an increase in the product adoption rate. High-powered motorcycles were legalized in China only in 2008, delaying the starting point of the PLC in this market. Today, there are still many limitations to circulation, especially in first tier cities, but the real impassable limit is price. Western brand prices are prohibitive in China.
With taxes that account for about 35 percent of the initial price and homologation costs of about US$5000, the cost of these products almost double in export markets. This situation restrains product sales, requires investments in sales promotion, and the development of a capillary sales network. Therefore, profitability is still far away (Vianelli et al., 2012). This example highlights how, in a global context, companies launching products new to some foreign countries must be able to manage both the criticalities linked to different starting points and takeoff times, and determine the presence of their product in different phases of the PLC across different markets. In fact, the shape of the PLC curve is influenced by two of the most critical uncertainties associated with new-technology/product introductions (i.e., whether and when the target market will adopt them).
Key Terms in this Chapter
VALS: VALS stands for Values, Attitudes and Lifestyles and it is a psychographic consumer segmentation system owned by Strategic Business Insights and based on the following eight consumer segments: innovators, thinkers, achievers, experiencers, believers, strivers, makers and survivors.
LOV: LOV stands for List Of Values and it is an approach to segmentation proposed by Lynn Kahle in 1983 in order to measure cultural values as a determinant of consumer behavior. LOV is based on nine different consumers’ values: self-respect, security, warm relationships with others, self fulfillment, sense of accomplishment, being respected, sense of belonging, fun and enjoyment, and excitement.
Hofstede’s Five Cultural Dimensions: Five dimensional cultural framework developed by Geert Hofstede in 1980, including the following dimensions: individualism vs collectivism; masculinity vs femininity; uncertainty avoidance; power distance ; long vs short term orientation.
Product Life Cycle (PLC): The Product life cycle is the course taken by a product’s sales and profits over its lifetime. The product life cycle is divided in different stages: research and product development, introduction, growth, maturity and decline.
Take-Off Point: The take-off point in the PLC is the time a specific product starts growing steadily in the market.
High vs. Low Context Countries: Classification proposed by Edward Hall in 1976. High context countries tend to use high-context messages, where the meaning of the communication is hidden in the words or in the background of the specific context. Vice versa low context countries use low-context messages, where the words are explicit and communication is clear.
Cultural Values: Set of values and generic beliefs that individuals naturally learn through education and socialization and that are recognized and shared by the members of a society.
Starting Point: The starting point in the PLC is the time of adoption of a specific product by innovators. If there are some limitations to the diffusion of a new product, the starting point can differ from the time a new product is introduced into the market.