Title: Chapter 10 Product and Brand Decisions
1Chapter 10 Product and Brand Decisions
2Introduction What to Sell ?
- The international marketer needs to determine
what the market offering should be in a foreign
market - Defining the product offering
- Products versus Services/Rights
3The Product Offering
Potential Product
Augmented Product
Expected Product
Generic Product
Core Benefit
Source Adapted from P. Kotler, Marketing
Management, 1994
4Basic Product Concepts
- A product is a good, service, or idea
- Tangible Attributes
- Intangible Attributes
- Product classification
- Consumer goods
- Industrial goods
5Product Warranty and Service
- Product Warranty
- Should a company keep the same warranty for all
markets or adapt it country by country ? - Should the firm use warranty as a competitive
weapon ? - Product Service
- Service capability to accredit the firm with
foreign suppliers - high investment in facilities, staffing,
training, and distribution network
6Goods versus Services/Rights
- Instead of marketing a product abroad, the
company may also sell rights or services in a
foreign market- rights brand / trademark /
patent- services management skills (hotel
chain)
7Sales of Rights - Examples
- Franchising business - Coca-Cola use of its
name to licensed bottlers around the world.-
Pilkington licensing of the process of
float glass.- Other Manpower,
McDonald's, etc.
8Sales of Rights - Examples
- Management Contracts - Sheraton Hotels
- Management contract for hotels abroad
- Sale of consulting and management contracts
- Little equity invested Sheraton manages almost
400 hotels worldwide but has equity in only 40 of
them. - Advantages minimum risk strong competitive
position.
9Sales of Rights - Examples
- Turn-Key operations
- The firm is selling technical and engineering
skills. - The firm is training foreign nationals to run a
plant. - The firm is supplying material and equipment.
10International Product Strategies
Straight
Product
Product
Extension
Adaptation
Innovation
The firm adopts the same policy used in its home
market.
The company caters to the needs and wants of
its foreign customers.
The firm designs a product from scratch for
foreign customers.
Source W.J. Keegan, Multinational Product
Planning Strategic Alternatives, Journal of
Marketing, 33, 1969, pp.58-62
11Extend, Adapt, Create Strategic Alternatives in
Global Marketing
- Extension offering product virtually unchanged
in markets outside of home country - Adaptation changing elements of design,
function, and packaging according to needs of
different country markets - Creation developing new products for the world
market
12Global Product Planning Strategic Alternatives
Product
Communication
Same Different
Strategy 2 Product Extension Communication
Adaptation
Strategy 4 Dual Adaptation
Different Same
Strategy 3 Product Adaptation Communication Exten
sion
Strategy 1 Dual Extension
13These Three Basic Strategies Can Be Further
Broken Down Into 5 Options
Source W.J. Keegan
14How to Choose a Strategy?
- Two errors that management makes in choosing a
strategy - NIH (Not invented here) syndrome means managers
ignore the advancements of subsidiaries overseas - Managers impose policies upon subsidiaries
because they assume what is right for customers
in one market is right in every market
15How to Choose a Strategy?
- Cave Dweller new products launched
internationally to dispose of excess production - Naïve Nationalist company recognizes growth
opportunities outside of home market - Globally sensitive company views world as
competitive marketplace
16How to Choose a Strategy?
- The product itself, defined in terms of the
function or need it serves - The market, defined in terms of the conditions
under which the product is used, preferences of
potential customers, and ability to buy the
product - Adaptation and manufacturing costs the company
will incur
17Standardization versus Customization
- Although the products sold abroad generally are
not identical to their domestic counterparts,
there is always a core of expertise that the firm
can carry abroad. - Principle " All Business is local."
