Adapting Products and Services for Consumers and Businesses

1
Adapting Products and Services for Consumers
and Businesses
2
Quality

• Market perceived quality
• Performance quality
• E.g. Airlines

3
Maintaining Quality

• Damage in the distribution chain
• Russian chocolate
• Quality is essential for success in todays
  competitive global market
• The decision to standardize or adapt a product is
  crucial in delivering quality.
• It is often mandatory to adapt as different
  countries have different laws. Video games

4
Green Marketing and Product Development

• Green marketing concerns the environmental
  consequences of a variety of marketing activities
  
• Critical issues affecting product development
• Control of the packaging component of solid waste
• Consumer demand for environmentally friendly
  products
• European Commission guidelines for ecolabeling
• Laws to control solid waste

5
Product and Culture

• A product is a bundle of satisfactions or
  utilities that a customer receives, not just form
  and function.
• Psychological attributes of a product vary across
  cultures. E.g Diet Coke and instant cakes,
  cosmetics and English books in Japan.

6
Innovative Products and Adaptation

• Determining the degree of newness as perceived by
  the intended market
• Diffusion depends on ability to communicate new
  attributes of a product.
• Established patterns of consumption and behavior
  new product may need time. Coffee in Japan
• Foreign marketing goal
• Gaining the largest number of consumers in the
  market
• In the shortest span of time
• Probable rate of acceptance

7
Diffusion of Innovations

• Crucial elements in the diffusion of new ideas
• An innovation
• Which is communicated through certain channels
• Over time
• Among the members of a social system
• The element of time
• Variables affecting the rate of diffusion of an
  object
• Degree of perceived newness
• Perceived attributes of the innovation
• Method used to communicate the idea

8
Characteristics deciding acceptance of an
Innovation

• Relative advantage (compared to past)
• Compatibility (with culture)
• Complexity (is it hard to use?)
• Trialability (risk associated with use)
• Observability (can the benefit be easily seen?)
• A marketer can try to change peoples perceptions
  of these factors to speed up the new product
  acceptance.
• Pioneer brand advantage

9
Product Component Model
Exhibit 13.1
10
Marketing Consumer Services Globally

• More than half of Fortune 500 companies are
  primarily service providers
• Consumer services characteristics
• Intangibility
• Inseparability
• Heterogeneity
• Perishability
• A service can be marketed
• As an industrial (business-to-business)
• A consumer service

11
Services Opportunities in Global Markets

• Tourism
• Transportation
• Financial services
• Education
• Communications
• Entertainment
• Information
• Health care

12
Barriers to Entering Global Markets for Consumer
Services

• Four kinds of barriers face consumer service
  marketers
• Protectionism
• Restrictions on transborder data flows
• Protection of intellectual property
• Cultural barriers and adaptation

13
Brands in International Markets

• A global brand is the worldwide use of a name,
  term, sign, symbol, design, or combination
• Intended to identify goods or services of one
  seller
• To differentiate them from those of competitors
• Importance is unquestionable
• Most valuable company resource

14
Global Brands

• The Internet and other technologies accelerate
  the pace of the globalization of brands
• Ideally gives the company a uniform worldwide
  image
• Balance
• Ability to translate

15
Country-of-Origin Effects and Global Brands (1
of 2)

• Country-of-Origin effect
• Influences that the country of manufacture,
  assembly, or design
• Has on a consumers positive or negative
  perception of a product
• Consumers have broad but somewhat vague
  stereotypes about specific countries and specific
  product categories that they judge best
• Ethnocentrism

16
Country-of-Origin Effects and Global Brands (2
of 2)

• Countries are stereotyped
• On the basis of whether they are industrialized
• In the process of industrializing
• In process of developing
• Technical products
• Perception of one manufactured in a
  less-developed or newly industrializing country
  less positive
• Fads often surround product from particular
  countries or regions

17
Products and services for businesses
18
Introduction

• Issues of standardization versus adaptation
• Less relevance to marketing industrial goods than
  consumer goods
• Factors accounting for greater market
  similarities in customers of industrial goods
  versus consumer goods
• The inherent nature of the product
• The motive or intent for the user differs

19
Industrial Vs Consumer

• Industrial goods and services are used to make
  other goods and services.
• Consumer goods are in their final form and
  consumed by individuals.
• Industrial consumers are seeking profit.
• Consumer is seeking satisfaction

20
Major Categories U.S. Exports
Exhibit 14.1
21
Discussion Question

• Which is usually a bigger gamble investing in
  products and services for industrial markets or
  consumer markets?
• Why?

