6-2 Short Paper

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1 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy Paige Katz INT 640 International Marketing Strategy Dr. Pesakovic January 20, 2024

2 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy Introduction Iran is second largest country in the middle east. They are classified as low-to-middle income by the World Bank ("World Bank country and lending groups," 2024). The target audience will be men aged 24 and up. They would live in small houses or apartments with at least a partner, if not children too (or soon). Family is a big part of Iranian culture and they value dignity as well as respect. There are some more traditional concepts in Iranian culture that are still a larger part of their daily lives (“Iranian culture - Core concepts,” n.d.). The product I have selected is window air conditioner. They are a very common purchase in many parts of the United States. It is far cheaper than central AC and is easy to move to a new location if the need arises. A small unit can range from $150 to $400. Having a window unit uses no floor space while cooling the area with recycled air from the house. That keeps the room(s) cooler with less energy than the portable kind. A window air conditioner is quieter than the portable kind and more effective at cooler larger spaces faster than a typical fan. The specific AC unit I have selected is the 8,000 BTU 115V Window Air Conditioner. It retails for about $299.00 (“8,000 BTU 115V window air conditioner cools 350 SQ. FT. with SMART technology, ENERGY STAR and remote in white,” n.d.). General Electric (GE) is a multinational corporation that has been around for over 130 years. They are very well known and previously had a strong reputation. They have had issues with debt and lost some affiliates. However, the average consumer still trusts the brand. Its public decline affected investors and employees more than anyone else (Hansen, 2018). The company is still considered to be a force

3 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy against its competition in the main three sectors (aviation, health and, power and energy). Many consumers still consider it a top brand for appliances. Based in both brand loyalty and quality. General Electric will always be a well-known brand, it’s been around too long not to be (Hansen, 2018). Globalization versus Responsiveness GE has a presence in over 170 countries (“FAQ,” n.d.). They have invested in many markets and have a strong brand presence throughout. GE made an estimated $67 million outside of the U.S. in 2017 (Gulati, 2017). Per General Electric’s Global Growth Organization CEO Jeff Immelt “ our strategy is based on connected localization” (Salas, 2017). The intention is to build relationships with all their areas of operation. They have a high integration of global commodities while using local responsiveness to market them. They use content marketing and tell stories that are relevant to the people reading them to contextualize the product for the different environments (Silber, 2018). They market appliance to Americans as cool upgrades to necessary products. It’s something we all have, but if you buy GE, you can have the nicest version with cool features. Something like and AC might be so common in America and consumers in that market can spend the extra bit to get a quieter model or a unit that cools larger areas faster. For the clients in a low-income market, an AC would be marketed as a necessity to keep your family from overheating or a luxury item that is sought after to create a better standard of living. Target Market Challenges and Adaptations

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4 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy One of the issues with the product that might affect the target market is the product size. The GE air conditioner is about 12.6 inches tall, 18.6 inches wide, and 15.3 inches deep (“8,000 BTU 115V window air conditioner cools 350 SQ. FT. with SMART technology, ENERGY STAR and remote in white,” n.d.). That isn’t the largest window unit on the market, but the target audience is small families in smaller spaces. The size could be an issue mostly when it comes to storing in the off season. There would have to be a significant space out of the way. Not only that, but when the AC is in use, the immediate space in front has to be somewhat clear for the air to circulate properly. There has to be space outside, as well. Besides the size, the potential usability of the unit itself is something that may need to be worked on. The typical window air conditioner is smaller than most windows with accordion style flaps that pull out to fit various sized areas. They are not usually adaptable to windows that don’t open by sliding the bottom pane up. If the windows open outward, that doesn’t work with the common window AC. Another minor problem with the product is that the motor for the fan and the vibrations against the windowsill cause a bit of noise. That could be a concern for men with smaller children or people who just don’t care for the constant, loud sound. Perhaps the more significant difficulty the target market might face is the cost of purchase and energy. Electricity costs can add up when something as large as an AC window unit is running as constantly as one might have it on. Iran does have access to the resources necessary for cheaper energy costs, however AC units can still add almost a dollar (in USD) more per hour to an electricity bill ("Electricity prices by country 2022," 2023). That combined with a retail price of around $300, a window unit is an expensive addition.