18 Reasons for Product Standardization
- Economies of scale Production, RD, Marketing
- Common Consumer needs Drinking patterns, car
sizes - Consumer Mobility Customer retention
Loyalty American Express, Kodak, ... - Home Country Image US jeans, French
Perfumes,... - Impact of technology B to B Markets
19Convergence in Drinking Patterns
20Convergence of Car Sizes
21Reasons for Product Adaptation
- Climate US Air-conditioning equipment
- Skill level of users Computers in Africa
- National consumer habits - front-loading/top-loa
ding washing machines- car models four-door
(F) - two-door (Germ.) - Government regulations on products, packaging,
and labels. - Company history and operations (subsidiaries)
22ExampleEuropean Toothpaste Market
- Market Size in France FF 1,8 Bill. (1996)
- Trends
- Multiple number oftoothpastes/family
- Therapeutic /sophisticated products
- Cosmetic products
- Volume
- Price
- Competitors in France
- Unilever 33
- Colgate 22,5
- Henkel 19
- Smithkline B. 12
- PG 0
23Drivers of Product AdaptationExample COLGATE
Toothpaste
- (1) Differences in National Regulations
- Triclosan forbidden in Germany
- High fluorine content in local water (UK)
- Obligation to sell high fluorine content
toothpaste in pharmacy (France) - Stringent clinical tests in France
24Drivers of Product AdaptationExample COLGATE
Toothpaste
- Packaging
- Ecological Stand-up tubes in Germany
- Failure in France (Carrefour)
- Distribution
- Role of pharmacy in Italy and Spain
- Role of drugstore in UK
- Communication
- Medical in Italy and Spain (recommended by
dentist) - Non-medical in UK
25- Attributes
- Brand (Global vs. Local)
- Packaging
- Quality
- Services (after-sale services, support)
- Positioning
26- Strong customer recognition/reassurance
- Economies of scale and scope
- Leverages power with retailers
- Consolidates efforts across countries
- Potential for extension
- Not locally responsive
- Demotivating for country managers
- Difficult to manage
- Need to maintain consistency across
- countries and product-lines
27Product Types
- Buyer orientation
- Amount of effort expended on purchase
- Convenience
- Preference
- Shopping
- Specialty
28Brands
- Bundle of images and experiences in the
customers mind - A promise made by a particular company about a
particular product - A quality certification
- Differentiation between competing products
- The sum of impressions about a brand is the Brand
Image
29Brands
30Brands
- The added value that accrues to a product as a
result of investments in the marketing of the
brand - An asset that represents the value created by the
relationship between the brand and customer over
time
31Brands
- We have to shift to high value-added products,
and to do that we need to improve our brand. - - Noboru Fujimoto, President Sharp Electronics
Corporation
32Local Products and Brands
- Brands that have achieved success in a single
national market - Represent the lifeblood of domestic companies
- Entrenched local products/brands can be a
significant competitive hurdle to global companies
33International Products and Brands
- Offered in several markets in a particular region
- Euro-brands
34 Naming your product
Atum Bom Portuguese tuna Kack Danish
sweets Mukk Italian yogurt Pocari Sweat
Japanese sport drink Poo Argentine curry powder
Alu-Fanny French Foil wrap Crapsy Fruit French
cereal Kum Onit German pencil
sharpeners Plopp Scandinavian
chocolate Pschitt French lemonade
35Naming your product
? Phonetic Problems with Brand Names- Bardok
(Sounds like Brothel in Russian)- Misair
(Sounds like Misery in French) ? Translations Int
ent Translation- Stepping Stone - Stumbling
Block- Car Wash - Car Enema- Highly
Rated - Over Rated Symbols- Owl - Bad Luck
in India ? Other Countries make mistakes too-
Zit (Chocolate from Germany)- Koff (Beer)
36Global Products and Brands
- Global products meet the wants and needs of a
global market and is offered in all world regions - Global brands have the same name and similar
image and positioning throughout the world
37Global Products and Brands
- A multinational has operations in different
countries. A global company views the world as a
single country. We know Argentina and France are
different, but we treat them the same. We sell
them the same products, we use the same
production methods, we have the same corporate
policies. We even use the same advertisingin a
different language, of course. - - Alfred Zeien Former Gillette CEO
38Family Brands
USA
Europe
Mexico
"Rabbit"
"Golf"
"Caribe"
-gt lightness
-gt prestige
-gt avoid negative connotation
39Private Label Branding
- Large retailers are moving increasingly into
their own brand, i. e. Marks Spencer. - They try to obtain greater control and higher
margins. - Private branding can be an effective way to break
into foreign markets.(Asian TV manufacturers)
40European Consumer Preferences Regarding Private
Labels
Product Category
Fr.
All.
It.
Es.
GB
Edible Oils
19
20
10
11
27
Pasta
16
24
12
12
24
Yoghurt
14
14
6
6
12
Frozen Vegetables
5
11
5
6
34
Fresh Pasta
3
7
4
3
5
Breakfast Cereals
4
8
2
2
18
Instant Soups
3
9
0
2
14
Icecream
6
10
4
2
21
Whiskey
3
1
2
1
4
Smoked Salmon
3
4
1
1
2
Champagne
3
4
2
3
6
Private labels per product category ( of sales
in qunqtities in hypermarkets and
supermarkets) Source Secodip International, 1998
41European Households Judging Credibility of
Private Labels
Europe
Germ.