22
Demand in Global Business-to-Business Markets

• Three factors affect the demand in industrial
  markets differently than in consumer markets.
  They are
• Volatility of industrial demand (demand in
  industrial markets is by nature more volatile)
• Stages of economic development (stages of
  industrial and economic development affect demand
  for industrial products)
• Technology and market demand (the level of
  technology of products and services make their
  sales more appropriate for some countries than
  others)

23
The Volatility of Industrial Demand

• Cyclical swings in demand
• Professional buyers tend to act at the same time
  e.g. Desktop makers floppy disk drives
• Derived demand accelerates changes in markets
• Derived demand can be defined as demand dependent
  on another source
• Minor changes in consumer demand mean major
  changes in related industrial demand
• Boeing
• Worldwide demand for travel services related to
  demand for new airplanes e.g Sep 11th WTC
• Commercial aircraft industry one of the most
  volatile

24
Stages of economic development (Rostow)

• Stage 1 Traditional e.g. Africa Raw materials
• Stage 2- Starting to take-off e.g. Vietnam
  Infrastructure
• Stage 3- Take-off e.g. Eastern Europe Semi and
  non-durable consumer goods
• Stage 4 e.g. Poland, Low cost manufacturing
• Stage 5 e.g. Japan, Services.

25
Technology and Market demand

• Level of education
• Increasing use of robots in manufacturing
• Develop and benefit from latest technology
  increased competitiveness.

26
Quality and Global Standards

• Perception of quality rests solely with the
  customer e.g. Unused functions of PC
• Level of technology reflected in the product
• Compliance with standards that reflect customer
  needs
• Support services and follow-through
• Price relative to competitive products
• Quality standards vary with level of countrys
  industrialization e.g. Nokia in Africa
• See B2B market research questionnaire on class
  notice board.

27
International Standards

• EU safety standards for cars., Non- tariff
  barriers.
• New standards discussions e.g. Saudi Arabia
• Metric system USA, NASA

28
ISO 9000 Certification An International
Standard of Quality(1 of 2)

• Positively affects the performance and stock
  prices of firms
• Certification of the existence of a quality
  control system a company has in place to ensure
  it can meet published quality standards
• Describes three quality system models
• Defines quality concepts
• Gives guidelines for using international
  standards in quality systems
• Generally voluntary

29
ISO 9000 Certification An International
Standard of Quality(2 of 2)

• EU Product Liability Directive, awarding costs.
• Now a competitive marketing tool in Europe and
  around the world
• The American Customer Satisfaction Index
• EU safety standards for cars., Non- tariff
  barriers.
• New standards discussions e.g. Saudi Arabia
• ISO 14000

30
Business Services

• For many industrial products the revenues from
  associates services exceed the revenues from the
  products
• Cellular phones
• Printers
• Leasing capital equipment
• Services not associated with products
• Boeing at-sea-satellite-launch services
• Professional services (advertising, banking,
  healthcare, etc.)

31
After-Sale Services

• Installation e.g. Hyundai car presses.
• Training
• Spare and replacement parts e.g. GE medical
• Delivery time
• Cost of parts
• Service personnel
• Almost always more profitable than the actual
  sale of the machinery or product
• Crucial in building strong customer loyalty

32
Other Business Services

• Client followers e.g. US Law firms
• Mode of entry
• - Exporting
• Licensing
• Direct investment
• Protectionism e.g. must pass local language exam
• Restrictions on cross-border data flows

33
Trade Shows A Crucial Part of Business-to-Busines
s Marketing (1 of 4)

• Secondary methods for marketing
• Advertising in print media
• Catalogs
• Web sites
• Direct mail
• Trade shows have become the primary and most
  important vehicle for doing business in many
  foreign countries

34
Trade Shows A Crucial Part of Business-to-Busines
s Marketing (2 of 4)

• Total annual media budget spent on trade events
• Europeans 22 percent
• Americans 5 percent

35
Trade Shows A Crucial Part of Business-to-Busines
s Marketing (3 of 4)

• Trade shows
• Provide the facilities for a manufacturer to
  exhibit and demonstrate products to potential
  users
• Allow manufacturers to view competitors products
• Are an opportunity to create sales and establish
  relationships with agents, distributors,
  franchisees, and suppliers
• Online trade shows
• Become useful in difficult economic and/or
  political circumstances
• Are obviously a less than adequate substitute for
  live trade shows

36
Trade Shows A Crucial Part of Business-to-Busines
s Marketing (4 of 4)

• Not a matter of selling the right product the
  first time instead selling a continuously
  changed the product to keep it right over time
• The objective of relationship marketing
• To make the relationship an important attribute
  of the transaction
• Differentiating oneself from competitors
• Using the Internet to facilitate relationship
  building and maintenance
• Cisco systems