Creating Products for Consumers in Global Markets

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Creating Products for Consumers in Global Markets
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Developing an international marketing strategy

• Segmenting
• Targeting
• Positioning

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Properties of a Market Segment

• Properties
• Measurable
• Sizable
• Accessible
• Actionable
• Competitive Intensity
• Growth Potential

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Bases for Global Segments

• Geographic
• Demographic
• Psychographic
• Behavior
• Benefits

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Average Monthly Expenditures for Chinese
Households National and Urban Areas - 1994
National Urban Areas
Food (includes eating out) 22.10 38.00 Savings 1
1.40 17.00 Clothing 5.60 9.00 Child's
Education 4.70 7.00 Home (includes Rent
Utilities) 4.30 8.20 Daily Goods other than
Food 3.50 4.80 Medical Expenses
Drugs 2.30 4.00 Entertainment 1.30 3.20
SOURCE Gallup China.
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YRs Cross-Cultural Consumer Characterizations
(4Cs)
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Global Scan Segmentation Study
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• Life Style
• Exhibit Typology of European Car Market

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Roper Starch Worldwide Global Study
40,000 consumers in 40 countries

• Shopping Styles
• Deal Makers (29) - love the buying process
• Price Seekers (27) - place primary value on the
  product that they are buying
• Brand Loyalists (23) - purchase name brands and
  remain true to them
• Luxury Innovators (21) - seek new, prestigious
  brands

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How the World Shops
Source How the World Shops, Advertising Age,
June 5, 1995, p.3.
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How the World Shops
Source How the World Shops, Advertising Age,
June 5, 1995, p.3.
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How the World Shops
Source How the World Shops, Advertising Age,
June 5, 1995, p.3.
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International Positioning Strategies

• Global Positioning and Segmentation Strategies
• Universal Segment / Uniform Positioning Theme
• Universal Segment / Different Positioning Themes
• Different Segment / Different Positioning Themes

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• Global Positioning Segmentation Strategies

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International Product Trade Cycle Model
production
High Income Countries
consumption
Quantity
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Medium Income Countries
1
3
7
2
4
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8
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13
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Low Income Countries
Time
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New Product
Standardized Product
Maturing Product
Stages of Production Development
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Products and Culture
? Cultural Influences ? Innovative Products
and Adaptation ? Diffusion of Innovations ? Degr
ee of Newness ? Characteristics of Innovations
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Adopter Categories in Diffusion Process
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Degree of Newness
Congruent Innovations
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation
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Characteristics of Innovations
? Relative Advantage ? Compatibility ? Complex
ity ? Trialability ? Observability
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Product Components
Core Component
Packaging Component
Support Services Component
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Product Component Model
SUPPORT SERVICESCOMPONENT
PACKAGING COMPONENT
? Repair and maintenance
? Deliveries
CORE COMPONENT
? Trademark
? Price
? Product platform ? Design features ? Functional
features ? Legal
? Warranty
? Installation
? Quality
? Brand name
? Package
? Instructions
? Spare parts
? Legal
? Styling
? Other related services
? Legal
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4 Ps - Product

• Product decisions are all decision which relate
  to the physical product and/or service offering,
  including its name, packaging, warranty, and
  availability. Product dimensions include
• Size of the product
• Color(s) of product
• Scent of the product
• Materials/ composition of the product
• Design of the product
• Packaging materials
• Package colors and package design
• Brand name
• Warranty
• Availability of options
• Customizing services
• After-sale service offerings
• Inventory levels

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Factors Influencing Product Adaptation vs.
Standardization
Stage in Product Life Cycle
Legal/Standards Constraints
Product Innovativeness
Cultural Differences
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Standardization versus Adaptation

• Factors Encouraging Standardization
• Economies of scale in production
• Economies in product RD
• Economies in marketing
• Shrinking of the world marketplace/ economic
  integration

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Standardization versus Adaptation

• Factors Encouraging Adaptation
• Differing use conditions
• Government and regulatory influences
• Differing consumer behavior patterns
• Local Competition
• True to marketing concept

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Strategic Adaptation to Foreign Markets
High
Need for Adaptation
Degree of Cultural Grounding
Low
Industrial/ Technology Intensive
Consumer
Nature of Product
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Global v. Local branding

• In 1989, Mars changed the name of Kal Kan cat
  food to Whiskas.
• Why?
• Sharing of ideas in global corporation
• Pet owners travel and might switch if their
  familiar brand was not available somewhere.
• Two years earlier, Mars had created to other
  global brands
• Kal Kan dog food ? Pedigree in U.S.
• Mealtime dry dog food ? Pedigree Mealtime
• High market share in U.S.
• Brand associations

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What is a brand?

• A name, term, sign, symbol, or design, or
  combination of them which is intended to identify
  the goods and services of one seller or group of
  sellers and to differentiate them from those of
  competitors (Kotler, 1991)

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What is brand equity?

• A set of brand assets linked to a brand, its name
  and symbol, that add to or subtract from the
  value provided by a product or service to a firm
  and/or to that firms customers.

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Brand Associations
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What is customer-based brand equity?

• The differential effect of brand knowledge on
  customer response to the marketing of the brand.

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Developing A Framework For Generic Brands Based
on Brand Knowledge
Components of Brand Knowledge (Keller, 1992)

• Brand Awareness
• Recognition
• Recall
• Brand Image
• Type
• Strength
• Favorability
• Uniqueness

of Brand Associations
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Customer-Based Brand Equity
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Decomposing Consumer Knowledge of Brands
Brand Image Strength, uniqueness,
favorability of associations
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Brand Strategies
Global Brands
National Brands
Global/National Brand Mix
Private Brands
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Global v. Local Brands

• Global brands provide
• Scale economies in the Development of
  advertising, packaging, promotion, etc.
• Exploitation of
• Media overlap
• Exposure to customers who travel
• Associations
• of a global presence
• of the home country

• Local brands provide
• Names, symbols, and associations that can be
• Developed locally
• Tailored to local market
• Selected without the constraints of a global
  brand
• Reduced risk from Buy Local sentiments