Product and brand discussion

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  • A product’s tangible attributes can be assessed in physical terms such as weight, dimensions, or materials used. Consider, for example, a flat-panel TV with an LCD screen that measures 42 inches across. The unit weighs 100 pounds, is 4 inches thick, and has a tuner capable of receiving high-definition TV signals over the air. These tangible, physical features translate into benefits that enhance the enjoyment of watching prime time TV and movies on DVR’s.
  • Companies differ in terms of both their willingness and capability to identify and produce profitable product adaptations. Unfortunately, in companies where an ethnocentric mind-set predominates, executives and managers are oblivious to the issues presented here. One new-product expert described three stages that a company must go through, they are listed above.
  • This slide sums up the section regarding choosing a product-communication strategy. It is important to note that only after analysis of the product-market fit and of company capabilities and costs can executives choose the most profitable strategy.
  • A frequently used framework for classifying products distinguishes between consumer and industrial goods. Consumer and industrial goods, in turn, can be further classified on the basis of criteria such as buyer orientation. Buyer orientation is a composite measure of the amount of effort a customer expends, the level of risk associated with a purchase, and buyer involvement in the purchase. The buyer orientation framework includes such categories as convenience, preference, shopping, and specialty goods.
  • Customers integrate all their experiences of observing, using, or consuming a product with everything they hear and read about it. The essence of a brand exists in the mind; as such, brands are intangible. However, companies develop logos, distinctive packaging, and other communication devices to provide visual representations of their brands. A logo can take a variety of forms, starting with the brand name itself.
  • This Slide illustrates that information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account. Information about products and brands comes from a variety of sources and cues, including advertising, publicity, sales personnel, and packaging. Perceptions of service after the sale, price, and distribution are also taken into account.
  • Products and brands can be broken down into three different categories. These are local, international and global. The next few slides illustrate the difference between the categories.
  • Companies should place a priority on creating strong brands in all markets through global brand leadership.
  • Both this slide and the next offer 8 suggestions for managers that are seeking to develop global brand leadership.
  • The essence of marketing is finding needs and filling them. Maslow’s hierarchy of needs, a staple of sociology and psychology courses, provides a useful framework for understanding how and why local products and brands can be extended beyond home country borders. Maslow hypothesized that people’s desires can be arranged into a hierarchy of five needs.14 As an individual fulfills needs at each level, he or she progresses to higher levels. At the most basic level of human existence, physiological and safety needs must be met. People need food, clothing, and shelter, and a product that meets these basic needs has potential for globalization. Mid-level needs in the hierarchy include self-respect, self-esteem, and the esteem of others. These social needs, which can create a powerful internal motivation driving demand for status-oriented products, cut across the various stages of country development.
  • One of the facts of life in global marketing is that perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries. Such perceptions contribute to the country-of-origin effect; they become part of a brand’s image and contribute to brand equity. This is particularly true for automobiles, electronics, fashion, beer, recorded music, and certain other product categories. Perceptions and attitudes about a product’s origins can be positive or negative. On the positive side, as one marketing expert has pointed out, “‘German’ is synonymous with quality engineering, ‘Italian’ is synonymous with style, and ‘French’ is synonymous with chic.”
  • In many instances, packaging is an integral element of product-related decisions. Packaging is an important consideration for products that are shipped long distances to markets in all parts of the world.
  • One hallmark of the modern global marketplace is the abundance of multi-language labeling that appears on many products. In today’s self-service retail environments, product labels may be designed to attract attention, to support a product’s positioning, and to help persuade consumers to buy.
  • Aesthetic elements that are deemed appropriate, attractive, and appealing in one’s home country may be perceived differently elsewhere. In some cases, a standardized color can be used in all countries; examples include the distinctive yellow color on Caterpillar’s earth-moving equipment and its licensed outdoor gear and the red Marlboro chevron. In other instances, color choices should be changed in response to local perceptions.