5 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy A proposed change is to make extension flaps for other types of windows than just a single or double hung window. An additional model or feature could be created to adapt to a casement window, sliding window, or awning. That could be am extra flap that goes upwards so the unit still rests on the window sill, or a hard plastic attachment to place the unit higher up in a larger window. The GE 8,000 BTU 115V Window Air Conditioner does have an eco-mode that shuts the unit of when a certain temperature is reached, that allows for energy to be saved and costs to be lowered (“8,000 BTU 115V window air conditioner cools 350 SQ. FT. with SMART technology, ENERGY STAR and remote in white,” n.d.) . The only other solution for the cost issue is to lower the buying price which likely wouldn’t benefit GE. For the noise, I would propose a dampener for the motor or a way to keep the lubrication of the parts higher from the point of purchase so there’s less maintenance needed for the consumer. The other way to solve the external noise because the unit is sitting on the windowsill, GE could put a slight layer of foam or padding to dull the connection between the plastic and the sill. This would have the added benefit of making the window more airtight. Summary of Recommendation to the Company’s CEO Entering low-income market is going to present a number of difficulties and barriers outside of the product itself. However, entering a market that isn’t as saturated will present GE with the opportunity to create a loyal customer base with virtually no competition. They will be making a product accessible to a new audience of people. It just might not present a lot of return on investment right away. There might not be immediate profit. The advantage of being first and being the best will have to outweigh the cost of funds for the startup of the plan. The adaptations

6 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy made will create a more useful and accessible product for the new target market, too. That will be more motivating to them to follow through on the purchase and recommend it to others. Marketing is an important part of communicating the opportunity to the target audience. It’s almost like a first line of offense. Roping them in with the idea and brand recognition. The product development and manufacturing would persuade them further. If GE can show the Iranian market that the air conditioner has been adapted to better fit their needs, it will be worth the cost for the consumers. The marketing metrics give a better insight to what the customer feels and wants, then the production team will act and improve the aspects that they can. All three aspects will be able to work together to make each other and the product more efficient and provide greater profitability. The marketing team provides production with the audience information they need to make the model better, and then the product development gives that plan to manufacturing who in-turn gives the final model info to marketing to push the product into the market. The needs and wants of the target audience in Iran will be vastly different form a U.S. audience. Therefore, each department has to collaborate to ensure the changes are up to date. Internally, strong responsiveness will be imperative as well. The company would be better off using integrated capabilities to stay on top of any changes they need to make. That means being ready to shift focus in the marketing if they see one aspect working more than another. They will need to be able to solve technical issues with the actual product and have solutions for any issues that I mentioned or new ones that might arise as the product hits the

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7 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy market. If GE is able to create as much anticipation as they would need to sell such a high-priced item in a low-income market, they have to be able to respond to retain the market’s interest. Because GE is a multinational corporation, they have to research and make sure entering this market is justified (Kotabe & Helsen, 2022). I believe it is. An AC is a global commodity that can be marketed as a local level. The responsiveness has to be high for it to take-off. GE can penetrate the market easily if they time the launch just as the spring is hitting full swing. They need to get people to think about the hotter season and prepare. However, if the product does not take-off, if people aren’t responding, the market will diffuse much too quickly. A product like an AC is only really purchased if and when it is necessary. GE will need to make sure the target audience knows it’s necessary; before and during the summer, when it’s hot and dry. I don’t think the framing of the marketing will be much different from the U.S. It’s hot and they want people to buy something to cool them down. The local responsiveness will come down to the price and that’s why it needs to be advertised as necessary. That makes it worth it to the lower- income market (Kotabe & Helsen, 2022).

8 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy References 8,000 BTU 115V window air conditioner cools 350 SQ. FT. with SMART technology, ENERGY STAR and remote in white . (n.d.). The Home Depot. https://www.homedepot.com/p/GE- 8-000-BTU-115V-Window-Air-Conditioner-Cools-350-Sq-Ft-with-SMART- technology-ENERGY-STAR-and-Remote-in-White-AHTK08AA/315272966#overlay Electricity prices by country 2022 . (2023, June 12). Statista. https://www.statista.com/statistics/263492/electricity-prices-in-selected- countries/ FAQ . (n.d.). The Next Generation and Future of GE | General Electric. https://www.ge.com/faq Gulati, R. (2017, September 1). GE’s global growth experiment . Harvard Business Review. https://hbr.org/2017/09/ges-global-growth-experiment Hansen, S. (2018, April 6). The rise and fall of General Electric (GE) . Investopedia. https://www.investopedia.com/insights/rise-and-fall-ge/# Iranian culture - Core concepts . (n.d.). Cultural Atlas. https://culturalatlas.sbs.com.au/iranian- culture/iranian-culture-core-concepts Kotabe, M., & Helsen, K. (2022). Global marketing and the internet. In Global marketing management (9th ed., pp. 669-670). John Wiley & Sons. https://mbsdirect.vitalsource.com/books/9781119888727 Salas, A. (2017, July 10). GE CEO Jeff Immelt discusses globalization . McDonough School of Business. https://msb.georgetown.edu/news-story/ge-ceo-jeff-immelt-discusses- globalization-1/

9 6-2 Short Paper: The Integration-Responsiveness Framework in Product Innovation Policy Silber, T. (2018, June 20). Multinational conglomerate GE goes all in on content marketing . Forbes. https://www.forbes.com/sites/tonysilber/2018/06/20/multinational- conglomerate-ge-goes-all-in-on-content-marketing/?sh=23d7111763da World Bank country and lending groups . (2024). World Bank Data Help Desk. https://datahelpdesk.worldbank.org/knowledgebase/articles/906519

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