Spain
France
Italy
UK
Criteria
3 19 78
3 12 85
3 26 72
3 29 68
1 13 86
More expensive Same Less expensive
2 16 83
5 78 17
2 90 8
3 78 19
7 71 22
4 77 18
Higher quality Same Lower quality
6 73 21
6 74 21
3 84 12
4 73 23
10 66 24
5 74 21
More confidence Same Less confidence
7 71 22
Private labels per product category ( of sales
in qunqtities in hypermarkets and
supermarkets) Source Secodip International, 1998
42Country of Origin effect
- Country-of-Origin (COO) Influences on Consumers
- For many products, the made in label matters a
great deal to consumers.
- Key research findings of COO effects
- COO effects are not stable
- Consumers prefer domestic products over imports
- Both the country of design and the country of
manufacturing/assembly play a role in consumer
attraction.
43Branding Strategies
- Combination or tiered branding allows marketers
to leverage a companys reputation while
developing a distinctive identity for a line of
products - Sony Walkman
- Co-branding features two or more company or
product brands - NutraSweet and Coca-Cola
- Intel Inside
44Branding Strategies
- Brand acts as an umbrella for new products
- Example The Virgin Group
- Virgin Entertainment Virgin Mega-stores and MGM
Cinemas - Virgin Trading Virgin Cola and Virgin Vodka
- Virgin Radio
- Virgin Media Group Virgin Publishing, Virgin
Television, Virgin Net - Virgin Hotels
- Virgin Travel Group Virgin Atlantic Airways,
Virgin Holidays
45Global Brand Development
- Questions to ask when management seeks to build a
global brand - Will anticipated scale economies materialize?
- How difficult will it be to develop a global
brand team? - Can a single brand be imposed on all markets
successfully?
46Global Brand Development
- Global Brand Leadership
- Using organizational structures, processes, and
cultures to allocate brand-building resources
globally, to create global synergies, and to
develop a global brand strategy that coordinates
and leverages country brand strategies
47Global Brand Development
- Create a compelling value proposition
- Think about all elements of brand identity and
select names, marks, and symbols that have the
potential for globalization - Research the alternatives of extending a national
brand versus adopting a new brand identity
globally - Develop a company-wide communication system
48Global Brand Development
- Develop a consistent planning process
- Assign specific responsibility for managing
branding issues - Execute brand-building strategies
- Harmonize, unravel confusion, and eliminate
complexity
49Local versus Global Products and Brands A
Needs-Based Approach
50Country of Origin as Brand Element
- Perceptions about and attitudes toward particular
countries often extend to products and brands
known to originate in those countries - Japan
- Germany
- France
- Italy
51Packaging
- Consumer Packaged Goods when the packaging is
designed to protect or contain the product during
shipping - Eco-Packaging because package designers must
address environmental issues - Offers communication cues that provide consumers
with a basis for making a purchase decision
52Product Packaging and Labeling
53European Packaging Trends
54- POM brand Pomegranate juice used a distinctively
shaped bottle to gain attention on the grocery
shelf
55Labeling
- Provides consumers with various types of
information - Regulations differ by country regarding various
products - Health warnings on tobacco products
- American Automobile Labeling Act clarifies the
country of origin, and final assembly point - European Union requires labels on all food
products that include ingredients from
genetically modified crops
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57Labeling
As Americans become increasingly concerned about
cholesterol, the FDA (Food and Drug
Administration) has responded by requiring food
manufacturers to list trans fat (i.e., trans
fatty acids) on the Nutrition Facts portion of
product labels, effective 1/1/06.
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59Aesthetics
- Global marketers must understand the importance
of visual aesthetics - Aesthetic Styles (degree of complexity found on a
label) differ around the world
60Product Warranties
- Express Warranty is a written guarantee that
assures the buyer is getting what they paid for
or provides a remedy in case of a product failure - Warranties can be used as a competitive tool
61New Products in Global Marketing
- Pursue opportunities in competitive arenas of
global marketplace - Focus on one or only a few businesses
- Active involvement from senior management
- Ability to recruit and retain best employees
- Understand the importance of speed in bringing
product to market
62Identifying New Product Ideas
- What is a new Product?
- New to those who use it or buy it
- New to the organization
- New to a market
63The International New Product Department
- How big is the market for this product at various
prices? - What are the likely competitive moves in response
to our activity? - Can we market the product through existing
structure? - Can we source the product at a cost that will
yield an adequate profit? - Does product fit our strategic development plan
64Testing New Products
- When do you test a new product?
- Whenever a product interacts with human,
mechanical, or chemical elements because there is
the potential for a surprising and unexpected
incompatibility - Test could simply be observing the product being
used within the market
65Looking Ahead
- Chapter 11 Pricing decisions