  • The starting point for an effective worldwide new-product program is an information system that seeks new-product ideas from all potentially useful sources and channels these ideas to relevant screening and decision centers within the organization. Ideas can come from many sources, including customers, suppliers, competitors, company salespeople, distributors and agents, subsidiary executives, headquarters executives, documentary sources (e.g., information service reports and publications), and, finally, actual firsthand observation of the market environment. The diagram on this slide illustrates the continuum that new products will fall into and the amount of learning that consumers will have to go through in order to use the product.
  • A high volume of information flow is required to scan adequately for new-product opportunities, and considerable effort is subsequently required to screen these opportunities to identify candidates for product development. The best organizational design for addressing these requirements is a new product department. Managers in such a department engage in several activities. First, they ensure that all relevant information sources are continuously tapped for new-product ideas. Second, they screen these ideas to identify candidates for investigation. Third, they investigate and analyze selected new-product ideas. Finally, they ensure that the organization commits resources to the most likely new-product candidates and is continuously involved in an orderly program of new-product introduction and development on a worldwide basis.
  • Product and brand discussion

    1. 1. 10-1 Chapter 10 Product and Brand Decisions
    2. 2. 10-2 Introduction: 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
    3. 3. 10-3 The Product Offering Core Benefit Generic Product Expected Product Augmented Product Potential Product Source : Adapted from: P. Kotler, Marketing Management, 1994
    4. 4. 10-4 Basic Product Concepts A product is a good, service, or idea – Tangible Attributes – Intangible Attributes Product classification – Consumer goods – Industrial goods
    5. 5. 10-5 Product 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
    6. 6. 10-6 Goods 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)
    7. 7. 10-7 Sales 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.
    8. 8. 10-8 Sales 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.
    9. 9. 10-9 Sales 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.
    10. 10. 10-10 International Product Strategies Straight Extension Product Product 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
    11. 11. 10-11 Extend, 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
    12. 12. 10-17 Standardization 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."
    13. 13. 10-18 Reasons for Product Standardization Economies of scale : Production, R&D, 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
    14. 14. 10-19 Convergence in Drinking Patterns
    15. 15. 10-20 Convergence of Car Sizes
    16. 16. 10-21 Reasons for Product Adaptation Climate: US Air-conditioning equipment Skill level of users : Computers in Africa National consumer habits : - front-loading/top-loading washing machines - car models : four-door (F) - two-door (Germ.) Government regulations on products, packaging, and labels. Company history and operations (subsidiaries)
    17. 17. 10-22 Example: European Toothpaste Market Market Size in France: FF 1,8 Bill. (1996) Trends: – Multiple number of toothpastes/family – Therapeutic / sophisticated products – Cosmetic products – Volume – Price Competitors in France : – Unilever 33% – Colgate 22,5% – Henkel 19% – Smithkline B. 12% – P&G 0%
    18. 18. 10-23 Drivers of Product Adaptation Example 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
    19. 19. 10-24 Drivers of Product Adaptation Example 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
    20. 20. 10-25 managing marketing from global headquarters ©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili. International Marketing Mix Decisions Strategic Alternatives in international and global marketing mix decisions. Managerial issues What aspects of Product can be modified?  Attributes  Brand (Global vs. Local)  Packaging  Quality  Services (after-sale services, support)  Positioning
    21. 21. 10-26 managing marketing from global headquarters ©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili. International Marketing Mix Decisions Strategic Alternatives in international and global marketing mix decisions. Managerial issues Advantages and Disadvantages of International Brands  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
    22. 22. 10-27 Product Types Buyer orientation – Amount of effort expended on purchase – Convenience – Preference – Shopping – Specialty
    23. 23. 10-28 Brands Bundle of images and experiences in the customer’s 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
    24. 24. 10-29 Brands
    25. 25. 10-30 Brands 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
    26. 26. 10-31 Brands “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
    27. 27. 10-32 Local 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
    28. 28. 10-33 International Products and Brands Offered in several markets in a particular region – ‘Euro-brands’
    29. 29. 10-34 Naming your product Alu-Fanny: French Foil wrap Crapsy Fruit: French cereal Kum Onit: German pencil sharpeners Plopp: Scandinavian chocolate Pschitt: French lemonade Atum Bom: Portuguese tuna Kack: Danish sweets Mukk: Italian yogurt Pocari Sweat: Japanese sport drink Poo: Argentine curry powder
    30. 30. 10-35 Naming your product  Phonetic Problems with Brand Names - Bardok (Sounds like Brothel in Russian) - Misair (Sounds like Misery in French)  Translations Intent 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)
    31. 31. 10-36 Global 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
    32. 32. 10-37 Global 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 advertising—in a different language, of course. - Alfred Zeien Former Gillette CEO
    33. 33. 10-38 Family Brands Family Brand Volkswagen USA Europe Mexico "Rabbit" "Golf" "Caribe" -> lightness -> prestige -> avoid negative connotation
    34. 34. 10-39 Private 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)
    35. 35. 10-40 European Consumer Preferences Regarding Private Labels Product Category Fr. All. It. Es. GB Edible Oils Pasta Yoghurt Frozen Vegetables Fresh Pasta Breakfast Cereals Instant Soups Icecream Whiskey Smoked Salmon Champagne 19 16 14 5 3 4 3 6 3 3 3 20 24 14 11 7 8 9 10 1 4 4 10 12 6 5 4 2 0 4 2 1 2 11 12 6 6 3 2 2 2 1 1 3 27 24 12 34 5 18 14 21 4 2 6 Private labels per product category (% of sales in qunqtities in hypermarkets and supermarkets) Source: Secodip International, 1998
    36. 36. 10-41 European Households Judging Credibility of Private Labels Private labels per product category (% of sales in qunqtities in hypermarkets and supermarkets) Source: Secodip International, 1998 Europe Germ. Spain France Italy UKCriteria 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
    37. 37. 10-42 Country 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.
    38. 38. 10-43 Branding Strategies Combination or tiered branding: allows marketers to leverage a company’s 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
    39. 39. 10-44 Branding 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
    40. 40. 10-45 Global 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?
    41. 41. 10-46 Global 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
    42. 42. 10-47 Global 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
    43. 43. 10-48 Global Brand Development Develop a consistent planning process Assign specific responsibility for managing branding issues Execute brand-building strategies Harmonize, unravel confusion, and eliminate complexity
    44. 44. 10-49 Local versus Global Products and Brands: A Needs-Based Approach Physiological Safety Social External/Internal Esteem Self-actualization
    45. 45. 10-50 Country 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
    46. 46. 10-51 Packaging 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
    47. 47. 10-52 Product Packaging and Labeling Protection Legal ConstraintsPromotion Climate Transport & Handling Buyer's slow usage rate Lack of storage facilites Merchandising ( income level, shopping habits) Minimum breakage / theft Ease of handling Multilingual Labels to Convey an International Image (Zara, Hollywood Chewing Gum) Recycling of Packaging (Duales System, Eco-Emballage) Regulations on consumer info. (Origin, weight, ingredients)
    48. 48. 10-54 POM brand Pomegranate juice used a distinctively shaped bottle to gain attention on the grocery shelf
    49. 49. 10-55 Labeling 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
    50. 50. 10-56
    51. 51. 10-57 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. Labeling
    52. 52. 10-58
    53. 53. 10-59 Aesthetics Global marketers must understand the importance of visual aesthetics Aesthetic Styles (degree of complexity found on a label) differ around the world
    54. 54. 10-60 Product 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
    55. 55. 10-61 New 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
    56. 56. 10-62 Identifying 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
    57. 57. 10-63 The 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
    58. 58. 10-64 Testing 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
    59. 59. 10-65 Looking Ahead Chapter 11 Pricing decisions

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